French renewable energy and battery storage developer Neoen has written down the value of one of its biggest solar asset in Australia – the 112MW Numurkah solar farm in Victoria – because of falling daytime prices and a lower operating performance.
The company announced late Monday in France that it had booked a €10.4 million ($A15.6 million) impairment on Numurkah, which entered production in 2019 and is the biggest of its four operating solar farms in Australia.
The announcement was revealed in an analysts presentation following the release of the company’s 2021 calendar year results, which showed a 20 per cent leap in overall net income to €171.2 million.
It also reiterated its target to lift its operating renewable and storage capacity to 5GW by 2023, and to 10GW – operating and under construction – by the end of 2025.
As one of the few renewable energy investors that remain listed, the company’s results provide rare insight into the operations of its assets.
CFO Louis-Mathieu Perrin blamed the write down of Numurkah, based in Victoria, on lower operating performance and a downward revision of the long term price expectations for solar in Australia.
However, he said it would not affect the rest of the company’s solar portfolio in Australia, which includes smaller solar farms at Griffith, Dubbo and Parkes in NSW, the 150MW Colleambally solar farm in NSW, and the 400MW Western Downs solar farm in Queensland which is currently under construction.
“We tested the entire operating solar portfolio in Australia, and the other solar assets are not affected,” Perrin said.
The company’s earnings from its global solar portfolio declined 15 per cent to €137.3 million, which it said was caused the unfavorable irradiation conditions reported by other companies, and the lower level of market prices, particularly during the day.
Its earnings from its Australian solar portfolio were down 18 per cent to €30.7 million, on an eight per cent fall in revenue to €37.6 million, but its wind earnings in Australia were up 16 per cent to €53.9 million.
Neoen owns the 317MW Hornsdale wind farm in South Australia, and is building the 157MW Kaban wind farm in Queensland and begun work on the first 412MW wind stage of the massive Goyder South renewables hub in South Australia.
Earnings from its global portfolio of wind assets grew by eight per cent to €105.0 million, mostly reflecting the contribution of the Bulgana wind and battery facility in Victoria, which finally reached full production in October after lengthy connection and commissioning delays.
Neoen says the wind result was also affected by a “temporary increase” in network services costs affecting “certain wind power plants in South Australia” after an interconnection line went down.
Neoen is also the leading battery storage developer in Australia, owning the Hornsdale Power Reserve, and the Victorian Big Battery, which replaced Hornsdale as the biggest battery in Australia when it came on line in late 2021 with capacity of 300MW and 450MWh.
Battery storage revenue totaled €30.2 million, down from €31.4 million in 2020, and its Australian contribution was €26.4 million versus €30.4 million in 2020, when it benefited from the massive boost in earnings when the Hornsdale battery played a key and well compensated role holding the grid together after the loss of the main transmission link.
CEO Xavier Barbaro warned that the impacts on the global supply chain was having an impact on the upfront costs of wind and solar, with solar expected to rise by around 10-15 per cent over the short term, and wind by around 10 per cent.
The cost of battery storage was also likely to rise – thanks to the six-fold rise in the price of lithium – but he insisted that the long term price trend continued to be down due to innovation, the scale of manufacturing and the experience curve.
“We are still well within the money, even with prices going up,” Barbaro said. “We have very valuable electrons.”
Note: This story has been updated to make clear that Collembally, not Numurkah, is Neoen’s biggest operating solar farm in Australia.
