A $450 million wind farm being built in Port Augusta, South Australia, has secured a power purchase agreement with ERM Power, marking the second renewable energy off-take deal for the Australian energy company in a matter of weeks.
In a statement released on Tuesday, ERM Power said it had signed two long-term Large Scale Generation Certificate (LGC) agreements with Singapore-based independent power producer Nexif Energy to support construction of the 212MW Lincoln Gap Wind Farm, 15km west of the Spencer Gulf town.
Construction of the project, which is being built by Senvion, is expected to start later this year with the project set to be generating electricity by mid-2018. The announcement came on the same day it was announced that the first two stages of a 300MW solar farm near Port Augusta began construction on Monday.
For Nexif, the PPA comes less than a month after the company bought the Lincoln Gap project from Sydney-based outfit OneWind Australia, in deal that also included the 75MW Glen Innes wind farm in NSW.
As we reported here, the wind farms, along with a 32 per cent share in RPVD Development, which owns the Walkaway II wind and solar projects in WA, were sold to Nexif for an undisclosed sum in early March.
For ERM Power, the Lincoln Gap PPA is part of a strategy that saw the company start the year as one of the industry “bad boys,” opting to pay a penalty to the Clean Energy Regulator rather than meet its development commitments under the federal Renewable Energy Target.
Since that decision – which sent ripples through the Australian renewable energy market and prompted the CER to issue another call for retailers to meet their RET obligations – ERM Power announced deals to underpin the construction of two renewable energy generation assets in Australia.
And three weeks ago it signed another deal for the output of the 57.5MW Hamilton Solar Farm, underlining ERM’s strategy of deciding to play with an “arbitrage” on large scale renewable energy certificates, using a three year “grace period” to bet that LGC prices will fall from their historic highs to more manageable levels.
Lincoln Gap, which will include up to 59 wind turbines, will feed into South Australia’s electricity grid via the Electranet transmission network and produce enough electricity to power around 111,000 homes. It also includes allowances for battery storage of power.
For the former coal town of Port Augusta, where South Australia’s last-coal fired generator closed last May, it signals the success of yet another major renewables project for the region.
Nearby, as we reported this morning, the first two stages (220MW) of the 300MW Bungala solar farm – Australia’s biggest – has begun construction about 12 km from Port Augusta after its developers last Friday reached financial close on the project.
Lincoln Gap, while not quite at financial close, is one step closer after the ERM Power PPA.
“It is a vote of confidence in the project, the town of Port Augusta and South Australia at a time when the need for innovative and reliable energy solutions in the State has never been higher,” said Nexif Energy Australia’s CEO Zeki Akbas on Tuesday.
“The project will also create a substantial number of jobs and stimulate economic activity in the region.”
ERM Power Managing Director & CEO Jon Stretch said it was gratifying to support a project which delivered new renewable sources of energy in Australia.
“ERM Power delivers 20 per cent of the energy fuelling business, government and industrials in Australia, enabling it to underpin the construction of new renewable infrastructure,” he said.
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