Australia to Expand Solar Capacity by 35 GW

2nd Jul 18

Cameron Quin

Written by Cameron Quin

The year 2017 was record-breaking for the solar power industry in Australia, and the cumulative installed capacity in the country surpassed 7,000 MW (7 GW). Although this represents several millions of solar panels, the number is dwarfed by the capacity of large-scale solar projects under planning and development – the total is 35 GW, divided among 259 solar farms. In addition, this figure only considers projects above 100 kW, which means the small-scale rooftop market growth is additional to the 35 GW.

To visualise the scale of 35 GW of solar power, let’s assume an average photovoltaic panel capacity of 300 watts. Since 35 GW is equivalent to 35 billion watts, the number of photovoltaic modules exceeds 116 million. There are many reasons for the success of solar power in Australia, and this article will provide a brief summary.

Consider that large-scale renewable energy investment is global, not only limited to Australia. For every dollar invested in fossil fuel generation in 2017, three dollars were invested in renewable generation. Consider that billionaire investor Warren Buffet, who is almost 90 years old and has been characterised by focusing on “traditional” investments, is among the top solar power developers in the US. His most recent solar projects in Nevada add up over 1 GW of capacity and have record low electricity prices for the US market – slightly over US$20 per MWh.

Solar Modules and Solar Electricity Reach Record Low Prices

A key reason why large solar farms are being developed so fast is the plunging cost of photovoltaic modules. According to Bloomberg New Energy Finance, this trend will continue in the near future: they predict the cost of modules will decrease from 0.37 to 0.24 US$ per watt only in 2018. For Australia, this could represent a reduction of up to 10% in solar power development costs, drawing even more investment to the industry. Note that the figure provided by Bloomberg is only for solar modules, not for completed solar power projects.

The reduced development costs of solar farms are being reflected in surprisingly low electricity prices from from some of the newer projects, not only in Australia but globally. For new utility-scale solar projects, the electricity cost has already dropped below AU$50 per MWh, approaching AU$40 per MWh in some cases.

Assuming you want to add batteries for ancillary services and energy arbitrage, the additional cost ranges from AU$15 to AU$35 per MWh. With these record low prices, solar power with batteries can assume many roles of natural gas peaker plants for a lower cost. Consider the 100-MW Tesla battery in South Australia, which had already saved over AU$35 million in its first four months of operation.

Even major utilities like AGL are considering the transition from coal to renewable plus storage. They plan to replace the Liddell coal-fired power station with a mix of renewable generation, batteries and natural gas peaking plants. Although natural gas is also a fossil fuel, it only produces around half the emissions of coal, while the renewable portion of the project has zero emissions.

For comparison, the generation cost with coal is around AU$60 per MWh, and this is only for generation. Once you add financing and maintenance cost, coal electricity becomes even more expensive. In other words, renewable energy  has become the best business decision, in addition to being better for the planet.

Solar Power is Simply a Good Investment

Australia still gets most of its electricity from coal, but many of these power plants are already approaching the end of their service life. They electricity is cheap for the simple reason that the plants are old – they paid back their development cost decades ago.

As previously mentioned, the scenario is not favorable for new coal generation. The business case is more attractive for renewable sources, even if you consider energy storage for power output stability. Energy developers are also afraid of being painted as “dirty power companies” by the media if they invest in new coal-fired power plants. Renewable generation is an attractive investment and also good for their corporate image, so the decision is very straightforward.

Although there are are many large solar farms under development in Australia, one project is under the spotlight due to its sheer magnitude. The Indian-British billionaire Sanjeev Gupta plans to develop 1 GW of solar power capacity with energy storage for the Whyalla steelworks in South Australia, owned by his holding company GFG Alliance. He will also sell power two five major industrial consumers in SA, using a 220-MW solar power systems and a 120 MW / 140 MWh battery, similar to the Hornsdale Power Reserve Developed by Tesla. Eventually, GFG Alliance plan to develop over 10 GW of solar capacity throughout Australia.

Although the GFG Alliance solar project has received plenty of media attention due to its sheer scale, there are many other industrial energy consumers switching to renewable energy. The following are just some examples:

  • Sun Metals has a 124-MW solar power system in Queensland.
  • Carlton & United Breweries (CUB), Mars Australia and the University of Queensland have plans to become 100% solar powered.
  • Australia Post have deployed solar power system for dozens of their buildings, producing over 5 million kWh per year. By early 2018, they had already saved over AU$40 million in power bills.

Distributed Renewables and Storage Improve Reliability

A common but erroneous criticism towards renewables is that they destabilise power grids, but evidence points to the contrary: the power network is to blame for most blackouts in Australia, and coal power plants are notorious for their major faults during the summer. Renewable energy systems allow generation to be spread across a larger geographical area instead of a few large power stations – electricity travels less to reach the point of use.

If energy storage is added to the mix, generators and consumers become even less dependent from the power grid. Storage capacity can be used strategically to unburden power lines during high-demand hours.

 

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