Philippines-based Acen Energy, which has an 8GW solar and wind development pipeline in Australia, has commended the New South Wales government for shielding the company from investment risk through its renewable energy and storage auction.
Acen Australia earlier this week emerged as the biggest winner in the first of a series of twice-yearly auctions the NSW government is holding to help accelerate the state’s transition away from coal.
As RenewEconomy reported on Monday, the auction produced strike prices below $35 a megawatt hour for solar, and below $50/MWh for wind – believed to be the lowest ever in Australia, and surprising given the recent jump in material and supply costs for the technologies.
The strike prices are for Long Term Service Agreements (LTESAs), which provide a guaranteed minimum price for the project’s generation over 20 years, enabling them in turn to secure finance from banks and equity funders.
Paul Moy, the head of AEMO Services – which is managing the tender process – said on Monday that the strike prices were amongst the lowest secured in any similar tender anywhere in Australia, although it is important to point out it is not the same as a locked in power purchase agreement.
For its part, Acen secured contracts for its already partially built 720MW New England solar farm, and for the 400MW Stubbo solar farm it is planning in the central west of NSW.
In a statement issued on Wednesday, Acen Australia CEO Anton Rohner said the LTESA’s allowed for greater investment certainty for major investors like ACEN.
“The LTESAs will help encourage investment in the renewables and storage capacity necessary to accelerate the transition to clean, reliable and more importantly, affordable power for Australians”, he said.
“The LTESAs offer the rights to access a minimum price for generation projects over a 20-year timeframe, which protects investors like us from the risk of unexpectedly low wholesale electricity prices.”
Acen says that in return for the long-term commercial value provided by LTESAs, it is making significant financial commitments to support community initiatives, regional manufacturing and employment, and Indigenous participation.
“Our focus is on ensuring that we develop projects that offer the right mix of benefits and opportunities for NSW and Australia at large,” said Acen CEO Eric Francia.
“We commend the government for its commitment to deliver better value not just to NSW electricity consumers but to project proponents like ACEN as well”, Francia said.
As RenewEconomy editor Giles Parkinson noted on Monday, the win by Acen for the New England solar farm may have raised some eyebrows, with the first 400MW stage largely built and already generating some power – it was formally opened by federal energy minister Chris Bowen in March.
The company’s first operational project, New England Solar has also laid claim to be the largest solar project in Australia to be financed on a fully merchant basis.
However, the auction was open to projects not rated as “committed” by AEMO before November, 2019. The NSW government and its agencies argue that the prospect of the tender will have caused projects like New England to move forward in advance of the results.
Acen Australia has around 1GW of renewable energy generation capacity worth $US1B under construction around the country and more than 8GW in the development pipeline across Australia.
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