Tectonic change as network owner buys solar farm, aims for renewable future



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In a move that could herald the beginning of a tectonic shift in Australia's energy sector, the main owner of the Spark Infrastructure network has announced that it is buying a 100MW solar farm in New South Wales – an unprecedented initiative for generation assets.

The purchase of the 100MW (120MW) / 120MW (DC) Bomen solar farm – located near Wagga Wagga – of the emerging developer Renew Estate – is Spark's first move in what it calls its "Value Build" strategy, as it seeks to go beyond to have only regulated network assets in a decentralized and renewable network.

"The project is our first step toward our goal of building a business platform in the infrastructure of essential services adjacent with a focus on renewable energy," CEO Rick Francis said in a statement.

"It is a testament to our commitment to invest in Australia's renewable energy future through 100% owned renewable contracted generation and increases our commitment to renewables through our existing electricity transmission and distribution business."

It also appears as a great measure in the arches of the traditional structure and ownership of generation assets in Australia, and will be seen as a major challenge to the long standing status quo of the great "gliders" who dominate generation and retail.

Spark warned earlier about this change with Rob Stobbe, director of SA Power Networks, one of its subsidiaries, noting for some years that the future looks bleak for traditional gen-tailer models with the emergence of decentralized generation, storage and decentralization. micro-networks.

Spark, like other network owners, is boosting new business, despite the presence of the so-called ring-fencing guidelines, which supposedly separate the networks from further infringing on the traditional "gen-tailer" business.

The implications for the likes of AGL, Origin, EnergyAustralia and state-owned Snowy Hydro are significant, and they will undoubtedly increase their efforts to keep networks out of what they see as their traditional business.

But their business models are already being squeezed and hampered by solar farms like Bomen, which are passing over big energy companies to sign deals directly with corporate buyers and new and emerging middlemen.

If this continues, as many expect, coupled with a rapid acceleration in solar pickup from home and small business coverage, and more network operators becoming the owners of local and regional renewable energy projects, this suggests a new order in the industry electric. .

Renew Estate director Simon Currie says it's the way it should be. "The model is broken," he told RenewEconomy. "(The current system) is not doing the right thing for consumers. It has to change … we have to come up with different regulatory models. "

Spark says Bomen is strategically located in a strong network location near TransGrid's Wagga North substation where it will connect to the TransGrid transmission network. It will also be located next to the new proposed transmission link that connects South Australia and NSW.

Construction of the $ 188 million project is scheduled to begin in the coming months, with completion scheduled for 12 months from now. Spark also owns a stake in Transgrid. The project should therefore avoid some of the connection problems that have affected other wind and solar power projects.

The Bomen solar plant has closed long-term contracts this week for almost all of its production with Westpac (for 10-year renewable energy and energy certificates) and retailer Flow Power over a range of 5 to 10 years.

Westpac will have just over a quarter of Bomen's output as part of its newly announced commitment to meet all of its electricity needs from renewable sources, while Flow Power will provide almost half of production to customers, including vintage Australian winemaker and iconic snacks manufacturer Snack Brands.

These contracts will provide annual average revenue of $ 13.5 million in the first five years for Spark.

Spark says that few projects "tick all boxes" like Bomen, describing it as a "high-quality, ready for digging" project, located on industrial land near cargo centers and with a 30-year useful life . It will have a capacity factor of 28% and will use Jinko's bifacial solar panels and Nextracker's single axis tracking.

"Bomen has highly contracted cash flows and attractive risk-adjusted returns that will exceed current regulatory returns," Francis said.

"Although modest, it is a logical and prudent first step in diversifying our exposure to regulated assets and growing accesses in adjacent essential services infrastructure, in line with our investment strategy."

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