Origin Energy shares have lifted after the company signed its first solar farm deal and reaffirmed cost cutting targets.
The troubled energy producer inked a 15 year contract with the new Moree Solar Farm in northern NSW, which will generate enough power to supply 24,000 households.
Origin will buy 100 per cent of the output from the farm, which has recently been commissioned by the local unit of Spain's Fotowatio Renewable Ventures (FRV) and is expected to produce 145 GWh of energy a year.
"Solar technology has improved dramatically over the past few years and the cost has come down as a result," Origin chief executive of energy markets Frank Calabria said.
"There has never been a better time for Origin to pursue large-scale solar opportunities."
In 2015 Origin said it was the world's first energy company to sign up to all seven climate change initiatives under the global Carbon Disclosure Project.
The deal with FRV is Origin's first solar power purchase agreement and follows the signing of nine offtake agreements with Australian wind farms.
More solar projects could follow, with Origin recently shortlisted for funding for a development approved site in Queensland's Darling Downs.
Meanwhile, chairman Gordon Cairns said the company's energy markets business is on track to achieve $100 million worth of cost reductions as well as a $50 million cut in capital expenditure by the end of the 2016 financial year.
Mr Cairns said Origin was also on track to cut costs by $200 million in 2017 as it looks for $800 million in asset sales.
"To drive improved returns in a low oil price environment, Origin continues to progress its three key priorities of growing the contribution from energy markets," Mr Cairns said.
CMC Markets analyst Ric Spooner said the market would be relieved that Origin's cost savings forecasts were tracking well, and the solar deal did not appear to be "that material" to the company.
Origin Energy shares gained 15 cents, or three per cent, to $5.09.
