Transmission network operator TransGrid has bolstered its balance sheet ahead of an expected surge in new wind and solar projects, securing a $600 million loan to finance the construction of new grid infrastructure.
TransGrid will use the $600 million debt facility to fund the completion of infrastructure needed to connect new renewable energy projects to the grid.
The NSW government wants to create at least three dedicated renewable energy zones in the state, which will see investment in new network infrastructure coordinated within additional investments in new wind, solar and storage projects.
TransGrid is also undertaking the development of a new interconnection between New South Wales and Queensland, that will boost electricity flows between the two states. TransGrid is also set to deliver the supporting network infrastructure for the Snowy 2.0 project in southern NSW.
Most of these major projects would fall within TransGrid’s ‘regulated’ asset base, with these investments recoupable through regulated network tariffs.
TransGrid said the $600 million in new loans will allow the company to undertake the work of connecting new renewable energy projects to the grid, with much of this kind of infrastructure falling within the company’s ‘unregulated’ business, which often generates higher returns.
“This debt facility plays a significant role in securing a renewable future for Australia. It enables us to continue the delivery of services to our fast growing pipeline of long-term contracted load and renewable energy infrastructure,” TransGrid’s executive manager for business growth Richard Lowe said.
“It also allows TransGrid to continue to deliver innovative solutions and fund new technologies and projects for customers and consumers.”
Further details on the loans were announced via TransGrid’s major shareholder, Spark Infrastructure, in a statement to the ASX on Friday.
“The new facilities combine highly competitive financing terms and additional funding capacity, with structural flexibility to support delivery of TransGrid Services’ pipeline of renewable connection assets that will continue to drive growth in longterm contracted and unregulated earnings,” Spark Infrastructure said in a statement.
The company said that the investment had been made by a group of nine banks, both new and existing lenders to TransGrid, adding that it demonstrated the strong interest in the expansion of TransGrid’s unregulated businesses.
“We are delighted by the support and strength of our banking relationships as we look to grow our TGS business,” TransGrid CFO Jason Conroy said.
TransGrid was advised by RBC Capital Markets and King & Wood Mallesons in the debt round.