A clean energy player with a vertical business model hopes to have 1.3GW of solar and wind (with storage) connected by 2025.

Regardless of the ups and downs experienced by clean energy businesses in Australia the sector is destined to attract new entrants because it is assured to grow at a rapid pace, such is the scale of the task ahead as coal is retired. The latest player, ACE Power, comes to the market with a portfolio of 10 projects and the backing of a global financier. The pipeline includes nine solar plants and one wind farm in Queensland, NSW, Victoria and South Australia, worth a combined 1.3GW.

The portfolio was purchased holus-bolus from renewable energy developer CleanGen, a company started by ACE Power founder and director of development Koovashni Reddy in 2012. ACE Power, Reddy says, follows a different model to CleanGen. “It will develop, build, own, operate and maintain projects,” she says. A funding relationship with Pelion Green Future, owned by the Avanti Group, and the presence of former Wirsol Energy managing director Andy Scullion as director of operations will ease the way for ACE, Reddy hopes.

“We’ll have a smoother process because we are well-connected along the chain of suppliers and funders,” Reddy tells EcoGeneration. “There are only certain stages [of developing a renewable energy project] you can get through without securing investors.”

Future earnings

Koovashni Reddy sees sense in a model where ACE Power will develop, build, own, operate and maintain 1.3GW of wind and solar assets, with storage.

A clear idea of where the money to build a project will come from is one thing but investors will be eager that energy prices in the future make it a juicy deal. How tough is it for them to commit when so much is unknown? “Renewables have a long way to grow,” Reddy says. “We need some clear policy guidelines, like set targets, to build business confidence and accelerate the transition to renewable energy.

“As demand for renewable energy grows, the price will increase.”

That comment requires further qualification, Reddy points out. Coal is old and shutting down, she says, and 17GW of polluting generation needs to be retired over the next decade or so. Offtake arrangements for wind or solar projects can be settled at “very low” prices, “and those savings really aren’t passed on to customers at the moment, unless it’s a corporate PPA [power purchase agreement] and they get the direct benefit,” she says.

“We want to see commercial outcomes at the PPA level. Energy companies are buying them at really low prices, but not really passing the savings [on].”

The great replacement

As renewables replace coal and gas the intention will be to keep prices down, Reddy says, “and we can do that with batteries.”

ACE Power is hoping to secure PPAs for its string of projects and also participate in the merchant market, a combination that will depend on the appetite for PPAs. “The levels that are out there now aren’t that great,” she says. “They are quite low.”

ACE’s projects are due to be completed between 2024 and 2025, and the company will decide the best mix between PPA and merchant price exposure closer to then. “It depends on the outlook for prices,” she says. “There is no hard and fast answer.”

REZ rights and wrongs

The east coast states’ various Renewable Energy Zone programs have been designed to ease the way for new wind and solar plants, along with storage and adequate transmission, but the approvals process can still be cumbersome, she says, particularly in NSW. “It’s lagging behind Victoria and Queensland, and always has been.”

There are hurdles and stumbling points for any development – applying for permits, all the various approvals, financing – but the highest risk at the moment is applying for network connections and working with a grid that is constrained in most areas. New transmission and interconnectors will help reduce the risk of grid instability.

“It [comes down to] the grid-strengthening mechanisms you can use,” Reddy says. “I think batteries fit that function quite well.”

Four of the projects (about 370MW in total) are approved with the network connection in progress and the others are in the process of obtaining permits and connections.

The construction of the portfolio is expected to create about 2,400 jobs with 100 service jobs for local communities.