Large-scale solar's sunny outlook

With a two-step move to get the fundamentals right, Australia could be home to many more significant solar developments.

With the nation’s eyes fixed firmly on the results of the impending federal election, there’s hardly a day that goes by without a reminder of the politics and policies at play. Australia’s clean energy future and the state of manufacturing in Geelong, Victoria are capturing a large share of this media attention.

Putting politics aside, it’s worth exploring how these two subjects are related and the future outlook of the renewable energy sector and large-scale solar projects in particular. To build on the momentum achieved in 2012, the industry must support project development that will:

-- Better educate key stakeholders such as utilities, networks, financiers and local governments;

-- Ensure the long term viability of an unsubsidised solar industry in Australia; and

-- Strengthen local supply chains and create clean energy development jobs within regional and remote areas.

Education needs to intensify

Discussions with utilities, government, financiers and engineering consultants about utility-scale solar projects are often focused on the cost of the solar panel. The reason for this is obvious – solar technology is a key foundational project component and has historically been responsible for well over 50 per cent of the total system cost.

The solar boom in recent years has dramatically shifted this paradigm to the point that panel technology is widely understood and accepted and the panels themselves are only responsible for 25 per cent or less of the total delivered solar energy cost. Instead, the vast majority of a solar electricity price is driven by the cost of financing and non-module components such as mounting structures, cables, power conversion equipment and construction labour.

Key concerns for developers are now focused around construction risks, development approvals, grid integration and financial credibility. This means that policymakers and industry stakeholders need to shift the focus towards the issues that really matter.

First, we need to place the interests of local communities at the forefront, championing the benefits that utility-scale solar projects can deliver to regional communities over time. The fundamentals are strong – utility scale solar sites compare favourably to other power generation sources in that the resource (sunlight) is abundant across much of regional Australia and does not pressure developers into concentrated areas that may conflict with existing agriculture, residential dwellings or environmental concerns.

In operation, a solar generation facility will generate electricity with minimal sound or water use which is unique for a generating facility and makes it attractive from a community perspective. Developers need to be working with local stakeholders to ensure that communities are well informed and respected.

Second, we need to work with the incumbent utility service providers to offer connection frameworks and timelines that reflect the changing generation technology and prioritise the long term cost and stability of network infrastructure. A cooperative approach is required – utilities need to respond to the shifting market framework and developers need to focus on further optimisation of grid integration and support provided by utility-scale solar plants.

Spotlight on building the ‘Australian-made’ supply chain

An often overlooked benefit of utility-scale solar projects is the contribution to the local economy and industry development within Australia.

Working with Australian manufacturers to develop and improve a component supply chain is critical for our industry to achieve the cost reductions necessary for long term viability. First Solar’s experience building Australia’s first utility-scale solar farm, the Greenough River Solar Farm in Western Australia, highlighted the benefits of purchasing non-module system components from within Australia once a supply chain had been established.

Graph for Large-scale solar's sunny outlook

Source: APVA Analysis and First Solar Analysis that includes estimated 2014 costs

For our Greenough River Solar Farm project, part of the solution lay in leveraging the experience of suppliers in Geelong that are also providers to the automotive manufacturing sector. First Solar’s local partners Hofmann Metaltec and Backwell IXL both created new opportunities for, and provided training to, existing workforces in order to manufacture, fabricate and assemble the steel brackets and mounting structures used in our system.

In doing so, a new supply chain was created that provided invaluable training and experience in the clean technology sector and an opportunity for new revenue to complement the historic manufacturing lines.

For future projects, we hope that our local manufacturing partners can apply their existing systems of quality, process improvement and innovation and contribute to our system cost reduction.

As we quickly approach an election, and regardless of the outcome, a few fundamentals must change in order to propel Australia’s clean energy sector and utility-scale solar into the future.

First, stakeholders must shift their focus from the cost of the panel to the issues that really matter like financial credibility, grid integration and risk reduction. Education and first-hand exposure to operating solar assets are the vehicles through which this shift will happen, both for utilities, local institutional banks and the communities in which solar plants operate.

Second, manufacturing solar components in Australia makes sense and offers great potential for system cost reduction and local economic gains. If we can get some of these fundamentals right, the future of utility-scale solar in Australia could be very sunny indeed.

Jack Curtis is Vice President, First Solar (Australia) and a Clean Energy Council Board Member.