The first two stage of a 300MW solar farm – Australia’s biggest – has begun construction near Port Augusta in South Australia after its developers last Friday reached financial close on the project, and agreed to sell it to two of Europe’s biggest investors in renewables, Italy’s Enel Green Energy and the Dutch Infrastructure Fund.

The first two stages, totalling 220MW, of the Bungala project is being built around 12kms from Port Augusta, where the state’s last coal fired generator closed last May. Ironically, project developer Reach Energy is headed by Tony Concannon, the former head of the owners of the Hazelwood brown coal generator in Victoria which closed late last month.

The two first stages of Bungala will be completed late in 2018, and will be built by Spanish company Elecnor, which recently completed the 57MW Moree project in NSW and the smaller 21MW Barcaldine project in Queensland.

Bungala will be built “battery storage ready”, and will also likely be the first major solar farm to participate in Australia’s FCAS market (frequency control and ancillary services), using SMA inverter technology to provide voltage control for the grid.

Concannon says the remaining 80MW of capacity could be built – along with battery storage – should the company win a South Australian government tender for 25 per cent of its electricity needs with “dispatchable” renewables.

Reach has submitted proposals for both 20MWh of battery storage and 100MWh, although it did not participate in the other tender for a separate 100MWh battery unit. If the tender is not successful, there are also discussions with other potential off-takers in train.

Concannon’s company, which is looking to develop 1,000MW of solar in Australia, has secured off-take agreements for the output of Bungala 1 and Bungala 2 with Origin Energy, raised $320 million of project finance debt, and found equity buyers for the $450 million project in Enel Green Power and DIM. And all without government grants.

It is one of a number of large scale solar projects proposed for South Australia, but the first to actually begin construction.

“That’s the difference with some of the others,” Concannon told RenewEconomy in a telephone interview on Tuesday. “Some of them have had lots of publicity, but are going nowhere. They don’t even have grid approvals.

“But with us, there are no “ifs” and no “buts”, it is definitely happening. We’ve done that deliberately (to keep a low profile) – Port Augusta has had a number of false dawns.”

News of the Bungala project comes as a big wind project, the 212MW Lincoln Gap, located 15kms west of Port Augusta, signed a power purchase agreement with electricity retailer ERM, with construction likely to begin later this year.

On prices, Concannon says that solar is currently “viable” in the mid $70s/MWh, and believes that within a few years, the combination of solar and storage will be “way under” $100/MWh, making it even cheaper than gas-fired generation. (He recently said the combination of solar and storage was already cheaper than gas power).

That, he says, will bring major changes to the grid. “I have no doubt that it (battery storage) will be the future, but I do think there is a lot of other stuff that existing plant can do.”

South Australia is already nearing 50 per cent wind and solar, but Concannon does not see any major threat to grid stability or reliability.

The new plant, he says, will be designed to provide FCAS – even at night, after the sun has gone down. “What a number of people don’t realise is that you can design ancillary services for solar plants to operate at night time.

“We can draw in power from the grid at night, and use the inverter technologies to regulate voltage, and that helps stabilise the system, even when the sun is not shining.”

Unlike battery storage in households, which he describes as mostly “passive” and focused on converting the output of solar panels from DC power to AC power so it can be put into the grid, utility-scale inverter technologies are able to shape voltage and current very quickly and in a very flexible manner. Modern wind farms are also using the same technologies.

“The inverter changes phase between the voltage and current … inverters can pull the current in, and change the phase to what grid wants.”

Concannon, a power engineer, says it is a tricky subject to try and explain, but says a lot of the articles he has read in the media – about wind and solar not being able to provide grid services – are wrong.

“Some of the articles I have read in the press are wrong. It is a tricky area, but what you can get with fast-acting inverter technology – they can definitely assist in managing the grid. They can react on frequency, in particular, much faster than gas and coal-fired plants.”

Reach has a 1,000MW solar pipeline, with the remaining project focused around NSW and Victoria. And the former executive of a major fossil fuel focused company is enjoying the focus on solar

Concannon left the “big corporate” world after a family illness and says he “personally felt that large-scale solar was something I could do on a start-up basis.

“The risk allocation was right. I couldn’t say that I had been totally green for the last 25 years, but I did have experience in bringing complex structured deals, and could figure out how to make solar competitive with wind, and how to do it without grants. We are pleased we have done this with no taxpayers’ money,”

Origin Energy chief Frank Calabria also stressed the importance of big solar in Australia, and particularly South Australia, as a counter-balance to wind energy as the shift to renewables accelerates.

“Energy markets around the world are in transition and Australia is no different,” Calabria said in comments on Tuesday. “We must make sure our energy supply is secure, as Australian homes and businesses rely on it. At the same time, we must make sure energy continues to be affordable as we move Australia towards a cleaner supply.”