A world-leading 1,200MW wind and solar project proposed for north Queensland is competing head to head with a new coal power station proposal favoured by Tony Abbott, who is in favour of giving he taxpayer loans to the coal generator, but not the wind facility.

The Canberra-based renewable energy development company Windlab is proposing a world-leading mega wind and solar project for north Queensland, in a proposal that could directly rival a Coalition push to build a new coal-fired generator in the same area.

Roger Price, the CEO of Windlab, told RenewEconomy on Tuesday that the company was proposing a 600MW wind farm combined with a 600MW solar PV farm in what it is calling the Kennedy Energy Park.

The facility, to be located near Hughenden, around 300km inland for Townsville, would deliver up to 80 per cent of local electricity demand – and at a capacity factor of around 70 per cent – at rates cheaper than a new coal plant.

“This is an absolutely world class resource,” Price said. “We believe we can deliver nearly baseload power for a price of around $100/MWh. You are not going to build a new coal-fired generator for that sort of price.”

But a coal-fired generator – such as the 800MW example proposed in one recent study – is exactly what is favoured by some local business people, local LNP politicians and even, more importantly, Prime Minister Tony Abbott.

But because the price of new coal generation is so high, Bloomberg New Energy Finance estimates it at about $130/MWh, it would require hefty subsidies from the government.

The decisions to be made in Townsville and the region highlight the crossroad that Australia finds itself at, and the debate around the future of the Clean Energy Finance Corporation.

The Abbott government would like to entrench the position of the fossil fuel industry, and wants to cut the deployment of renewables and demolish the CEFC. Others say Australia should be a world leader in the adoption of wind, solar and other renewable energy technologies, and the CEFC is key to this.

Abbott, in a recent interview with the Townsville Bulletin, said the coal project could qualify for loans from the new north Australia infrastructure fund created by his government. The $5 billion facility has been dubbed the “Dirty Energy Finance Corporation.”

“I’d be very surprised if we did not have, coming forward as a potential project under the Northern Australia fund, a power station,” Abbott told the newspaper.

The irony would not be lost on the renewable energy industry, given Abbott’s decision to tell the $10 billion Clean Energy Finance Corporation to not fund large wind projects, or rooftop solar.

Windlab’s Price says that such a world-leading wind-solar project – while cost competitive – would need the involvement of the CEFC, because it would act as a catalyst for finance for banks, who are notoriously reluctant to stump up money for first-of-its kind facilities such as the one proposed.

This, Price says, highlights the contradiction of the Abbott government’s directive to the CEFC to stop lending money to wind energy developments, at the same time as proposing a similar fund for fossil fuel technology in the north.

“It would need the CEFC because it is a first-of-its-kind project,” Price said.

“That is one of fallacies of the current situation. Wind farms are not all vanilla projects, every one of them has distinctive characteristics and by ruling out an asset class, it means they are not prepared to back the cheapest technology and not prepared to back innovation for this sort of technology.”

Windlab has been trying to develop the Kennedy wind farm for several years. This, and a 300MW solar farm, were to be built if the Queensland government approved the CopperString transmission line linking Mt Isa to the east coast, potentially opening up a new province of renewable projects in north Queensland.

However, the then Labor government outsourced the decision on the line to Mt Isa operator Xstrata, who chose a gas-fired generator instead, pumping gas from reserves thousands of kilometers to the south.

Price says that Windlab now estimates a combined 600MW wind farm and a 600MW solar farm could solve the region’s growing energy needs, and save costs.

That’s because the installation of local generation would reduce transmission losses (most electricity is sourced from further south), and could also reduce the hefty cost of the Community Service Obligation, which subsidises the delivery of fossil fuel energy to regional Queensland, to the tune of around $600 million.

North Queensland is one of the most promising areas for renewable energy, not just because of its excellent wind and solar resources, but also because it is the one area in Australia with growing demand, and where extra capacity will be required.

That puts renewable energy in direct competition with new-build fossil fuels – a contest it is winning in other countries in similar situations, such as Chile and the Middle East, and South Africa.

Windlab last week began construction of what will be the lowest-cost wind farm in Australia to date, the 20MW Coonooer Bridge project which will be paid a flat rate of $81.70/MWh over 20 years by the ACT government. It also built the 207MW Collgar wind farm, the biggest in Western Australia, with an estimated capacity factor of nearly 50 per cent.

Windlab says the first phase of the Kennedy wind and solar project could be for up to 100MW of wind and solar energy, connecting to the existing electricity grid.

This, it says, will provide more than enough electricity to power the whole of the region stretching from Julia Creek through to Charters Towers and provide excess energy to Townsville and beyond.

To boost capacity to 600MW of wind and 600MW of solar would require a new transmission line to connect to the main grid. But previous studies have indicated the economic benefits of the project.

Because of the combined benefits of wind and solar, Price says its studies show that the facility could provide 600MW of capacity – the equivalent of 80 per cent of the region’s needs – at a capacity factor of 70 per cent.

That capacity would presumably be supplemented by other local generation, including rooftop solar, small utility-scale solar projects and local biomasss. FRV is also considering a 150MW solar plant in the region, and Genex has proposed a 330MW pumped hydro facility that could also provide dispatchable power when needed, and store excess generation at times of high wind and solar output.

Such projects would rapidly turn Queensland, hitherto a laggard in large-scale renewables with just 12MW of wind and a much delayed solar “booster” at the Kogan Creek power station, into a leader in new technology. Or it could follow the Abbott route into the past and try to build another coal-fired generator.

Note: Original story was published on reneweconomy.com.au