1

Funding commercial solarIan Kay (CFO)

NSW Resources and Energy Investment Conference28 July 2015

2

ARENA supports all solar technologies incl. storage

To date, ARENA has committed almost $700m to solar PV and thermal, from R&D focused rounds to large scale deployment

# $m % # $m % # $m %

R&D 94 99.2 14.2% 34 78.7 11.3% 128 177.8 25.5%

Demonstration 10 81.6 11.7% 4 80.2 11.5% 14 161.9 23.2%

Deployment 5 358.8 51.4% - - 0.0% 5 358.8 51.4%

Total 109 539.6 77.3% 38 158.9 22.7% 147 698.5 100.0%

TotalStage Solar PV Solar Thermal

RenewEconomy

Australia’s Largest Solar Plant

Achieves Full Generation

Australia’s largest solar farm, the AGL Energy-owned 102MW Nyngan Solar Plant in western New South Wales is set to become fully operational in a matter of weeks after achieving the milestone of full generation

The Daily Telegraph

Miner to build $40m solar power

station

Sandfire Resources says the $40 million project at the DeGrussa copper mine 900km northeast of Perth will be the largest integrated off-grid solar and battery storage facility in Australia.The project… is getting up to $15 million in funding from the CEFC and $20.9 million from the ARENA

3

This includes a broad range of commercial solar projects

Large scale grid connected deployment

Off-grid mining load support

Fringe-of-grid commercial

Off-grid community

New commercial technology

Nyngan Solar Plant

(Utility scale)

Broken Hill Solar Plant (Utility scale)

Moree Solar Farm

(Utility scale)

Bluescope Steel(Built in PV)

Degrussa Solar Plant

(Off-grid mining)

Weipa Solar PV Project

(Off-grid mining)

Yulara Tourism PV

(Fringe-of-grid commercial)

Laing O’Rourke(Redeployable solar)

Doomadgee Solar Project

(Off-grid community)

Flinders Island Hybrid Energy

(Off-grid Community)

Coober Pedy Hybrid

(Off-grid Community)

4

Growth expected in behind the meter generation

• Significant growth is expected in behind the meter commercial and industrial solar in the future, coupled with storage capacity growth

• Policy frameworks remain uncertain

• Let’s not forget market risk

-

500

1,000

1,500

2,000

0

1,000

2,000

3,000

4,000

5,000

6,000

Cu

mu

lati

ve

Sto

rag

e C

ap

ac

ity

(M

Wh

)

Cu

mu

lati

ve

Ge

ne

rati

on

C

ap

ac

ity

(G

W)

Cumulative new PV + Storage capacity - Commercial and Industrial

Commercial - Generation Industrial - Generation Storage - Capacity

Source: Bloomberg New Energy Finance

5

Solar is now competitive with diesel in off-grid locations

• In the off-grid market, solar is competing with diesel today

Existing diesel

New build diesel

100

150

200

250

300

350

400

20

15

20

15

20

15

20

16

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20

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20

22

Pri

ce

pe

r M

Wh

Off-Grid Energy Costs (Diesel, Gas and Solar)

Source: Energetics; BNEF; ARENA Analysis

10 year solar

20 year solar

6

Solar is now competitive with diesel in off-grid locations

• In the off-grid market, solar is competing with diesel and gas today

Existing LNG

New build LNG

100

150

200

250

300

350

400

20

15

20

15

20

15

20

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20

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20

22

Pri

ce

pe

r M

Wh

Off-Grid Energy Costs (Diesel, Gas and Solar)

Source: Energetics; BNEF; ARENA Analysis

10 year solar

20 year solar

7

Solar is now competitive with diesel in off-grid locations

• In the off-grid market, solar is competing with diesel and gas today

• The off-take period is a big driver of the commerciality of any project

• We recently reached financial close at the Degrussa mine in WA

10 year solar

20 year solar100

150

200

250

300

350

400

20

15

20

15

20

15

20

16

20

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20

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20

22

Pri

ce

pe

r M

Wh

Off-Grid Energy Costs (Diesel, Gas and Solar)

Source: Energetics; BNEF; ARENA Analysis

LNG

Diesel

8

Large scale grid connected is closing in fastWe are bridging the gap to wind

40

60

80

100

120

140

160

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Utility Scale Solar PV (Global Average) Onshore Wind (Global Average) New Build Coal Australia

Utility scale solar PV (global) (1)

$87 (FRV, Brazil) (3)New build coal (Australia) (2)

Onshore wind (global) (1)

Current LCOE of Utility scale

solar PV in Australia (4)

LC

OE

(U

SD

$/M

Wh)

Source:

(1) Large scale solar PV and onshore wind projections are global averages (inc US, EU, China and India regions) from BNEF, New Energy Outlook Global 2015 (2) Coal projections are from Australian Bureau of Resources and Energy Economics, 2012 Australian Energy Technology Assessment model – they do not include a carbon price. (3) Bloomberg New Energy Finance News, Solar energy makes landfall in Brazil at record-setting low price, 4 November 2014

(4) Assumes average exchange rate USD:AUD (0.8:1)

The gap is closing, but

could be faster

9

Case Study – Degrussa Solar10MW Solar with 6MW

Battery

Integrated with 19MW Diesel

gen-set

Displacing 25% of annual diesel

consumption

Up to 95% of peak load

penetration

Financed by ARENA, CEFC

and Neoen

Direct hedge of diesel costs on a fixed take-or-pay

Or 50,000 tanks of fuel in the

standard 4WD

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ARENA’s new open programme is ready for applicationsWe have recently launched an “Advancing Renewables Programme” which will open for applications from 1 August

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Strategic priorities focused on 5 key areasWithin ARENA’s investment focus areas, our 5 priorities for new investment are:

Integrating renewables and grids

Renewables for industrial processes

Fringe-of-grid and network-constrained

Increase the penetration and use of renewable energy generation and distributed energy eg. providing customer-focused solutions, facilitating greater renewables uptake in low-voltage networks, or addressing knowledge gaps.

Off-grid areasLarge-scale solar

photovoltaics

Application and economic benefits of using renewable energy within industrial processes, eg. displacing fossil fuels, or reduction of technical and commercial risks.

How distributed renewable energy systems can alleviate the need for network augmentation or provide other benefits, particularly at the fringes of grids or where there are network constraints.

Activities that integrate renewable energy with existing electricity supply to power industrial processes and communities in remote off-grid areas.

Through the large-scale solar PV competitive round, pre-commercial deployment activities that show a clear path to commercial competitiveness for large-scale solar PV.

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Large scale solar PV Priority

ARENA has begun consultation for a large scale solar competitive round to continue push the cost curve is the right direction

What? How much?

Program size ca. 200 MW (DC)

Individual project size 10 MW – 50MW (DC)

Budget $80m - $100m

Launch Timing Consultation to late July, launch in Aug/Sep

Financial Close and Construction December 2016 target Financial CloseDecember 2017 construction complete

LCOE Metric $130/MWh as minimum benchmark

Competitive metric ARENA grant per MWh (calculated over 20 year life)

For more information, go to:

arena.gov.au/large-scale-solar-pv

13

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