"The cost trajectory of large-scale solar PV is expected to see the technology become competitive without additional support in the medium term," the agency said in a statement.

The move was welcomed by the Clean Energy Finance Corp, another body that the federal government sought to abolish. Instead, the government is now seeking to alter the organisation's mandate so that it cannot lend to wind farms or small-scale solar, although large-scale solar plant investments can proceed.

"The CEFC will continue to work closely with ARENA to identify opportunities for debt financing that can help maximise the potential of the projects ARENA supports, including projects that are part of the announced large-scale solar auction," Oliver Yates, chief executive of the CEFC​, said in a separate statement.

"The solar potential of Australia is obvious but financing for large-scale solar has been difficult due to market and policy uncertainty," Mr Yates said.

Jack Curtis, the Asia Pacific regional manager for First Solar, said his firm would probably bid for projects once tendering begins.