Lightsource bp supercharges solar growth

20/09/21

Australian Financial Review

The solar power offshoot of British oil and gas giant bp has shrugged off grid bottleneck concerns and doubled its growth target in Australia after securing $US1.8 billion ($2.5 billion) in financing to accelerate its global expansion.

Lightsource bp, Europe’s largest solar developer which is 50 per cent owned by the oil company, aims to develop at least 2 gigawatts of large-scale solar generation capacity in Australia by mid-decade, up from an earlier goal of 1 GW, said country manager Adam Pegg.

Power from Lightsource bp’s Wellington solar farm in NSW is sold to Snowy Hydro. 

Globally, the firm will use the funding to expand its 3.8 GW portfolio of developed solar projects to a massive 25 GW by 2025, likely to make it the world’s biggest solar developer and owner.

Mr Pegg said Lightsource bp would also look to enter markets in Asia-Pacific supported by the funding.

“We see Australia as an attractive place to develop solar and continue to develop solar, not only from its high amounts of irradiance comparable to other countries, but as a market that needs to transition away from coal,” he told The Australian Financial Review.

The expansion paves the way for a further decarbonisation of bp’s Australian business after the closure earlier this year of its oil refinery in Kwinana, where it is now examining the potential for production of green hydrogen. It also underscores the growing presence of international oil majors in Australia’s renewable energy sector, where Shell, France’s TotalEnergies and Italy’s ENI are all active players.

New renewables investment has slowed in Australia in recent months amid grid constraints, connection delays and uncertainty over long-term federal policy for clean energy following the meeting of the 2020 Renewable Energy Target.

Adam Pegg, Australia country manager for Lightsource bp, sees plenty of opportunity for growth here. 

But Mr Pegg said Lightsource bp still saw the expanded target as doable given state government efforts to roll out network augmentation and work being carried out under the Energy Security Board to address reliability and grid performance.

“We think the two gigawatts is still a good target, even with those sorts of question marks,” he said.

“We’re a big believer in the Australian market being an attractive place to invest in solar in the long term. And with taking our time, and care, working through the grid processes on each project, we can put together really robust investments.”

The next project expected to reach financial close is the 400MW Wellington North solar farm to be built adjacent to the operating Wellington solar project in NSW, anticipated in the first half of 2022.

So far, the venture has about 500 MW in production or under construction after reaching financial close in June on the West Wyalong project in NSW’s Riverina region and the Woolooga solar farm in Queensland.

Acquisitions of solar development projects are also on the cards as part of the expansion.

“We’re always in the market for a good project,” Mr Pegg said, adding that all the projects will allow for the addition of storage.

Global CEO for Lightsource bp Nick Boyle said an ambitious pace of change on renewable energy is essential to meet the climate goals of the Paris Agreement, saying that business as usual “isn’t going to cut it”.

“Globally, renewable energy is shifting from a mindset of gigawatts to terawatts,” Mr Boyle said.

“Investments are being made by the billion, not the million. And big companies like Amazon, McDonald’s and eBay are switching to clean energy.”

The financing, in the form of a revolving credit and trade finance facility, is provided by 10 banks, including BNP, SocGen, Santander, Natwest, Lloyds, Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corporation, Canadian Imperial Bank of Commerce, Toronto Dominion and Wells Fargo.

Separately, France’s Neoen reached financial close on its $370 million Kaban Green Power Hub project, the cornerstone of the new Northern Queensland Renewable Energy Zone.

Debt for the project, which consists of a 157MW wind farm near Ravenshoe on the Atherton Tablelands and a 320km transmission line upgrade, is provided by five lenders: HSBC; MUFG, NAB; and Germany’s NORD/LB.

The project, which is due online in 2023, is underpinned by a 15-year power sales contract with Queensland state-owned CleanCo.

Meanwhile, privately owned energy developer EDL will expand solar power generation and add battery storage to its solar farm in Weipa in Queensland to increase clean energy supply to Rio Tinto’s bauxite mine. The additional 4 MW of solar and a one-hour, 4 MW battery will be integrated with the existing 1.6 MW solar farm and Rio’s diesel-fired power station to help reduce emissions from the mine.