![A new large-scale solar project is on the cards in South Australia thanks to the Snowy Hydro deal.](/content/dam/images/g/s/b/m/1/x/image.related.afrArticleLead.620x350.gu1ylt.png/1485849766505.jpg)
Snowy Hydro has made its first commitment for decades to a new large-scale renewables project, involving a $200 million solar farm in South Australia that will be later supplemented by batteries.
The 22-year power purchase deal, to be formally announced on Wednesday, sees Snowy join with one of Asia's biggest private renewables investors, Singapore-based Equis, for the project at Tailem Bend on the Murray River.
The 100-megawatt solar project, to be completed next year, will be built "battery ready", with the intention of adding up to 100 MW of large-scale electricity storage to make production more reliable. The first chunk of storage, potentially involving Panasonic batteries, could be added within four years, said Snowy chief executive Paul Broad.
Mr Broad said Snowy's commitment to buying all the power from the project showed its commitment to expanding its South Australian customer base of 50,000, held under its Lumo Energy business, to about 100,000, potentially within five to 10 years.
He said the deal made sense given the increase in forward prices for power in South Australia from the mid-$40s a megawatt-hour to close to $70 with the closure of baseload power plants in the state.
"Cheap baseload power is coming out of the system and the forward curve is getting stronger: it's hard to see that not continuing," Mr Broad said, adding Snowy would in future be able to call on a combination of diesel and solar power in South Australia to give protection to grow its retail position.
Appetite for large-scale solar
Mr Broad has previously expressed appetite for large-scale solar combined with utility-scale storage, particularly in South Australia, where the recent closure of base-load power stations has increased risks of supplying customers. Increased reliance on renewable energy in the state has heightened the risks of wholesale prices spiking to the market cap of $14,000 a megawatt-hour depending on whether the wind is blowing.
The Tailem Bend project will help almost double Snowy's generation capacity in South Australia, where it is currently reliant on 136 MW of diesel capacity at Port Stanvac and Angaston. A further 28 MW of diesel generation will be added at Tailem Bend from this year, using plants being shifted from NSW's Hunter Valley.
For Equis, the project represents "an exciting expansion" into Australia and an opportunity to leverage off expertise in developing large-scale renewable energy, said chief executive David Russell, a former Macquarie Group banker in the private equity and infrastructure space.
Equis has developed 3.7 GW of renewables capacity across Asia since its inception in 2010, raising more than $US2.7 billion in equity in the past five years. Tailem Bend is though to be its first project in Australia.