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posted on:
January
15
2017

Solar closing cost gap with wind, conventional power

 

Source: The Financial Review 15/1/17


The latest batch of large-scale solar projects have revealed a "new cost paradigm" for the technology in Australia, although costs remain more than double the lowest-cost projects overseas, experts say.


Construction contracts awarded to Downer EDI for the Clare solar project and to RCR Tomlinson for the Sun Metals Solar project, both in Queensland, demonstrate a further decline in costs per unit of power produced that makes the projects markedly cheaper than the first utility-scale solar projects built here, said Gero Farruggio at Sustainable Energy Research Analytics (SERA).



"The costs are half of what the the capital intensity was of the ones that are on stream and were built over 2015 and 2016," Mr Farruggio said. "It's a huge step forward for the industry and for the future of solar in Australia."


The progress on costs has been more rapid than expected, and large-scale solar projects are now becoming competitive with wind power and getting "very close" to wholesale electricity prices excluding large-scale generation certificates (LGCs), said SERA director Ben Willacy.


"It really won't be long before solar projects can compete in Australia without a subsidy and without necessarily relying on LGC revenue," Mr Willacy said.



Mr Farruggio said that while the cost of solar panels was falling worldwide, increased competition among contractors was also helping improve the economics of local solar projects, with about 15 EPC [engineering, procurement and construction] contractors now fighting it out for work as opposed to just one a few years ago. Work has also slowed in other areas such as mining and energy, helping soften construction costs, while expertise in the area has grown.