Scaling up solar: What New Zealand can learn from Australia's experience

  • Opinion

    13 June 2024

Scaling up solar: What New Zealand can learn from Australia's experience Desktop Image Scaling up solar: What New Zealand can learn from Australia's experience Mobile Image

Australia’s experience in utility-scale solar projects is impressive and as we heard at the 2023 SEANZ solar conference, the New Zealand industry wants to hear their insights. The first grid-scale solar plant in Australia was built in 2012 and the cumulative large-scale solar capacity in Australia now sits at 8.2 GW.[1] Fourteen large-scale projects were commissioned in 2023 alone, including 400 MW farms in both Queensland and NSW. There were a further two 400 MW solar farms among the 38 large-scale solar projects under construction across Australia as of December 2023.

By comparison, the sun is only just rising on New Zealand’s utility scale solar industry. Lodestone’s 33 MW Kohirā, commissioned in 2023, was the first utility-scale solar farm to generate enough electricity to supply our national grid. Things are heating up though: solar comprises 67% of Transpower’s new generation connection pipeline with more than 50 projects. The size of the developments is also of a scale not seen here before – for example, Far North Solar Farm and Aquila Capital have announced a 420 MW solar farm for the Mackenzie Basin.

It's easy to see why developers, contractors, and lenders are keen to learn from Australia’s utility-scale solar projects experience, including the risks and opportunities involved in the larger undertakings. MinterEllisonRuddWatts is fortunate to have had a strategic alliance with Australia’s largest law firm, MinterEllison, for the past 30 years. We recently caught up with members of MinterEllison’s renewable energy team to discuss their experiences in the evolving utility-scale solar landscape and we share eight key insights below.

1. Whilst it is common for Principals to free-issue equipment such as modules, potential consequences on EPC contractor performance guarantees need to be worked through

An issue we are currently seeing in New Zealand arises when the project developer wishes to procure the modules and other key components for the solar farm, but also requires a ‘fully wrapped’ EPC contract for debt financing purposes. Free issuing of modules (where the developer procures the modules and supplies them to the contractor at no cost) is becoming more common in Australia, largely driven by price considerations. For example, cost savings may be achieved:

  • where the developer can access more favourable pricing through a global supply arrangement in place with a supplier; and 
  • by saving on the margin that the EPC contractor would typically add to the cost of the materials it is responsible for procuring.

However, where the developer is free issuing major components, both the developer and EPC contractor should consider how that may affect the performance guarantees typically given by the EPC contractor for the first couple of years of commercial operation. In particular, where the performance guarantees are not met, can the parties determine the cause and responsibility?

2. The growing popularity of a package-based delivery model

Whilst the EPC contract model is still typically used for solar projects in Australia, especially those that are project-financed, there is a growing willingness to look at alternative delivery models where that might provide value to the project. This is currently more common in relation to wind and battery arrangements - with splits between supply and balance of plant (electrical and civil) – and we are closely watching to see whether solar supply, balance of plant and installation models also gain traction in Australia. A key aspect of this approach is considering the interface risk (as there is no single point of responsibility) and, where appropriate, putting interface arrangements in place.

3. Traditional ‘fully wrapped’ EPC contracts are no longer so readily available

EPC contractors are cognisant of losses that have been suffered in the industry arising from the assumption of certain risks, including certain risks relating to grid connection and site conditions. As a result, the passing of all such risks under a full “EPC wrap” that might have been achieved in the Australian market at the beginning of the utility solar boom may not be so readily available today and a more nuanced contracting position has emerged.

4. Local knowledge and experience of grid connection is invaluable

A key aspect of a solar project in New Zealand, and one that has also proven to be an important issue in Australia, is getting connected to the grid. An EPC contractor with local experience in relation to connection assets and the interface with the applicable network service provider is valued in the Australian market and those that have such experience are in demand. Similarly, it is critical for suppliers (especially in relation to inverters) to understand the local connection requirements and those who have done so well are perceived as leaders in the space.

5. Equipment supply agreements are key contracts for the project, and need to be fit for purpose

Parties to an EPC contract will often dedicate the resources needed to ensure a robust contract is agreed, but the equipment supply agreements are just as important to the project and shouldn’t be overlooked. It is important that the supply agreements for major components are sufficiently comprehensive to ensure that the project needs will be met, including by incorporating the requirements for support during and post commissioning are incorporated.

6. Social licence is critical

Social licence for solar developments is increasingly important in New Zealand, over and above legal requirements.

Obtaining and maintaining a social licence to develop and operate also remains an important issue in Australia. Additional mechanisms and guidance related to social licence matters are being put in place outside of the approvals processes, with the aim of lifting the industry standard and achieving a level of consistency. Examples include the Clean Energy Council’s Leading Practice Principles: First Nations and Renewable Energy Projects (2024) and draft guidelines for benefit-sharing and private agreements that were released by the NSW Department of Planning and Environment for consultation late last year.

Social licence commitments may also be woven into other aspects of the project and become contractually binding, for example the ‘Social Licence Commitments’ agreed to by the project vehicle under a Capacity Investment Scheme Agreement with the Commonwealth for revenue support or under similar State-based support mechanisms.

7. Battery storage is an integral part of projects

New solar projects in Australia now almost always incorporate battery storage, seen as an increasing critical component for grid stability. In the Northern Territory, where the network is comparatively small, the incorporation of battery storage is necessary to comply with local grid requirements. The importance of, and potential revenues from, the ancillary services markets are on the rise.

8. Government support has been instrumental

Obtaining the required level of debt financing is often a challenge for developers of utility-scale solar projects without offtake arrangements in place. The Australian Government has supported developers to overcome this issue via government schemes and incentives, such as the Commonwealth Capacity Investment Scheme and the New South Wales Long Term Energy Supply Agreement scheme. In contrast, the New Zealand Government has sent a clear message that it is taking a market led approach to the energy transition.

New Zealand and Australia are at different stages of their energy transition journeys. It is arguable that Federal and State support is necessary for Australia to meet its renewable electricity targets - renewable energy provided 39.4% of Australia’s total electricity generation in 2023 compared to a target of 82% by 2030 [2], whereas in New Zealand 87% of electricity generated over 2022 came from renewable sources.[3] However, even with our highly renewable system, it remains to be seen whether New Zealand can convert its strong pipeline into sufficient commissioned capacity without Government support.

As part of our ongoing article series on utility-scale solar developments, we plan to explore some of these insights in more detail. If you would like to discuss any aspect of utility-scale solar developments, please get in touch with one of our energy experts.

Our thanks to Simon Harvey, Joshua Dellios, Joel Reid, Clay Wohling and David Pearce of MinterEllison for sharing their time and expertise with us.



[1] Clean-Energy-Australia-2024.pdf (, p.79
[2] Clean-Energy-Australia-2024.pdf (, p.9
[3] Energy in New Zealand 2023 (, p.2