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CEFC commits over $780m to solar and eyes sector as key player in Australian energy transformation

3 May 2017 

The CEFC sees a bright future for Australia's rapidly developing solar industry, with its own investment commitments to the large and small-scale solar sector surpassing $780 million and unlocking projects and programs valued at over $2 billion. 

CEFC Chief Origination and Transaction Officer Ludovic Theau said large-scale solar capacity has grown exponentially from 2012, when only 18MW of installed capacity was recorded, to an estimated 1GW by the end of 2018. Rooftop solar, which has always led the solar sector in Australia, has now reached 5.6GW of capacity. 

Speaking at the 2017 Solar Energy Exhibition and Conference in Melbourne on May 3, Mr Theau said solar was the biggest technology investment in the CEFC's portfolio. 

"Our major focus has been on commitments to large-scale projects and this has unlocked $1.5 billion of large-scale project development, with more than 600MW generating capacity." 

"Our Large-Scale-Solar Program, which is about to reach financial close on its 10th project, has played a significant role in the transformation of the solar sector. Through it, we've made the largest single debt financing commitment to the sector to date, with more than $370 million of finance accelerating a total generating capacity of 400MW and estimated total project value of more than $900 million. 

"Our program has spurred projects that are the first of their kind, such as the first solar farm in Victoria. It has helped drive down the costs of solar by working with a range of investors and developers to build sector knowledge and local experience. 

"These investments complement our earlier solar finance for projects which include the now operational Moree Solar Farm in NSW, Barcaldine Solar Farm in Qld, the innovative solar and battery storage project at DeGrussa copper and gold mine in WA and the expansion of Uterne Power Station in the NT. 

"Earlier this year we made our first equity investment in a solar project - $20 million for Ross River Solar Farm in Queensland, which has reached financial close and is just about to start construction." 

"In recent years we've witnessed solar's rapid improvement in cost competitiveness with other energy generating technologies. The benchmark Levelised Cost of Energy (LCOE) for solar in Australia is now around AUD$95/MWh, which, according to Bloomberg New Energy Finance, is well below the $107/MWh benchmark for gas and $182/MWh for new coal. 

"It is now possible to develop a commercially viable large-scale solar project without grant funding." 

Mr Theau said confidence among investors was also growing. "When we first began investing, a lack of a Power Purchase Agreement (PPA) was a major impediment for private sector financiers. Now we're seeing the private sector working alongside the CEFC in financing partially contracted projects," he said. 

"Moving forward, we're looking at solar projects that incorporate components that support electricity grid stability. Alongside better demand management systems, increased storage capacity and strengthened transmission, solar should remain a key player in Australia's energy mix." 

Mr Theau said the CEFC was looking at hybrid renewable energy and storage projects that combine solar with other technologies to promote more effective clean energy outcomes. 

"We're seeing a number of existing generators who are considering installing solar as a value add to their businesses and projects, including pumped hydro projects and wind farms" Mr Theau said.