Melbourne’s trams, steelworks to go solar

CEFC finance for the Numurkah Solar Farm is supporting a path-breaking example of how solar energy can deliver cost-effective electricity for Victoria’s energy-intensive services and manufacturers.
Even before work has begun on the 100MW (AC) (128MWp) solar development in Victoria’s Goulburn Valley region, developer Neoen has secured major power supply contracts for both the Laverton steelworks, in Melbourne’s west, and the Melbourne tram network.
CEFC CEO Ian Learmonth said the CEFC commitment of $56 million in debt finance would help accelerate development of the $198 million solar farm.
“High grid electricity prices, high gas prices and unfavourable contracting conditions have put pressure on tight operating margins for manufacturers,” Mr Learmonth said. “The lower cost of solar, combined with these types of commercial power purchase agreements, offer manufacturers welcome control over their energy use.
“Reducing the electricity bills and carbon emissions of energy-intensive industries such as steel manufacturing is increasingly achievable. The Numurkah Solar Farm contract with Laverton steelworks is an outstanding example of how clean energy can be integrated into manufacturing operations to help decarbonise their production processes and reduce costs with locked-in solar contracts.
“For passengers on Melbourne’s iconic tram network, the benefits are also clear. Trams get cars off the road, which is crucial for lowering emissions. Supporting the operation of the tram network with solar energy is a further opportunity to reduce emissions in the transport sector.”
Neoen Australia managing director Franck Woitiez said the successful financial close of Numurkah is one of the most significant milestones for the company’s operations locally.
“Numurkah is an important project for Neoen,” Mr Woitiez said. “First, because it marks the achievement of our first gigawatt of projects in Australia, either under construction or in operation. And second, because the Victorian Government and ZEN Energy are long-term partners for Neoen and this project proves that collectively, we are moving towards our aim of delivering sustainable, reliable and competitive energy to all Australians.”
Neoen expects the Numurkah Solar Farm to generate about 255,000 megawatt hours (MWh) of electricity into the national power grid each year. That’s enough solar to power about 42,000 homes. The project will be constructed over 500 hectares and include about 350,000 solar panels. It is expected to be operating by the middle of 2019.
Neoen has contracted 60 per cent of the farm’s projected output to renewable energy retailer SIMEC ZEN Energy, a majority owned subsidiary of the GFG Alliance which operates the Laverton steelworks. SIMEC ZEN Energy will use the energy to support firm retail supply contracts to commercial and industrial customers in Victoria, including the Laverton steelworks.
The Victorian Government has contracted a further 30 per cent of Numurkah’s large-scale generation certificates to support its goal of covering the electricity load of Melbourne’s tram network with solar power.
Transaction leader Monique Miller said the CEFC expected to see further demand for solar as energy intensive manufacturers seek corporate power purchase agreements to offset their energy costs.
“In steel making, energy can account for between 20 to 40 per cent of input costs. It makes good economic sense to find a renewable energy resource that can reduce those outlays,” Ms Miller said.
“We expect to see more industrial and commercial businesses contract directly with renewable energy producers to meet their electricity needs in the future, as consumers take more control over their energy needs. This will also strengthen the business case for project developers, giving them security over the sale of their power output as their projects come online.”
With this latest investment, the CEFC has committed just over $420 million to renewable energy projects in Victoria, adding approximately 1GW of solar and wind energy to the state’s power supply