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Flagships stumble: Solar funding stalls on the grid

The future of the federal government's $1.5 billion Solar Flagships program is in limbo, after both winning consortia failed to meet Thursday’s deadline for financial close.

As predicted here two weeks ago, neither the $1.2 billion Solar Dawn project, which proposes to build a 250MW solar thermal facility in Queensland, and the $923 million Moree Solar Project, which plans a 150MW solar PV facility in the north of NSW, have been able to strike power purchase agreements, the necessary pre-requisite to get finance from the banks.

Both consortia will now have meetings with officials from the Department of Energy and Resources – at least one as early as today – to discuss the next move. Both will push for extensions, arguing that the state of the market in Australia has made it impossible to strike PPAs.

Losing bidders, including two solar PV projects that already had energy utilities AGL and TruEnergy on board, an effective guarantee of a PPA, are standing ready. The two winners are expected to argue that they have made considerable progress in other areas of their projects, including local development approval, and deserve extra time. They will likely point to the precedents in other grants programs (see below) and the unique nature of the scale and type of these projects.

Still, given the political rhetoric around clean energy and government support programs, the issue threatens to become a potentially difficult one for the government over its choice of consortia and technology, and the sheer scale of the project – most other countries have begun their solar rollouts with much more modest projects.

Resources and Energy Minister Martin Ferguson was asked about the program's status byClimate Spectator on Thursday. He said: “Obviously that’s being handled by my department in association with the Flagships program advisers. If I remember correctly, the process of consultation with the two Flagships selected concludes today. The Department’s responsibility is to assess the outcomes of those negotiations and discussions, and in due course they’ll bring forward a report to me, and on the basis of that report I’ll assess where the program is up to.”

To know more, read Climate Spectator's full story.

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