The Australian government has withdrawn its funding of $60m to the proposed $230m solar thermal station at Whyalla as the project developer Solar Oasis failed to meet several conditions of agreed timeframe, reported ABC.
The move is seen as a major blow to the plant that was expected to have provided power for up to 19,000 homes and create 200 new jobs.
Solar Oasis is the Australian consortium of renewable energy firms.
Citing the option of filing an alternative funding application by the consortium, Ivor Frischknecht of Australian Renewable Energy Agency (ARENA) told the ABC: "[It] doesn’t mean the project can’t go ahead, but our support for it is no longer there."
The move will also affect building of a research and development capacity at the Whyalla campus of the University of South Australia.
"The initial stage, the $230 million project, the $60 million grant from the Commonwealth was a significant contribution. So that’s not something that is easy to get over," added Frischknecht.
The federal government was also under pressure from residents of Port Augusta to withdraw the grant as the city is planning to replace its coal-fired power stations to solar thermal power stations.
Meanwhile, the Whyalla Council is considering reviving the project by supporting developers.
The funding was offered by the government in 2010.
ARENA is an independent Commonwealth authority, supporting innovations that improve the competitiveness of renewable energy technologies and increase the supply of renewable energy in Australia.