Fotowatio Plans to Build Australia’s Largest Solar-Power Project

Fotowatio Renewable Ventures, the solar-power plant developer backed by U.S. energy investor Denham Capital Management LP, won the right to build a 20-megawatt project near Australia’s capital.

Fotowatio will participate in the Australian Capital Territory’s feed-in tariff program, which rewards generators of solar power by paying above-market prices for the electricity, Simon Corbell, ACT minister for the environment and sustainable development, said today in a statement.

The Royalla solar farm, to be built about 25 kilometers (16 miles) south of Canberra, will become the largest in Australia by 2014, according to the statement. The venture will help in an effort to lower carbon emissions and shift away from fossil fuels, the ACT government said.

Fotowatio, which is based in the Netherlands, sought a new project in Australia after losing a competition earlier this year for federal government funds to build a large-scale solar plant in New South Wales state. Denham Capital in March reached an agreement with Fotowatio to invest $190 million in solar projects in markets including Australia.

Australia: Wind Energy and Solar Power Needs Support

The Grattan Institute has studied the potential of wind power, solar energy (photovoltaic and concentrating solar thermal power), geothermal energy, bioenergy, nuclear and CCS to generate near-zero emissions power.

No easy choices: which way to Australia’s energy future? explores the acute intellectual and policy challenge Australia faces in energy policy.

Markets must be the primary mechanism by which Australia transforms its electricity supply. Yet it will not be able to meet its emission targets and at the same time produce future electricity at a price acceptable to the public unless governments act to reduce the costs of low-emission technologies.

It is increasingly clear that the carbon pricing scheme alone is not enough to make low-emission technologies competitive and effect the change that Australia needs.

The report analyses the potential of seven clean-energy technologies: wind farm, solar photovoltaic panels, large-scale concentrated solar power, geothermal energy, carbon capture and storage, nuclear and bioenergy.

The report argues that wind turbines and solar photovoltaic may be commercially viable if carbon pollution prices rise to foreseeable levels over the next 20 years. But it states that those technologies can never provide more than 50 per cent of Australia's electricity needs without massive advances in storage technologies.

Geothermal energy, which has huge potential in Australia, is highly uncertain when it comes to reliability and costs because it's still in the exploration stage. The report acknowledges that nuclear and CCS are unlikely to be demonstrated in Australia anytime soon "unless government takes on most of the material risk of the project".

Mr Wood says the carbon tax and subsequent emission trading scheme (ETS) must be the primary mechanism by which Australia reduces its emissions but he argues the market on its own won't make low-emissions technologies competitive.

The Gillard government, at the behest of the Greens, is establishing a $10 billion Clean Energy Finance Corporation which will leverage private sector financing for renewable energy and clean technology projects. But the Grattan Institute report says more needs to be done aside from support for research and development.

Labor's carbon price scheme begins on July 1, at a price of $23 per tonne of carbon dioxide emitted. The government has also promised a $10 billion clean energy finance corporation, due to start in 2013-14, and Australia has a target of 20 per cent of energy coming from renewable sources by 2020.

But the Grattan Institute found government was responsible for several barriers preventing the development of clean-energy technology. They could be removed by changing the rules governing the electricity network, improving mapping of solar and geological resources and giving potential investors greater certainty by releasing annual emissions limits for well into the future.

Further, it calls on governments to expand exploration and mapping of solar energy and geographical resources to aid in the development of concentrated solar thermal power and geothermal energy and the location of suitable sites for carbon storage.

Finally, the think tank's report stresses the need for a complete overhaul of Australia's distribution network. "Existing transmission networks and network regulation are designed around the assumption that almost all electricity generators will be large plants close to existing centres of generation," it states.

Current cost structures mean wind farm, solar energy and geothermal energy plants in remote locations are unviable simply because they can't connect to the grid. Mr Wood suggests existing generators and retailers should foot the bill for new hubs to be built with low-emissions suppliers only paying a share of the cost once they're up and running. New regulatory frameworks are required that ensure long-run cost-efficient trade-offs, the report concludes.

www.grattan.edu.au/publications/124_energy_no_easy_choices.pdf

Renewable Energy Firms Plan Profits Sans Subsidy

Renewable energy companies are approaching the point where they can generate electricity at a price competitive with fossil-fuels without subsidies, the biggest wind and solar manufacturers said.

Suntech Power Holdings Co. Chief Executive Officer Zhengrong Shi said solar will reach parity with fossil fuels on electric grids by 2015. Vestas Wind systems A/S expects its turbines to compete without incentives "in the coming years," said Peter Brun, head of governmental relations.

"Wind in some cases already is, or can in coming years, be fully cost-competitive with fossil fuels," Brun said today by e-mail from the World Economic Forum in Davos, Switzerland. "Fossil-fuel prices will continue to rise, and that increases the competitiveness of new technologies. We are preparing the whole industry for getting off the subsidy-need."

Caught between oversupply and tumbling prices, the companies are reminding governments that their products are taking the biggest share of new power generation and increasingly rivaling oil and gas. That’s pushing green growth up the agenda as Germany and Japan close nuclear reactors and President Barack Obama defends U.S. support for renewables.

New electricity generation from the wind, sun, waves and biomass drew $187 billion in 2010 compared with $157 billion for added capacity from natural gas, oil and coal, according to Bloomberg New Energy Finance, the first time investment in renewables has exceeded that of fossil fuels.

"Renewables are the energy of the future, and there’s been a larger investment in renewable energy than conventional energy," said Steve Sawyer, secretary-general of the Global Wind Energy Council in Brussels, who first attended Davos in the early 1990s as a lobbyist for Greenpeace when clean energy companies were tiny.

Subsidies to renewables totaled $66 billion worldwide in 2010, according to the most recent figures from the International Energy Agency. Incentives must be retained to meet existing targets of diversifying the energy supply, the Paris- based group said.

Power from solar panels costs more than triple natural gas, according to levelized cost of energy data from New Energy Finance. Onshore wind is close to parity with coal, and about a quarter more pricey than gas.

Solar power will be "very competitive" within a decade, and in some places, it’s already near "grid parity," meaning it can compete without subsidies, Trina Solar Ltd. Chief Executive Officer Jifan Gao said in an interview in Davos. He spoke through an interpreter.

"We see costs coming down and manufacturing efficiency being improved all the time," said Gao, whose company is the fifth biggest maker of silicon-based solar panel. "In places like Australia, this year they will reach grid parity; next year Italy will, and in 2014 regions like California."

Gao’s comments support those of Suntech’s Shi, who told Bloomberg television that with government support, the industry has made "tremendous progress," and solar prices have been cut in half in a year.

"We believe that by 2015, there will be around 50 percent of countries where it reaches grid parity," Shi said.

Brun at Vestas said that the cost of wind power is "site- specific" and that the technology may reach grid parity in the breeziest areas by 2020. He declined to say where. Governments and the industry should consider re-allocating subsidies to turbines in areas with lower wind speeds, and offshore, where winds are stronger and costs are higher, he said.

With incentives for wind and solar power under threat in the U.S. and the European Union as governments tighten budgets, Davos serves as a forum for industry executives to remind governments of the need to promote renewables as part of the effort to stem climate change, said Tulsi Tanti, chairman of Suzlon Energy Ltd., India’s biggest wind-turbine maker.

"Davos is the one place the most important decision makers of the world — be it government or business — converge," Tanti said in e-mailed answers to questions. "The most crucial issue this year will be to argue for policy certainty despite the economic environment."

In the U.S. the wind industry is threatened by the loss of a tax credit which expires at the end of this year. Vestas has said it may fire 1,600 U.S. workers if the credit isn’t renewed, and Obama in his State of the Union Speech on Jan. 24 urged Congress to "pass clean-energy tax credits."

"I will not walk away from the promise of clean energy," Obama said.

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