Large-scale solar station goes into receivership - Sun power needs tax breaks

Australian
Wednesday 9/9/2009 Page: 7

SOLAR power stations will need special tax breaks as well as massive government subsidies, the renewable energy industry has warned, after Australia's first planned large-scale solar energy station went into receivership this week. The Rudd government's budget promise to produce 1000 MWs of solar energy by building the single largest solar energy station in the world" with a $1.6 billion grant was already in doubt before Victorian company Solar Systems went into voluntary administration.

Solar Systems had been promised $129 million in funding from the state government and the Howard government towards its $420m Mildura project, but it was forced to go into receivership when a major investor pulled out and it was unable to find replacement funding. According to the renewable energy industry organisation, the Clean Energy Council, the failure of Australia's leading solar energy company highlights the need for tax breaks and other incentives to attract private investors, on top of big government subsidies.

"Developing emerging clean energy technologies is an inherently risky business... It's been a tough year for all businesses to find investors, and even harder for companies like these that are years away from providing a return on the investment," said Clean Energy Council chief executive Matthew Warren. "What this clearly reveals is that we need to change the rules to make it easier and more attractive for investors to back these sorts of companies."

The CEC has engaged Ernst & Young to develop proposals for tax concessions for clean technology companies and accelerated research and development write-off provisions. As revealed in The Australian, the CEC and would-be recipients of money from the budget's $1.6bn solar flagships program have written to Boston Consulting Group, which is developing the program's criteria, saying the government won't be able to build power stations generating 1000 MW with the money it has allocated and the estimated contributions from industry and the states.

Some calculated the funding could fall up to $1.7bn short of the government's stated aims. And the industry warned that with investors more risk adverse after the credit crisis, the government would need extra measures to attract private investors. Former industry minister Ian MacFarlane awarded Solar Systems a total of $79.5m in federal grants, of which the company had so far received just $2.6m, part of which was used to build solar energy stations at three indigenous communities in the Northern Territory. He said that "based on the analysis," it should have worked.

A spokesman for Resources Minister Martin Ferguson said Solar Systems' appointment of a voluntary administrator is a commercial matter for the company in question, not a reflection upon the Rudd government's support for renewable energy".