Australia’s biggest wind projects stall as owners pass the hat around for billions of dollars in debt and equity

Capacity Investment Scheme contract: Tick. Power purchase agreement: Tick. Environmental approvals: Tick. Equipment suppliers locked in: Tick. EPC contractors signed: Tick. Finance and equity locked in… Er, not quite yet.

Australia’s biggest wind project developments have largely jumped over the industry’s most challenging hurdles of the past decade – planning, connection, and transmission approvals – and are now focused on locking in billions of debt and equity finance to seal financial close of their projects and finally begin construction.

The latest to pass around the hat to banks and investors is the Bungaban wind project, which – according to the AFR’s Street Talk column – is seeking to raise at least $1.5 billion to defray the cost of the now $5 billion project for the joint owners, Andrew Forrest’s Squadron Energy and Windlab, now owned by Federation Asset Management.

Bungaban is one of the largest wind projects in Australia, at 1.4 gigawatts (GW), and will likely come with a 350 megawatt (MW) battery and is looking at a solar addition too. It has a 25 year deal with Rio Tinto for 1.2 GW of that capacity to help power the giant aluminium smelters and refineries in Gladstone.

Origin Energy, the country’s biggest utility, prefers not to own its own renewable projects and is seeking buyers for the 1.45 GW Yanco Delta wind project in the south-west of NSW, which has grid access rights for all its capacity, and which will presumably sell its output to Origin under an agreed price.

This follows a familiar pattern for Origin, whose last major investment in wind energy, nearly a decade ago at Stockyard Hill in Victoria, saw it sell the project to Goldwind and buy back the output – for a price that is likely half of what an off take agreement would be now.

German energy giant RWE is also seeking equity and debt for its 1.1 GW Theodore wind project in Queensland, with Macquarie Partners adding that mandate to its reported role for Bungaban.

Like the others, Theodore has its planning and connection approvals, and it thought it had an equity partner too, with the state-owned energy utility Stanwell. However, since the election of the LNP state government in Queensland, all state-owned utilities have backed out of equity investments in new wind and solar projects.

The biggest wind project to reach financial approval in the last two-and-a-half years in Australia is the 470 MW Parron Maam Marang wind project in Western Australia.

It is like to be soon overtaken by Alinta Energy’s 550 MW Marri wind project, which also has a long term power purchase agreement with a WA state owned utility, in this case the Water Corporation, and is also seeking an equity partner.

Alinta is now owned by the deep-pocketed Singapore group Sembcorp, but big companies seem intent on sharing the love, or at least the equity, in such projects. Marri was given the green tick under the federal environmental process this past week, so the financing is the only remaining hurdle.

In the last 12 months, a total of 10 wind farms have reached financial close and pressed ahead with construction, with half of these in Western Australia.

This is where Forrest is pushing ahead with his “real zero” goal in the Pilbara and where the state government is preparing for the closure of the last state-owned coal generators before the end of the decade on the state’s main grid.

But most of the wind projects that have reached FiD have been relatively small. And even though a record amount of new wind and solar capacity reached financial close in the September quarter, the federal government needs much bigger projects built to get close to its target of reaching 82 per cent renewables by 2030.

The same is also true for NSW, which needs plenty of new capacity to allow its remaining coal-fired power generators to close, with Origin’s Eraring the next to go in 2029. It currently has just one wind farm under construction.

David Dixon, from Rystad Energy, says there are some other wind projects that have previously negotiated power purchase agreements, particularly in Queensland, but have yet to seal finance and begin construction. This includes one of the most recent, for the 600 MW Jackson North project in Queensland.

The Banana Range wind farm in Queensland also landed a PPA, but that was back in 2022, and it may no longer be valid. Genex also secured two PPAs for its proposed Kidston wind farm, but has now cancelled the project because it can no longer make it work economically.

Others to obtain PPAs in Queensland under the previous Labor government include the Mt Hopeful and the Tarong West wind projects, but their future is unclear. Former Nationals leader David Littleproud has called on the state government to “call in” and cancel the Tarong West project in his own electorate.

The last major wind project to achieve financial close without a longterm PPA remains the country’s biggest operating facility, the soon to be completed 1.33 GW Golden Plains wind farm in Victoria.

Its owner, Portugal-based TagEnergy, chose to chance its arm without a firm off take deal, reasoning that once under construction, buyers would come. It was right, and it has since locked in deals with various customers after securing its finance from a consortium led by CBA and the CEFC.

“The broad acceptance of our unusual and more commercial investment model by major participants and financiers reflects a fast-maturing industry embracing inventive approaches helping speed both project timelines and the transition to clean energy,” CEO Franck Woitiez said at the time.

But no one has been able to follow suit since then.

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