Australia to Decide on Funding Solar Projects Within Six Months

The Australian Renewable Energy Agency, which plans to allocate A$2.2 billion ($2.3 billion) in government funds to help the industry, expects to decide within six months whether to invest in two solar projects.

The government agency, set up last year, said it’s in discussions with Pacific Hydro Pty and Fotowatio Renewable Ventures about funding their proposed solar plant in New South Wales and is talking with Infigen Energy (IFN) and Suntech Power Holdings Co. (STP) about another solar project in the state.

While a venture including Areva SA (AREVA) abandoned plans for a A$1 billion solar-thermal project in Australia after failing to get funding from the renewable agency, other solar ventures are going ahead as the country moves toward a target of generating 20 percent of its power from clean energy by 2020.

“Why hasn’t more solar happened?” Ivor Frischknecht, who started as chief executive officer of the renewable energy agency in August, said in a phone interview yesterday. “Large- scale solar today still needs a subsidy, and various subsidy programs haven’t been as successful as everybody would have hoped, but I think we’ve learned a lot from the past.”

First Solar Inc. (FSLR) and AGL Energy Ltd. (AGK) in June won A$129.7 million in government funds to build a 159-megawatt solar project across two sites in New South Wales. Silex Systems Ltd. (SLX) announced last year it would get as much as A$75 million in federal funds for a solar plant in the state of Victoria.

‘Waiting to Happen’

“There are a number of projects out there waiting to happen or proceeding on schedule,” he said. Decisions on the solar photovoltaic ventures in Australia’s most populous state will be made “as soon as possible,” he added.

Australia had 1,936 megawatts of solar projects using photovoltaic panels to convert sunlight into electricity, including just 19 megawatts at large-scale plants, Bloomberg New Energy Finance said last month. A large-scale solar project is defined by BNEF as having capacity of more than 1 megawatt.

By comparison, Germany and Italy installed more than 7,000 megawatts each last year, making them the world’s two biggest markets for the technology.

The Australian renewables agency released its funding strategy yesterday, seeking to encourage clean energy projects in locations where consumption is forecast to increase and fossil fuel-based generation costs are the highest.

“We’re trying to further the penetration of renewable energy particularly into diesel-powered areas of remote Australia,” said Frischknecht, previously investment director of Australian venture capital fund Starfish Ventures.

Solar PV

ARENA’s board decided it wouldn’t fund the 250-megawatt Solar Dawn project proposed by Paris-based Areva and Wind Prospect Group Ltd. partly because the Queensland government withdrew A$75 million of funding, said Frischknecht, who started as the agency’s CEO in August.

“The relative cost of PV to solar thermal has moved so dramatically, and that was such a large project, it just didn’t seem fantastic value for money,” Frischknecht said.

The agency also plans to make smaller investments, potentially A$10 million or less, in emerging renewable energy technologies across the country, he said.

“There’s a lot of activity at the smaller end of town,” he said. “We are getting applications on a weekly basis, if not more frequently, and I would be disappointed if we weren’t able to announce some of those in the next few months.”

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

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