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Origin Energy, APA Group among contenders for solar power funding

Origin Energy, Infigen Energy and APA Group are among a host of players vying for a share of $100 million of government funding to build large-scale solar projects as the industry chases costs down to match or potentially beat wind power.

The Australian Renewable Energy Agency has selected 22 individual projects to go through to the final bid stage, seeking in total more than three times as much funding than is on offer.

The projects, which are to be formally announced by ARENA and federal Environment Minister Greg Hunt on Thursday and include several potential new foreign entrants into Australia, have been selected from 77 expressions of interest.

They include a mega project of more than 100 megawatts by Origin in Queensland, and smaller ventures planned by foreign players including China's Goldwind, Germany's juwi and Spain's FRV.

Potentially only between four and 10 projects are set to win funds, with ARENA providing grants of up to $30 million apiece. The Clean Energy Finance Corporation is offering debt funding through a complementary $250 million financing program.

ARENA chief executive Ivor Frischknecht said the keen interest in the funding round showed "Australia is serious about deploying large-scale solar and capitalising on its abundant solar resources".

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Projects chase $332m

The 22 projects representing 766 megawatts of capacity, are asking for about $332 million of funds for plants that would require investment of $1.68 billion to build. They are all on mainland Australia, with 10 in Queensland, eight in NSW, two in Victoria and one each in Western Australia and South Australia.

The program is intended to drive the development of about 200 megawatts of large-scale solar, which would almost double capacity to 440 megawatts, enough to power 120,000 homes, said Mr Hunt's office.

AGL Energy, the owner of the country's two largest utility-scale photovoltaic plants, at Nyngan and Broken Hill in NSW, which received government funding in 2013, is not on the short list.

The program aims to drive down the cost of large-scale solar energy so it is cost competitive with wind power by the end of the decade. It requires solar projects to deliver electricity at $135 per megawatt-hour in this funding round, on the way to meeting the typical cost of wind power of $80-$90 per megawatt/hour.

Mr Frischknecht said some of the competing projects were anticipating costs "significantly below" $135 per megawatt/hour. The funding round would help drive innovation and reduce solar PV supply chain costs in Australia, where large-scale solar is still in its infancy compared with rooftop solar and compared with some overseas countries.

Origin Energy is looking to get into large-scale solar despite seeking to sell its wind power business in Australia and its international renewable energy portfolio.

Chief executive Grant King has voiced confidence about the potential for large-scale solar to undercut wind power. Its Darling Downs project is planned for a site adjacent to a gas-fired power plant, and is understood to be close to receiving council approval.

Mr Frischknecht said it was clear that Australia "has some work to do to catch up to countries with more mature large-scale solar industries" but that the local industry had the potential to bring down costs to less than $100 a megawatt/hour by 2020.

The CEFC's financing program also supports other solar projects that require loans of $15 million or more and is intended to unlock additional private-sector investment in the sector.

Final submissions from the project proponents for ARENA funding are due by June 15.

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