Australia’s energy future came into the spotlight once again, following the release of the Finkel Report. The report highlighted the role of renewable energy, such as solar, to reduce power prices, and increase the reliability and security of energy in the country. Here, we look at the opportunities and challenges for investment in large-scale solar provided by the report.

The Independent Review into the Future Security of the National Energy Market, also referred to as the Finkel Report, was handed down to the COAG Energy Council by Australia’s Chief Scientist Alan Finkel on 9 June 2017. It sets out 50 policy recommendations based on four key outcomes: increased security, future reliability, reward customers, and lower emissions.

While the report opens up a number of opportunities for the growth of renewable energy to help achieve these outcomes, there are also issues that need to be considered.

Opportunities for solar developers

One of the key recommendations put forward by the Finkel Report is the adoption of a Clean Energy Target (CET).

The report states, “A Clean Energy Target will encourage new low emissions generation into the market in a technology neutral fashion. Under this mechanism, new low emissions generators such as wind, gas, or the combination of coal with carbon capture and storage, will receive incentives to enter the market.”

The CET also provides renewable energy developers new opportunities by creating an alternative to the Renewable Energy Target (RET), which is scheduled to top out large-scale generation at 33,000GWh in 2020.

While the report recommends that the RET is not extended, the CET would take over its role in encouraging new low emissions generation.

The CET would provide eligible generators with certificates for the electricity they produce in proportion to how far their emissions intensity is below the threshold.

These would allow renewable energy generators to negotiate and enter into longer-term PPAs as electricity retailers would be obliged to purchase these certificates to demonstrate that a pre-determined share of their electricity came from low emissions generators.

This in turn will lead to greater investment, including the construction of new large-scale solar, as parties are provided greater security that their investment will be recovered.

Increasing costs for large-scale solar

While the Finkel Report opens up new opportunities for the investment into new large-scale solar projects, it also increases the costs.

The report recommends the adoption of a new Generator Reliability Obligation, consisting of new obligations for variable renewable energy generators such as solar connecting to the NEM, to ensure reliability is maintained.

One of the options to achieve this reliability is the inclusion of battery storage with new projects.

Jeff Lawson, National Construction Equipment Sales Manager at Vermeer, said that the additional need for infrastructure such as batteries will increase the price of construction.

“In the long-term, batteries will increase a solar projects’ energy output and revenue, but the initial increase in construction costs needs to be addressed,” Mr Lawson said.

“One way to offset this extra cost is to use equipment that will make construction more efficient, reduce the risk of project delays or added installation costs, while producing high-quality work.

“For example, Vermeer’s PD10 pile driver has GPS guidance and automation features, ensuring piles can be installed cheaply compared with other foundations such as anchor systems, ballasts or hybrid racking systems.

“The PD10 uses an inclinometer with auto-plumb and a laser-controlled post-depth-control feature to make sure each pile is installed exactly in place, resulting in improved efficiency and productivity while consistently maintaining accuracy.

“Australia is already experiencing a solar boom, and under the CET this can continue to grow beyond 2020 – even with the additional costs of batteries – if contractors can offer developers solutions that drive down costs of construction, ensuring new developments remain an attractive
investment option.”

This partner content is brought to you by Vermeer. For more information, visit www.vermeer.com.au

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