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Silex Systems buys collapsed Solar Systems’ assets, raising solar energy hopes (and many questions)


Plans by Silex Systems Limited to buy the assets of Solar Systems, the Melbourne-based solar energy company that was placed into administration last September, injects life into a cherished plan, but uncertainty persists. Government support is in the offing and, worse for engineers, the technology remains unproven at utility scale.

Solar Systems’ planned 154MW heliostat concentrator photovoltaic power station at Mildura remains a great, unrealised idea. It’s a glorious dream for those who covet a home-grown solar industry.

The collapse of Solar Systems was a real blow, but with high-technology leader Silex Systems Limited at the helm, the future looks considerably brighter.

Silex declared assets of just over $78 million last year. To purchase Solar Systems, the company will pay $2 million in cash on completion, with a further $18 to be taken in shares. Completion is expected to take place in March.

Silex says that $10 million would be needed over 12 to 18 months after completion to commercialise the technology.

Follow the money

Promises of $75 million from the previous federal administration under its Low Emissions Technology Demonstration Fund have been tied to the achievement of project milestones, “none of which have been met,” says the Department of Resources, Energy and Tourism.

The Victorian Government has promised $50 million but nothing has been released.

Expect further negotiations with federal and state governments. The federal Department of Resources, Energy and Tourism says that money for the 145MW Mildura plant is contingent on the successful completion of a 2MW pilot project.

The pilot plant “would most likely be the first project to be undertaken in the first year”, says Silex. Work would start — other things being equal — between March and June next year.

“Sometime in the first half of 2011 we would hope to be moving into the 2MW pilot phase,” says Silex CEO Dr Michael Goldsworthy in an interview.

One of those things might be continued disinclination by the Government to release funds. Silex says that the 2MW pilot plant will be completed “subject to continued support”.

“We’ve had preliminary discussions with the Victorian Government and the Federal Government on the Mildura project funding and feedback is quite positive,” says Dr Goldsworthy.

“We understand from those discussions that, subject to us submitting ourselves to the same terms and conditions and key milestones for progressive funding, that that funding would still be available to the project.”

But to reach this goal, Silex must finish commissioning the Melbourne production facility.

Work to be completed includes photovoltaic module and array performance characterisation and analysis of the balance-of-system engineering and costs.

“We’ve budgeted $10 million for that. It should be more than adequate. Once that’s done, then we would go ahead hopefully with the 2MW Mildura project as phase one. And if phase one is successful, then we move into the phase two — the [154MW] project.”

Will solar scale up?

“2MW is a good target from where they are and they will learn a lot, but 154MW is 70+ times bigger,” says Bill Parker, editor of Solar Progress, the magazine of the Australian Solar Energy Society. “I have serious doubts, but since I am not a [mechanical engineer], I cannot flesh this [out].”

A heliostat concentrator is a large, ground-mounted array of flat mirrors that concentrates sunlight onto a central receiver. “In principle,” says Silex, “these systems can be built to much larger scales.”

Parker says that the large Mildura plant is “a very long way” from plants Solar Systems has built, such as one at Hermannsberg in the Northern Territory.

“Having looked up close at the Hermannsburg installation I found it hard to believe that it would be an easy scale up to 154MW,” he says. “The Hermannsburg plant is 192kW. Whichever way you cut it, none of these plants get up without a series of challenges.”

The ponds for cooling water at the Hermannsburg plant are 1,000 square metres in size, for example, and contain village waste water. Parker says that ponds for a 154MW plant would need to be built significantly larger and take into account evaporation and supply.

“I do not know if there is intimate contact between the waste water and the hot flow from the PV focal point. If there is, then there will be real issues with the waste water algae and the like.

“Going 10 [times larger] at each phase you learn what you can and cannot do like you thought you might.”

The Government committed $4.5 million toward the pilot plant under the Asia Pacific Partnership on Clean Development and Climate program.

“To date approximately $2.62 million of this amount has been paid to Solar Systems following the successful completion of milestones under the APP program,” says the Department.

But Parker says the Government has failed to recognise the market size for solar power, as did the previous administration.

“The area of technology assessment is difficult whatever the politics are but the way things stand, coal still rules. [The] Solar Flagships [initiative] is no answer and if they cut it back, well, no surprises there.

“If I were Silex I would not be trusting [government] at all,” he says. “[Silex] are not doing [too] bad on the ASX. If I were a director there I would be pushing the 2MW and going back to the market and looking for [money] to scale up with the proof of concept.

“Forget [about the government].”

Can Silex Systems handle this hot potato?

Based at the Lucas Heights Science & Technology Centre, Silex is used to working with embryonic technologies. It had 2009 revenues of $9.2 million and posted a net loss in 2009 of $3.75 million.

The SILEX laser technology is being commercialised in the US by a company established by a consortium of global nuclear players, called GLE.

“That technology only came into being around 1996,” says Dr Goldsworthy. “It took a few years of background investigation. The technology that’s being developed by GE, Hitachi and Cameco in the US now has taken about 13 years to get to this point.”

Silex hopes to know the results of the test loop soon and will “hopefully” move towards a commercial plant after that.

“You know, it’s tough doing high tech development, yes, you’re right, very tough,” says Dr Goldsworthy.

But the company’s backers have deep pockets.

The largest shareholder in Silex is Jardvan Pty Ltd, the family company of Michael Boyd, a major investor in the phenomenally-successful pathology-services provider Sonic Healthcare Ltd. Boyd’s father-in-law, Barry Patterson, is chairman of Silex.

Dr Colin Goldschmidt, Sonic’s CEO, is also a Silex director. Sonic directors Christopher Wilks and Peter Campbell are Silex directors.

Sonic’s fortunes derive from a sharp increase, since the 1990s, in Medicare-funded pathology services. Boyd’s initial 1991 $1 million investment was worth $225 million in 2005.

Silex also bought the Sydney Olympic Park domestic solar panel factory of BP Solar in 2009.

“Both of these solar technologies will play an important part in the renewable energy industry, as global climate change policies become mainstream in the energy sector,” says Dr Goldsworthy.

Matthew da Silva writes feature stories to fulfil a dream after working in communications and technical writing roles for two decades. He grew up in Sydney, lived in Japan for nine years and now lives on the Sunshine Coast, in Queensland. He blogs daily at Happy Antipodean.

Photo: Silex Systems Limited