Australian banks will invest more heavily in solar energy projects within the next 12 months

Australian banks will invest more heavily in solar energy projects within the next 12 months, Clean Energy Council chief executive Kane Thornton said after Thursday's announcement that 12 new solar farms Australia-wide had been backed by $100 million from the federal government.

The federal government's Australian Renewable Energy Agency on Thursday announced 12 large-scale solar projects – six in Queensland – had received federal support.

ARENA chief executive Ivor Frischknecht said improved efficiencies had meant solar energy producers were getting much more bang for their funding buck than they were even two years ago.

"In 2014, the grant funding needed for large-scale solar projects was $1.60 a watt," Mr Frischknecht said.

"In 2015, this dropped to 43 cents at the EOI stage of ARENA's $100 million large-scale solar funding round; and to an average of 28 cents in June 2016 when full applications were submitted," he said.

"The average requirement of the projects we are taking forward today is an incredible 19 cents a watt."

Mr Thornton said solar projects would soon begin to rely less on federal government for funding to begin operations.

"We really at the threshold of saying that once we see another round of these of these projects we are going to see the costs decline to the point when they are built on their own, without the government support," he said.

"I think it is months, if not maybe a year or so, before we can expect them to go ahead without further funding."

Mr Thornton said banks were now closely examining the viability of investing more heavily in solar and renewable energy projects in Australia.

The first major investment in solar energy by Australian banks came in 2013 when NAB and ANZ invested in a 20 megawatt solar plant in Canberra.

More investment in solar plants followed, while banks have questioned some large new coal projects.

"If we look at the recent large-scale projects that have gone ahead, certainly Australian banks have been heavily involved in all those projects," he said.

"And we will know over the next couple of months how enthusiastic they are, but our recent experience is that they are looking very close at the (renewable energy) sector."

He said production costs for solar energy were declining as operators built on the experience of earlier projects.

"At the current trajectory you would say in the next couple of years it is going to be cost-competitive."

Mr Thornton said obstacles still included financing, connecting solar projects to the electricity grid, project location and the lack of a policy to guide a long-term shift away from coal-fired generation.

"Obviously ARENA's announcement today means we will have another wave of projects," he said.

"But the waves that come after that, we really do need to have a much more sophisticated energy policy in this country," he said.

"Which involves a discussion about ways to phase out coal-fired energy generation so there is 'space' so to speak for the renewables to come into the industry."

Mr Thornton said scale of new solar farm plants was lowering production costs to the point where it was "cost comparative' with coal and gas.

Mr Thornton said it was now time to begin training workforces that worked in traditional energy supply companies to work in renewable energy.