MAONENG AUSTRALIA GROUP – PORTFOLIO UPDATE
New South Wales – Maoneng Australia [“Maoneng”], one of Australia’s leading solar PV developer and owner of renewable energy assets is expanding its NSW portfolio after securing key contracts with one of Australia’s largest electricity retailer – AGL Energy.
On 7th December 2017, Maoneng entered into a power purchase agreement with AGL Energy [“AGL”] to supply up to 800,000 MWh of renewable energy per annum for 15 years.
Maoneng’s Vice President Qiao Nan Han said the AGL contract, which underpins 300MW of solar PV power plants in NSW, is the largest solar energy supply contract ever signed in Australia. The contracts will underpin at least two major solar farms in NSW, including the Sunraysia Solar Farm in Balranald.
“The Sunraysia Solar Farm will be the first of several solar farms which Maoneng will work with AGL to develop. We are pleased to have entered into a contract with AGL that provides certainty for renewables development and energy security,” said Qiao Nan Han.
The balance of the AGL contract will be allocated to the next most suitable project within Maoneng’s development portfolio in NSW. Maoneng will also consider the acquisition of suitable shovel ready projects.
“In the absence of bankable PPAs during a period of political uncertainty, we believe that the AGL contract sets us apart from the market. The second project underpinned by the AGL contract, the Midgar Solar Project, demonstrates our continuous efforts to transition Australia out of fossil fuel dependency. We remain committed to making a difference in the energy sector, one solar panel at a time,” said Qiao Nan Han.
Certainty and Energy Prices
Solar PV power plants are typically financed based on the certainty of revenue and cashflow. This can be achieved through a financial instrument between a buyer and a seller of renewable energy. The instrument provides the certainty that a fixed price for energy is agreed between the two parties for a long period of time. Once such an agreement is in place, the power plant will then have the certainty of revenue and cashflow required to be project financed by banks under a low risk investment regime.
Unlike fossil fuel generators which operate based on the periodic consumption of fossil fuels, renewable energy generators are designed and built with their lifetime supply of “renewable fuel” on day one. This in turn means that renewable energy generators tend to require large capital investments as they have up to 30 years of fuel installed in one go. The large upfront investment is typically amortised over a long period of time by banks and investors.
In a politically uncertain market, it is difficult for both buyers and sellers to put a value on renewable energy (or energy in general). This will typically lead to energy supply issues – especially amidst imminent closures of existing power plants. As the National Electricity Market (NEM) fundamentally operates on supply and demand, a lack of supply of energy will immediately translate to a higher cost of energy – which has been exhibited in the past few years and for the foreseeable period.
The cost of energy at any point throughout the day is determined by a bid stack. The stack is comprised of generators who are bidding to supply energy for any given period. Only the lowest cost generators which bid into the stack can dispatch and sell their electricity, but the price for which the entire volume is sold is determined by the highest price of the bid stack. As renewable energy continues to replace base load (such as coal), it is also critical to have economic peaking power plants that can finish the bid stack with competitive pricing. In the short term, gas will continue to play a critical role to compliment renewable energy, but it will only be a matter of time before large batteries start taking over that role.
More about the Sunraysia Solar Farm
The development of Sunraysia Solar Farm was first announced in May 2016, with the receipt of the Secretary’s Environmental Assessment Requirements in June 2016. Following six months of land, site, technical and grid interconnection feasibility studies, an Environmental Impact Statement (EIS) was submitted in February 2017. Incorporating stakeholder comments and inputs, the Sunraysia Solar Farm was approved for construction in July 2017.
The Sunraysia Solar Farm project will be underpinned by the UNSW PPA and one of the AGL PPAs. On 7th December 2017, Maoneng entered into a PPA with AGL Energy to supply up to 800,000 MWh of renewable energy per annum for 15 years, a portion of which will be allocated towards the Sunraysia Solar Farm. On 14th December 2017, Sunraysia Solar Farm entered into a PPA with UNSW to supply up to ~124,000 MWh of renewable energy per annum for 15 years. King & Wood Mallesons acted for Maoneng on the AGL PPAs and Clifford Chance advised Maoneng on the UNSW PPA.
Sunraysia Solar Farm entered into a Memorandum of Understanding (MOU) with Decmil Australia for the Engineering, Procurement and Construction of the solar farm with construction expecting to commence in Q2 2018. Rothschild has been appointed as Maoneng’s Financial Advisor. Investor relations and lender enquiries should be directed to Rothschild’s representative on the following page.
For further information please contact:
Qiao Nan Han
Vice President – Maoneng Group
M. +61 428 275 150
Director – Rothschild
M +61 419 120 249
ABOUT MAONENG GROUP
Maoneng Group [“Maoneng”] is an Australian-Chinese developer, owner and operator of renewable power generation assets. Maoneng has a development pipeline of 500MW of solar farms within Australia and sells energy and large-scale generation certificates [“LGCs”] to Australian businesses and governments through a combination of medium and long-term contracts. Maoneng commissioned a 13MW solar farm developed under the ACT Government’s Reverse Solar Auction scheme in November 2016. For further information please visit our website: www.maoneng.co