The federal government’s green bank, the Clean Energy Finance Corporation, has ended 2024 with a bang, committing its largest ever single financial investment of nearly $2 billion to Australia’s race to deliver a clean energy “superhighway” of upgraded transmission networks.
The CEFC announced late on Thursday that it was tipping a record up to $1.92 billion to the projects of network company Transgrid, to help fast-track delivery of the HumeLink project and the New South Wales element of the Victoria-NSW Interconnector (VNI West).
The finance is a combination of concessional senior debt and subordinated notes, which the green bank says is designed to attract additional private sector capital to the landmark project. It also includes $140 million in CEFC debt finance previously provided to VNI West (NSW).
The contentious $4.8 billion HumeLink project, which will involve 365km of new 500 kilovolt high-voltage transmission lines between Wagga Wagga, Bannaby and Maragle, was given the all-clear by federal environment minister Tanya Plibersek on Thursday.
It is considered crucial to the connection of the Snowy Hydro 2.0 pumped hydro project and is slated to deliver up to 2,000 MW of long duration storage and – along with the NSW part of VNI West – accommodate an additional 2,570 MW of renewable energy in south-western NSW.
“HumeLink and VNI West (NSW) are vital parts of the clean energy solution,” CEFC CEO Ian Learmonth said on Thursday.
“These nationally significant projects will help bring low-cost and low emissions clean energy to energy users in NSW and Victoria, with CEFC finance helping reduce the level of project costs that may be passed on to consumers.
“In making this very substantial investment commitment, we have drawn on the considerable scale and specialist expertise developed in our first decade of investment across the economy.
“Just as we used our capital to build investor confidence in the growth of our large-scale solar and energy storage sectors, we are now extending that focus to the crucial area of transmission.”
The huge financial leg-up from the federal government comes amid ongoing criticism of the cost of HumeLink, which has blown out from early estimates of around $1 billion.
Who pays these costs is another bone of contention. Critics, like Australian energy market veteran Ted Woodley, have argued that it should be the project’s main beneficiaries, including Snowy 2.0 and other renewables developers, who foot the $4.8 billion bill, and not NSW consumers.
Critics have also argued that, despite its exorbitant price tag, HumeLink is undersized and will not be able to accommodate the combined capacity of Snowy 2.0, up to 3GW of future southwest-NSW wind and solar farms, as well as interstate transfers with Victoria and South Australia.
Coincidentally, an example of just how easily the price of transmission projects can blow out was supplied on Friday by Marinus Link, the developers of the new undersea cable between Tasmania and the mainland.
In an update, Marinus Link says the total costs for Stage 1 of the project are now forecast at $3.86 billion, an increase of around 17% compared to pre-tender completion estimates.
It says the updated costings do not impact project timelines, with construction expected to begin in 2026 and to be completed by 2030.
