Why has Silex scrapped plans for its Mildura power plant?

When Silex Systems announced it was building a 100MW solar power plant in Mildura, there were many high expectations. The company was not only leading the way in terms of sustainable energy generation, but also taking steps to bring down electricity tariffs across the nation.

However, it's just been announced that plans for the solar power facility have been put on hold, which has been met with concern from electricity suppliers and the renewable energy industry as a whole.

Why has the decision been made?

Silex announced it had carried out a joint review with the Australian Renewable Energy Agency (ARENA), which determined that the Mildura plant wouldn't be in the best interests at this present time.

Solar Systems, a wholly owned subsidiary of the company, agreed that plans for the station should be put on hold for the foreseeable future. As a result, the finding deed for $75 million has been terminated.

Furthermore, $35 million in conditional funding provided by the Victorian government though its Energy Technology Innovation Strategy Fund will also be withdrawn.

A number of reasons have been given for the decision, although the one that has grabbed the most headlines is the role of the Renewable Energy Target (RET). The RET is currently undergoing a review and there are widespread concerns that it could soon be scrapped.

Not only this, Silex revealed how reduced wholesale electricity prices had impacted on its decision.

Why is the RET being reviewed?

The federal government revealed it would be reviewing the RET earlier this year, with a report expected to be released in the not-too-distant future. Experts from the policy, business and energy sectors have been brought together to discuss what options are available.

The review has been established to make sure the RET is fit for purpose and meeting the carbon-reduction targets it was designed for. It was introduced with the intention of ensuring 20 per cent of Australia's electricity is sourced from renewables by 2020.

Various submissions have already been made to the review, with many groups calling for the target to be left in its current form rather than being altered in any way.

There are concerns that a revised RET may not lead to the environmental outcomes it was originally put in place to achieve, which may be something Silex is also worried about.

One of the key focuses of the review is the effect of the RET on electricity prices, as well as whether or not it has been successful in driving down emissions.

What does the future have in store for the Mildura site?

Silex Solar Systems is currently considering what other options are available at the Mildura site in Victoria as it still hopes to create a project albeit on a much smaller scale.

It's currently involved in discussions with the Victorian government and ARENA as it seeks to create other projects to boost the provision of sustainable energy technology.

"Since we launched the 1.5MW Mildura Demonstration Facility in June last year, we have captured a great deal of useful data and are now investigating alternative opportunities to build on the outstanding work already achieved at the Mildura site," said Dr Michael Goldsworthy, chief executive officer and managing director of Silex.

He noted that solar power has a strong future in providing clean, low-cost energy to various regions - the next step is to determine where exactly these efforts should be focused.

ARENA Chief Executive Officer Ivor Frischknecht agreed, saying there is a good, strong working relationship between the organisation and Silex that could come into play through another project.

Posted by Richard West