In this paper, we investigate the role that a Contract-for-Difference (CFD) feed-in tariff might play in underpinning increased investment in renewable energy in Australia. We investigate two particular CFD designs: two-way and a one-way CFD. We develop a financial model that is capable of determining commercially viable CFD strike prices for different renewable energy projects. In this modelling, we take account of revenue from wholesale electricity market and renewable energy certificate sales. We also include capital and operational costs of the project including distribution of funds for holders of equity and debt. We present findings bases on analysis of the solar array located at UQ Campus Gatton Australia, employing a typical meteorological year framework. Our major findings are that governments will prefer a two-way CFD design and Single-Axis tracking solar array technology. Project proponents, however, will strongly prefer a one-way CFD design.
Global Change Institute, The University of Queensland 2017