On Wednesday 6 November renewables contributed to 75.6% of the power going into the National Electricity Market (Australia’s east coast network), according to the Australian Energy Market Operator (AEMO). That figure beat the previous record of 75.2% set on 30 October, which beat the previous record of 72.2% set on 9 September.

But this rising tide is not lifting all boats. There is one clear loser. Utility-scale solar is in deep trouble, sources agree.

In September, just as renewables output was hitting new peaks, AEMO drastically curtailed most of the output of South Australia’s utility-scale solar farms. Enel Green Power’s Bungala solar farms, Vena Energy’s Tailem Bend project and Iberdrola’s Port Augusta Renewable Energy Park were reportedly among the solar farms affected.

The reason for the drastic cuts was Australia’s huge rooftop solar supply, which hit 43% of total generation as renewables were hitting their new target, according to AEMO. Rooftop solar, which peaks at the same time as utility scale solar and cannot be turned off by the regulator, has been pushing demand to hit new lows and prices into negative territory.

Australia’s government this week celebrated the four millionth rooftop solar installation, noting that one in three Aussie homes have rooftop solar and Australia is on track to add 3.15
GW of rooftop solar this year.

That is great for the climate and great for individuals’ power bills, but it is less good news for people selling utility solar assets or running solar development businesses.

Australia is seeing a rash of announced renewables deals but most that are getting done are wind deals or have a large wind component, like CVC DIF and Cbus’s sale of their Australian renewables assets, Neoen’s sale of its Victorian assets and Statkraft’s Enerfin sale. Wind farms generate power at a different time to utility or rooftop solar and, therefore, are not subject to same levels of curtailment.

Largely or exclusively solar sales like Hanwha’s Australian assets sale, Island Power and Overland Sun Farming’s sale of the Hay Sun Farm and battery, Metlen’s auction of its Australian solar portfolio, Pacific Partnerships’ disposal of its Australian solar farms and X-Elio’s Blue Grass solar and battery project have been in the market for a while.

Genex’s sale of equity in the Bulli Creek solar farm, bp’s sale of a stake in bp Lightsource Australia and Foresight Solar Fund‘s sale of its Australian assets have come to the market more recently.

Elgin Energy is pitching people on a 5.6 GW platform with a curtailment proofed mix of solar and storage, which has attracted some interest.

“Solar is very hard,” acknowledged an adviser.

Not only is it tough to make money owning solar assets and tough to sell them, it is also tough to fix them. A solar farm owner can add a battery to store cheap power from his facility in the middle of the day and sell more expensive power in the evening, but the owner still has to get a return on the existing solar plant as well as the battery. A stand-alone battery owner can buy cheap power in the middle of the day and sell it in the evening by buying the power from the grid. He is not saddled with the existing cost of funding a solar farm.

“Why would you do it unless someone wants to know that they are buying green electrons?” asked a second adviser.

Big tech companies have been looking for firmed renewable power for a while and might be willing to pay some premium for it.

To be sure, some solar assets have changed hands. Swedish developer OX2, which is owned by EQT Infrastructure VI, sold the development rights to the 106 MWp Lancaster and 31 MWp Mulwala solar farms in New South Wales to Denmark’s European Energy and its 118 MW Horsham hybrid project to the Victorian government.

“We’re investing in renewable energy projects for people, not profit,” said Lily D’Ambrosio, Minister for the State Electricity Commission, the Victorian government agency, which bought Horsham.

Others do not have the luxury of ignoring profits.

“You have got to have a plan to limit curtailment risk,” says an investor, who still looks at some solar investments. “You have to have at least a clear path to storage.”

That could include development approval and a connection agreement. New solar without storage – or a clear path to storage – does not merit a second look, he added.

Batteries with long-dated tolling arrangements with creditworthy counterparties – like the Riverina or Koorangie batteries which sell their output to Shell – are a far simpler proposition, he agreed.

Not only is OX2 selling solar assets, it is also pivoting towards developing wind in Australia. After buying solar developer ESCO Pacific in its initial drive into Australia, OX2 recently announced that it has bought an unidentified 1 GW project north of Perth, which fits the description of Wind Prospect’s Twin Hills wind project, and it has been bidding for Statkraft’s Enerfin wind development business.

Nor is OX2 alone. FRV Australia, which is owned by Lateef Energy and OMERS, is arguably one of the most successful solar developers in Australia. In July it refinanced AUD 1.2bn (USD 781m) of debt linked to a 1 GW portfolio comprised of eight solar farms.

But it too seems to be focusing on other areas. FRV Australia’s most recent greenfield project – financed in July with the rest of the portfolio – is the 100 MW/200 MWh Terang battery energy storage system (BESS) in southwest Victoria, a standalone battery, and it too has been a bidder for the Enerfin business.

“It has been a while coming,” says the first adviser of FRV’s pivot to wind.

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Solar developers were already being squeezed by higher construction costs, like all other kinds of developers, but they are also having a tougher time in the debt markets as a result of curtailment.

There are not too many solar financings in the Australian market but a lender says, “of course” they have been impacted by AEMO’s solar curtailments.

X-Elio is seeking debt to refinance the Blue Grass solar farm and add a battery and John Laing is seeking to refinance the Sunraysia solar farm.

“They’ll get done,” says the lender. “But with more equity.”

Beyond the refinancings, greenfield solar developments – and greenfield financings – are starting to look rare.

At the end of last month, AEMO announced 3.5 GW of new renewables projects had reached registration – a key milestone on the way to full commissioning – of which 1.8 GW were wind projects, 1.25 GW were battery projects and just 400 MW were solar projects.