Utility-scale solar is certainly making an impression on the NEM with the recently released Quarterly Energy Dynamics from the Australian Energy Market Operator (AEMO). It reported that Q4 2019 saw the highest grid-solar output on record. In addition, Shell announced its first foray into the world of utility-scale solar. They plan to build a 120 MW solar farm in Queensland.
Typically, these projects come with some hedge against spot price risk. This is in the form of a Power Purchase Agreement or another contracting arrangement with a counterparty (typically an offtaker). However, there has recently been a rise in interests around fully-merchant solar projects. This is despite the probable effect of price cannibalisation, especially, in solar-rich states such as Queensland and NSW.
This Chart of the week analyses price bands by delivered volume from a typical (existing) solar farm in NSW. This analysis sheds light and provides commentary on how captured prices – and in turn merchant price exposures – for solar are evolving over time as more grid-scale solar connects in the state.