It wasn’t long ago that large-scale solar was an unviable commercial proposition for Victoria, but costs have fallen so low that the less sun-blessed states are now getting in on the action, with construction set to begin for the 110 megawatt Bannerton Solar Park, which will power Melbourne’s tram network.

UGL, part of CIMIC Group, has been awarded the contract to design and build stage 1 of the project, which is set to generate revenue for the company of $133 million over three years. The project is a joint venture between global infrastructure and private equity investment manager Foresight Group and Victorian developer Syncline Energy.

Equity investment is being provided by UK-listed Foresight Solar Fund Limited (FSFL) and Korean government-owned Korean Infrastructure Asset Management Company (KIAMCO), both with a 48.5 per cent stake, and Korea’s Hanwha Energy with a three per cent stake.

The Clean Energy Finance Corporation is the sole debt financier, putting in $98 million.

CEFC chief executive Ian Learmonth said falling costs meant the project could go ahead without any grant funding.

“Previously it wasn’t viable to construct solar of this scale in Victoria, which has good insolation rates, but not as high as the northern states,” he said.

“We have witnessed rapidly improving economic conditions that now make this project commercially viable without the need for grant funding.”

He said the project would help to reduce the city’s public transport emissions, making it an “important contribution” to the decarbonisation of the economy.

Foresight Group partner Ricardo Pineiro said the company was pleased to have completed FSFL’s first overseas acquisition in Australia.

“We’re particularly proud that Bannerton has been successful in the tender to provide clean power to the Melbourne Tram network, supporting the Victorian State’s target of 40 per cent renewables by 2025,” he said.

Construction of the 320,000-panel plant is set to commence in late 2017, and is expected to be providing power to the grid by July 2018, with contracts for supply already in place with the Victorian government and Alinta Energy.

There will be an estimated 180 jobs generated during the construction phase.