What's stopping solar's assault on diesel?

What's stopping solar's assault on diesel?

By Lyndon Frearson

Finance – It is generally assumed that the principal financial barrier is one of capital cost, evidence to date, however, suggests that even where the underlying economics of a proposal meet or exceed industry benchmarks for viability, the projects are often unable to proceed due to inability to access finance. i) Capital constraints – Although the IRR of a particular project may be consistent with general industry expectations, competition for capital within a particular proponent e. g. ii) Valuation of risk – Where external financiers are willing to own/finance a project under a PPA (or similar) framework, the return required will be defined by their valuation of the risk of the proposal – this often creates the perverse situation where the entity best placed to understand and value the risk is not the entity having to price the risk within the finance package.

Supply chains – The general presumption with remote area power system is that the supply chain barrier is either purely technical “we need better widgets” or purely economic “the widgets need to be cheaper”. i) Intellectual supply chain – There is insufficient capability or capacity within the key decisions makers to facilitate the implementation of renewables – i. e. iii) Logisitical supply chain – existing logistic supply chains have been optimised and refined to support existing technologies.

Remote and regional areas of Australia have some of the highest marginal costs of generation anywhere in Australia yet are located in areas with some of the highest renewable energy resource potential – in particular solar.

For example, building a multi MW PV system in a remote area may necessitate the transport of many thousands of glass panels along hundreds of kilometres of corrugated dirt roads – the existing transport contractors familiar with the remote area may not be equipped to support the specific requirements associated with remote renewable projects.

Read more here: Business Spectator


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