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Telstra Energy – Solar farm built with RES Australia

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Telstra Energy are backing a solar farm which will be built near Emerald in North Queensland at the cost of $100m. The telco have entered into a long term PPA (purchase power agreement) with RES Australia, who will operate the facility when it is built.

Telstra Energy & The Emerald Solar Farm

Telstra Energy
Telstra Energy

The single axis tracking farm will be built on 160 hectares and generate a huge 70MW of power – enough for 35,000 homes. The deal was announced yesterday – Telstra will buy the output (and the resulting renewable energy certificates (which act as a form of currency when validated)) from the farm, which will be completed in 2018. The Rnewable Energy Certificates (LGCs) are currently trading around $80/MWh and will help mitigate the cost of buying the solar power, given that wholesale electricity prices in QLD are around $100/HWh at the moment and, according to RenewEconomy, the cost of solar farms in QLD is around $70/MWh.

James Gerraty heads up strategy for the newly formed Telstra Energy division and told RenewEconomy that (the Emerald Solar Farm PPA) “…is about risk management. It makes a lot of sense for us.”. Meanwhile, Head of Telstra Energy Ben Burge (previously of Powershop Australia) gave the AFR some idea as to how they plan to use the power, saying “It’s a highly distributed, highly responsive source of energy which over the coming years we will look to make better use of in order to improve our resilience but also to address extreme wholesale prices in the market,”. No doubt they will use the backup power to sell when prices surge on the wholesale market and simultaneously protect themselves from larger fluctuations in energy pricing – a very astute risk management strategy. This will no doubt prove to be a sound investment and it will be interesting to see how far Telstra Energy take this new direction – they account for nearly 2TWh (2,000 gigwatt hours) of electricity per year so protecting themselves against rising energy costs whilst harnessing the falling cost of renewables is a no-brainer.

“We certainly will be looking at harnessing our own standby energy capacity in the wholesale market,” Mr Burge said, who said that, for example, he could see opportunities in the energy market for $300/MWh cap power contracts.

Watch this space for more news on Telstra Energy!

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A Guide to SPPA (Solar Power Purchase Agreements) in Queensland

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What is a Solar Power Purchase Agreement (SPPA)?

A Solar Power Purchase Agreement (SPPA) refers to a fixed-time financial agreement where a third-party developer (e.g. a company like Infinite Energy, Horan and Bird, or EnergyAustralia) owns, operates, and maintains a Solar PV (photovoltaic) system at your residence (this can be at a house or a business). The customer agrees to house the solar system and then proceeds to buy the energy directly from the provider for a fixed period of time.

This financial arrangement allows the host customer to receive stable and, as a general rule, lower-cost electricity. There are also myriad benefits for the solar services provider in the form of incentives such as tax credits and also income generated from the sale of the electricity.

SPPA Explained
SPPA Explained – Adapted from Rahus Institute’s “The Customer’s Guide to Solar Power Purchase Agreements” (2008).

Private/Public SPPAs in Queensland

As all states are moving at their own pace with regards to renewables and the progress differs significantly, it’ll be interesting to see how the SPPA (solar power purchase agreement) in Queensland works in other states – and how long it takes before we see locations across Australia offering a similar scheme. These generally result in a kwh decrease of almost 50% (on an average SPPA in March 2017 you’ll pay ~13c / kWh compared to ~25c / kWh directly from retailers).

Mark Baily (QLD Energy Minister)  advised at the Solar 2015 Melbourne conference that the QLD Government remain committed to generating 50% of their energy from renewables by 2030.  To achieve these goals the Queensland Government have been offering both residents and developers generous incentives on Solar Power Purchase Agreements (SPPA).

SPPAs have been effective in other countries (such as America) and we’re confident

If you’re considering – keep in mind that these are only available in some areas of Queensland right now

How does an SPPA work in Queensland?

SPPA Queensland
Solar PPA (SPPA) in Queensland Explained (Image from InfiniteEnergy)

This image from InfiniteEnergy shows the basic steps one would undertake when starting an SPPA with them. This can vary from provider to provider but generally you can expect:

  • No (or minor) upfront capital costs
  • No operational risks (Provider is responsible for maintenance)
  • Substantial decrease in cost of electricity.
  • Potentially increased value of your building.
  • Possibility to ‘lock in’ electricity rates for a set period (like a fixed home loan – depending on supplier)

Send us a message if you’re located in Queensland and have any questions or you want to get started with an SPPA – we’ll be able to put you in touch with some recommended suppliers.

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Tony Concannon, former head of GDF Suez (Hazelwood plant): ‘solar and storage already cheaper than gas’

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Tony Concannon, former Australian boss of Engie (formerly (GDF Suez) and current chief executive of Reach Solar Energy, has made a submission to the Finkel review last month. Concannon’s submissions says the combination of solar energy and storage is already ‘competitive’ with the gas fired CCGTs (Combined Cycle Gas Turbines).

Tony Concannon Solar
Tony Concannon (LinkedIn)

Concannon’s submission to the Finkel review on February 21 notes that “Renewable generation and energy storage costs continue to fall rapidly. Reach received estimates in late December 2016 for solar PV and energy storage (40MWh to 100MWh) which translated into a tariff between $110/MWh to $130/ MWh. This is already competitive with gas-fired CCGT and costs are expected to reduce further”. It’s interesting to note that Concannon, as former boss of Engie (i.e. the company that run Victoria’s ‘Hazelwood’ brown coal generator which is Australia’s most polluting brown coal generator) has completely shifted focus to renewables. It’ll also be interesting to see whether these estimates are able to hold up in practice.

Reach’s Current Solar Projects

As per RenewEconomy , Reach Solar Energy have approval to build 300MW PV (Photovoltaic) solar power station 7km north east of Port Augusta (on a former ostrich farm) in South Australia, and a contract from Origin Energy for two 110mw solar farms as part of the Bungala Solar Project. The ‘Nature of Development’ as per the application states the “Bungala Solar Project – 300 MW Solar Voltaic Electricity Generation Plant” – so it’ll be interesting to see how many MW they end up producing (the $660m Port Augusta solar array will start with 100MW and scale up to the planned 300MW according to The Guardian) and how this affects effective tariffs after they are completed. If costs do continue to reduce as quickly as per the below image indicates it’s only a short matter of time before we do see the energy market become cheaper than gas-fired CCGT. Once regulations around storage of this energy are organised Australia will be in good shape to meet its Paris target by 2030.

PPA Graph Australia
Bundled PPA (power purchase agreement) Prices as per Origin presentation.

 

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