Interesting article here on the rationale for CEFC funding the bulk of the Lincoln Gap wind farm in SA, which will be mostly merchant, with storage. Seems to me that this is the model that Infigen want to go forward with. Great to see the CEFC backing this approach too.
Lincoln Gap..... is holding a significant part of its output for the merchant market, selling it at spot wholesale prices.
Akbas says that the bundled sales market – which has seen developers of big wind farms such as Stockyard Hill, Silverton, and Coopers Gap sign contracts for $60/MWh or less – is not attractive.
Nexif did sign up for some contracts with ERM (for LGCs) and Snowy Hydro (electricity) to lock in some revenue, but the company feels there is potential to do much better on the open market. Battery storage should help it.
“Our approach, after looking at the market last year – was that the bundled sales market was not vey attractive, even including the financing that goes with it..”
“There is not a lot of developers offering contracts that are needed by the market.” And this situation may worsen as the RET approaches completion and the retailers are no longer forced to seek contracts.
And getting Australia’s big banks to embrace this new concept is still not easy.
Nexif turned to the Clean Energy Finance Corporation to provide the bulk of the $190 debt required, although Investec (which once owned Hornsdale), put in some $40 million.
Surprisingly, it was the first wind farm financed by the CEFC in South Australia, but the added attraction for the CEFC was that the wind farm was not actually contracting to the biggest retailers in the state, and so was adding to competition.
“That’s where we feel it is important for us to play a role in these financings where there is some merchant exposure and the mainstream banks still don’t want to play,” CEO Ian Learmonth says.
“It’s one that is at the forefront of this new wave of projects. ”
(You can hear Learmonth discuss this project in our latest Energy Insiders podcast).
And what does Nexif think of the proposed National Energy Guarantee? “The NEG has a long way to go in my mind. There is not a lot of detail worked out, and it will be all about the detail,” Akbas says.
Learmonth also has some strong views on the subject, and says he has a particular interest in the modeling assumptions that the Energy Security Board will be using to justify the plan. (Hear more here).
IFN Price at posting:
68.0¢ Sentiment: Buy Disclosure: Held
