The fast shrinking Solar Flagships program

The $1.5 billion Solar Flagships program is going to end up the ‘sub-$1 billion Solar Flagships program' after the Australian Renewable Energy Agency today backed away from supporting two of the shortlisted candidates – Solar Dawn and EnergyAustralia (formerly TRUenergy). In fact, the amount of government funding from the program, while heavily obscured by being shoved into ARENA, likely won't reach $500 million.

The $1 billion Solar Dawn project in Queensland – Australia's first standalone solar thermal project and largest planned solar development – is now dead after a long year during which it has won state and federal government support, failed to reach financial close, lost state government support and finally saw federal support in a state of flux before disappearing altogether.

“After exploring several options to address current market conditions, ARENA is no longer pursuing development of the 250 MW Solar Dawn solar thermal project in Queensland,” ARENA said in a statement this morning announcing the release of its funding strategy for the next two years.

Solar Dawn was always vulnerable after the Newman government indicated it had no interest in supporting the development. It left the Areva-backed development as the only shortlisted Solar Flagships project without state government backing. And now, without federal funding, the developers have pulled the pin.

“The Solar Dawn Consortium has today confirmed that although it remains committed to Australia's large-scale concentrated solar power industry, it will no longer be pursuing development of its proposed 250MW solar thermal power facility in South-West Queensland,” the group said in a statement.

“The announcement follows extensive discussions with the Australian Renewable Energy Agency (ARENA) on options to move the project forward in response to dynamic market conditions.”

EnergyAustralia, meanwhile, has also been left out as it was considered too similar to the AGL-First Solar project – the only project so far to have confirmed funding out of Solar Flagships. Energy Australia, like AGL, was working with First Solar on the development and while there was confidence its similarities to AGL's project would work in its favour, the opposite has proven true. The Infigen-Suntech proposal and the Moree Solar Farm remain under consideration, however.

The upshot is ARENA now has an extra half a billion dollars at its disposable. The $3.2 billion body originally had been set up with $1.5 billion already committed to previously announced programs and $1.7 billion to do as it saw fit. That make-up is now $1 billion and $2.2 billion, respectively.

As for ARENA's funding strategy, it doesn't differ much from what was written on Climate Spectator a month ago. The body won't favour one technology over another, and will look to fund some projects in conjunction with the Clean Energy Finance Corporation. As we have written before, this makes sense in terms of getting a technology from the R & D phase through to deployment, but may encounter some challenges if the Coalition wins office, given its pledge to get rid of the CEFC.

The strategy is quite broad and will focus on three ‘initiatives': ‘strategic', ‘supporting' and ‘complementary'.

The bulk of the money will be directed toward strategic initiatives, which will likely be quite large in scope. This will include looking at ways to use renewables to supplant diesel generation in regional and remote communities as well as large-scale renewables, specifically the Solar Flagships programs previously mentioned and potentially more projects of a similar nature.

The initiatives:

STRATEGIC

-- Regional Australia's Renewables – Demonstration of renewable energy in remote and regional locations to increase deployment of commercially prospective remote renewable energy generation systems. Will be done in partnership with mining companies, the CEFC, commercial investors and local communities and governments.

-- Deploying utility scale renewable energy – Solar Flagships, and potentially more large-scale solar projects in the future.

SUPPORTING

-- Removing roadblocks for regional and remote renewable energy – Help to overcome possible issues like system integration, intermittency, storage, technology demonstration and testing facilities.

-- Building Australia's next generation solar – In this regard, ARENA will focus on existing Australian Solar Institute (ASI) projects and will consider ASI initiatives to extend to build our solar capabilities.

COMPLEMENTARY

-- Supporting high value renewable energy knowledge – The development of a knowledge sharing program to support discussion and development of renewable energy solutions.

-- Continuing programs – ARENA will take charge of the $126.6 million Emerging Renewables program, the Renewable Energy Venture Capital Fund program (which is funding a $100 million investment in the $200 million Southern Cross Renewable Energy Fund managed by Southern Cross Venture Partners) and the Advanced Biofuels Investment Readiness program.