Funds short for solar ambition

Weekend Australian
Saturday 5/9/2009 Page: 2

Kevin Rudd's budget promise to produce 1000 MWs of solar energy by building the single-largest solar energy station in the world" cannot be met within the Rudd government's $1.6 billion budget, the renewable energy industry has warned. The "solar flagships" program unveiled as part of the budget's centrepiece $22bn infrastructure package promised to build two to four large-scale solar energy stations, generating 1000 MW of electricity. It said $2 of state or industry funding would match each dollar provided by the commonwealth providing $4.8bn to meet the ambitious generation target.

In a submission to Boston Consulting Group, which the government has charged with setting the guidelines for grants from the fund, the Clean Energy Council says this level of funding will not be enough to build the targeted 1000 MW of capacity". Individual solar energy companies, in confidential submissions to BCG, have also questioned the 1000 MW target, estimating the funding could fall up to $1.7bn short of meeting the government's stated aim.

The renewable energy industry strongly supports the government's program, but wants to make sure it is delivered efficiently and in a way that meets its aims. Mr Rudd explained the program in a visit to a power station the weekend after the May budget, saying the government planned to "invest with industry in the biggest solar generation plant in the world.., in order to support a clean energy future". "A thousand MWs is a lot," the Prime Minister said. "Three times the size of that which exists in California... That's what its necessary to do."

The government's plan was always to build a number of separate power stations with its fund, using both solar thermal and photovoltaic technology, but to run them as an "integrated commercial enterprise" by a single project manager. The Clean Energy Council said that "a single program manager trying to manage the construction and operation of all projects with a mix of technologies is likely to be very inefficient" and recommended they be managed separately.

The industry is also concerned that, after the credit crunch, there is unlikely to be financing available for new technologies that involve some level of risk, saying the government will also need to help in ensuring a supply of credit. "A key role for the government must be to make funding available to facilitate the securing of additional private finance," the CEC said. Cabinet is expected to receive Boston Consulting's recommended guidelines by the end of the month and the successful projects are scheduled to be chosen early next year.

Construction is scheduled to start in 2012 with the power stations operating by 2015. The CEC warned "the proposed timeline.., is very tight," especially for technologies not yet fully developed. The solar flagships program was part of a $4.5bn clean energy initiative, which will also fund carbon capture and storage projects. About half the money in the clean energy fund came from an education investment fund set up under the Howard government.