Investec Bank is embarking on developing a $200 million hybrid diesel and solar photovoltaic power station east of Geraldton.
Investec submitted a planning application for the Chapman Solar Power Station this week, a 50MW solar photovoltaic plant with a back-up plant of 45MW to 50MW of diesel for use during peak times in overcast conditions.
The project is currently progressing through planning approvals and an assessment decision is expected later this year. A decision to proceed with construction is not expected until 2012 with project completion earmarked for 2014.
Mark Schneider, Investec’s head of project and infrastructure investment inAustralia, said the increasing economic viability of solar power means it will play a significant role in shapingAustralia’s future electricity supply within a competitive market.
He told WA Business News the proposed carbon tax and Renewable Energy Target policy (which mandates that 20 per cent ofAustralia’s energy should be produced by renewable energy by 2020) act as a strong incentive for private investment in energy generation.
“The renewable energy projects we are involved in are in some sense more driven by the renewable energy target,” he said.
“We certainly do believe that there will be opportunities that will come with a carbon limited or carbon constrained world. People like us have to be working to unlock those opportunities.”
“The introduction of the carbon price and the increasing cost of renewable energy certificates is expected to make it more expensive to produce energy from fossil fuels over the next two to five years.
“With coal being the dominant source of energy in WA, the cost gap for renewable energy sources is expected to close and production costs of solar power will continue to fall.
“As this trend continues, renewable energy will become a more competitive power source for energy retailers seeking cleaner alternatives that supportAustralia’s renewable energy target,” he said.
Investec developed the Collgar wind farm and sold it toUBSInfrastructure Management and the superannuation fund REST Super at the commencement of the construction phase in 2010, a project that he said wasn’t affected by the carbon tax but has benefitted from the RET.
Mr Schneider said the company doesn’t at this stage have plans to follow that strategy and sell the Chapman solar power station at commencement of construction.
“That is a possibility, but what we are focusing on at the moment is, it started out nine or twelve months ago just as an idea, and what we are trying to do is make it a very real project with all the classic development tasks, getting the approvals in place, securing the land, negotiating network connection contracts, hopefully negotiating sale contracts for the power and once all of that is done, then there will be a real project,” he said.
Asked whether hybrid plants are a good way to progress the development of renewable energy power stations inAustralia, Mr Schneider said the issue is ‘horses for courses’.
He said in some parts of the country the intermittency of sources like solar and wind isn’t an issue.
“The energy just goes into a large grid or pool and the fluctuations don’t matter and then there are places where you don’t quite have that same flexibility and in those places we certainly think hybrids are worth investigating,” he said.
It is a strategy which the company uses when developing power projects, and Mr Schneider said the company chose to develop its gas fired power station Cherokee inSouth Australiabecause of the suitability of the technology for the location.
“The Cherokee project is partly being developed in order to ameliorate the fluctuations in the network inSouth Australiaas a consequence of wind,” he said.
Under the proposal, Chapman will be one of the largest utility-scale solar projects built outside the federal government’s A$1.5 billion Solar Flagships program.
