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Energy Developments - Submission to medium-scale solar discussion paper

Energy Development LogoBuilding 17

9 November 2010

MediumScale Solar Working Group
Energy Sector Development Division
Department of Primary Industries
GPO Box 4440
Melbourne VIC 3001

By email: mediumscale.solar@dpi.vic.gov.au

Dear Sir / Madam

Submission on the medium scale solar discussion paper

About Energy Developments

Energy Developments is an international provider of renewable energy and low greenhouse gas emission energy.

The Company currently owns and operates a diversified 590 MW international portfolio of power stations in Australia, the United States and the United Kingdom from a range of fuel sources including landfill gas, waste coal mine gas, natural gas and liquefied natural gas.

In the year ended 30 June 2010, in its worldwide operations, the Company produced approximately 3.2 million MWh of clean energy, and abated and avoided greenhouse gases estimated at 10.6 million tonnes of carbon dioxide equivalent, akin to removing 2.5 million cars from the road.

We submit the following responses to the Discussion Paper. Energy Developments would welcome the opportunity to discuss these responses and potential Victorian solar projects in greater detail with the working group on a commercial in confidence basis.

Responses to the Discussion Paper

  1. QU1: It is appropriate to define mediumscale solar as falling between 100kW and 5MW?
    We submit that the guiding principle to setting lower and upper limits to the definition of medium scale solar should be the delivery of sufficient, long term, firm incentives to drive investment in solar at the scale required. We have no objection to a definition of medium scale solar at between 100 kW and 5 MW, provided the incentive developed is appropriate to drive investment across that scale.

  2. QUI3: What are the immediate financial shortterm barriers to investing in the mediumscale solar sector?
    The immediate financial barrier to the deployment of solar is the ability to secure a long term, revenue source at a price sufficient to receive a commercial return on capital invested. Unfortunately, current National Electricity Market and Renewable Energy Certificate prices alone are not sufficient for a commercial return on investment in medium or large scale solar.

    Additional commercial incentives in the form of grants, feed in tariffs or electricity purchase under a long term power purchase agreement can bridge the gap between current market prices and a price sufficient for a commercial return on investment in solar.

  3. QU26: Given the barriers you have already identified as being the most significant in your particular instance, what would be the most appropriate solution and why?
    We have identified a number of appropriate incentive mechanisms above, each of which has merit providing it follows the guiding principle of delivering sufficient, long term, firm incentives to drive investment in solar at the scale required.

    An additional consideration is how to achieve value for the incentives offered. One potential mechanism is a competitive tendering process to deliver the most efficient and least cost solar projects for the available funding.

Please do not hesitate to contact the writer with any queries.

Yours faithfully

Tim Sprey

Manager – Commercial Services, Energy Developments

Building 17, 2404 Logan Road PO Box 4046 Eight Mile Plains QLD 4113