ReNU Energy (ASX: RNE) has signed a heads of agreement with Kinelli Pty Ltd to develop a A$10 million solar farm near Boggabilla in northern New South Wales.
The proposed farm will comprise 7.4 megawatts (MW) of direct current (DC) and is anticipated to cost between A$9 million and A$10 million to develop.
Under the agreement with Kinelli, ReNU has a 90-day period to carry out due diligence and then secure definitive contracts. Kinelli has been involved in numerous solar photovoltaic projects throughout Australia, and ReNU claims Kinelli’s expertise “significantly de-risks” the Boggabilla project.
The Boggabilla solar farm will include 27,000 solar panels across 10 hectares. The panels will be placed in a fixed tilt configuration and linked to a central inverter station. The system will also allow for future battery storage installation.
Once developed, the solar farm will be connected to New South Wales’ Essential Energy network and export 12,000MW hours per annum into the national electricity market at 22,000 volts.
ReNU plans to sell the energy via the whole sale electricity market and/or through corporate power purchase agreements.
Additionally, ReNU has secured a separate heads of agreement with the land owners to lease the project’s land for up to 25 years with a further two five year options.
“The proposed Boggabilla solar farm is an exciting opportunity for ReNU to expand its portfolio of renewable energy projects from 5.4MW DC to 12.8MW DC and will be a significant step towards our stated objective of achieving positive EBITDA on a run basis in 2018,” ReNU chief executive officer and managing director Chris Murray said.
Estimated internal rate of return for Boggabilla is 11% after debt and a 10-year equity yield higher than 12%.
ReNU intends to fund its part of the project through debt and equity.
The Boggabilla solar farm was introduced to ReNU through its alliance with VivoPower. In addition to Boggabilla ReNU is currently developing a 360-kilowatt solar network at the Griffin Plaza shopping Centre in New South Wales. The company is also undertaking design work for a further three centres and operates a 1.1MW bioenergy project in Queensland as well as building another bioenergy (1.6MW) project in New South Wales.