Australia’s ‘best’ unbuilt wind project gains financial close

More than three years after it was first approved for construction, the Hornsdale wind farm near Jamestown in South Australia has reached financial close – making it the last of the winners from the first round of ACT wind energy auctions to do so.

The project’s majority owner, French company Neoen, said on Wednesday that it had secured an “unprecedented” long-term debt financing package from KFW IPEX-Bank GmbH and Societe Generale, and signed contracts with Siemens for the supply of turbines and construction, long-term operations and maintenance of the project.

The ACT’s out-going environment minister, Simon Corbell said that with all finances now in place to move to the construction phase of the project, all three wind farms from the first auction round were now going on to be built.

“It is pleasing to see that the three projects are progressing with support of local communities. Neoen, RES and Windlab are to be commended for their positive engagement of local communities, showing that regional communities are embracing wind energy as a way of diversifying regional economies,” Corbell said in a statement.

The 100MW first stage of the Hornsdale Wind Farm is being developed Neoen and its Australian partner Megawatt Capital, who bought the project from Investec Bank last year, after it struggled to get a financial commitment since due of the policy uncertainty around the renewable energy target.

But, as we have noted before, the primary driver for the project has not been the RET, but the ACT feed-in tariff – a 20-year contract of $92/MWh, secured in the first round of wind auctions.

For this reason, it has been considered by many to be the “best” unbuilt wind energy project in Australia. Its capacity factor, as a percentage, is rated in the high 40s.

It’s a point that is not lost on Megawatt Capital Investments’ Mark Schneider: “Through their innovation, the ACT have assumed the mantle of renewable energy leadership for the nation, demonstrating that sustainable, renewable energy can be sourced in grid scale quantity at a cost-competitive price.

“With the Federal Renewable Energy Target now secure till 2030, the opportunity exists for other governments and large power purchasers to follow the ACT’s example. The renewable energy industry is ready to deliver,” he said on Wednesday.

Construction of the Hornsdale project – situated 90km south-east of Port Augusta – is set to begin immediately, according to Neoen, with South Australian firms Catcon and CPP confirmed as contractors, and is expected to generate around 250 jobs in the region.

The fate of the remaining part of the project – which could be up to 270MW – will largely depend on the RET, but both AGL Energy and Meridian Energy have said that political uncertainty, specifically the Abbott government’s dislike of wind generation, will dampen investments.

The Hornsdale project and its stakeholders will also join with the Canberra Institute of Technology to establish the CIT Renewable Energy Skills Centre of Excellence, building on the ACT’s strong position in the industry for Australia and the Asia-Pacific region.

“The Centre of Excellence will take an important place in the growing ACT renewable energy industry cluster and reinforce Canberra’s position as the Renewable Energy Capital of Australia,” Neoen said.

The wind farm is expected to be in operation in 2017, at which time it will be one of three wind farms used to supply more than a quarter of Canberra’s total electricity supply, as it heads for its target of 90 per cent renewables by 2020.

Financial close is the latest significant milestone for the Hornsdale project, following the signing of the engineering, procurement and construction contract with Siemens last week.

Neoen Australia managing director, Frank Woitiez, said Hornsdale the company’s second project to start construction this year. “The quality of the relationship with all the stakeholders, added to the exceptional wind resource at Hornsdale have turned it into a winning project under the ACT Wind Auction and a great business opportunity. Neoen is now ready to build the next 170MW of Hornsdale Wind Farm.”

The ACT launched its second wind energy auction earlier this month, calling for tenders to develop of a further 200MW of wind energy capacity across the National Electricity Market.