Pacific Hydro in bid to save solar project

www.smh.com.au
27 Feb 2012

FRUSTRATED by the market dominance of the three major energy companies, Australian renewable generator Pacific Hydro is seeking its own retail energy licence as it tries to save a large-scale solar project. The proposed 150- MW photovoltaic Moree Solar Farm-initially backed by Pacific Hydro, BP Solar and Spanish firm Fotowatio Renewable Ventures-suffered a major setback in December when it lost the rights to a $306 million grant from the federal government's troubled Solar Flagships Program.

The northern New South Wales farm had not met its funding agreement obligations, prompting Energy Minister Martin Ferguson to re-open the grant to four shortlisted photovoltaic farm candidates. All four-AGL Energy, TRUEnergy, Infigen Energy Suntech Power and the Moree consortium-are understood to have resubmitted their bids before the deadline on Friday.

Pacific Hydro Australia general manager Lane Crockett said a key reason the Moree bid was unable to achieve financial close on time was its failure to reach a power price agreement with a major retailer. Two of the three big retailers were rivals for the grant. It is understood the third, Origin Energy, rejected a deal with the Moree consortium. Mr Crockett said Pacific Hydro-owned by the $31 billion super giant Industry Funds Management-faced a retail market dominated by a few large companies that were both rivals for government grants and potential customers for projects such as the Moree plant.

''It is not unreasonable to expect that this conflict will continue to occur in the future,.. [it] requires independent power producers like ourselves to continually evolve and adapt,'' he said. He said the Moree consortium would enter a power price agreement with Pacific Hydro, which expects to have a retail energy licence within three months. ''Pacific Hydro has been working on our retail market strategy for some time and we are very confident that it will be a success, with projects like the Moree Solar Farm part of a future diversified renewable energy portfolio that will include wind and possibly into the future geothermal,'' he said.

The revised Moree bid no longer includes BP Solar, with the remaining two partners taking up its stake. They have signed an engineering, construction and procurement agreement with Spanish infrastructure company ACCIONA Energy. Announced in May 2009, the Solar Flagships Program has been criticised by the Greens and Coalition as it became clear two projects awarded $750 million were struggling to prove their viability. The second Solar Flagships Program winner, the $1.2 billion Solar Dawn Project in Queensland using solar thermal technology, has been given a six-month extension until June 30 to secure financing.