A landmark CEFC investment to support the Southern Downs Renewable Energy Zone (REZ) will help develop critical transmission and grid infrastructure to connect multiple clean energy assets in Queensland to the National Electricity Market.
In its first investment to support the development of a REZ, the $160 million CEFC financing commitment will unlock an additional 500 MW of new network hosting capacity, adding to the proposed 1000MW of renewable plant capacity to support the MacIntyre Wind Precinct. The precinct includes the 103MW Karara Wind Farm, and the 923 MW MacIntyre Wind Farm, and is set to be one of the world’s largest onshore wind farms.
In a significant shift that demonstrates a new way to deliver a REZ, the project marks the first time that generator contributions will cover the cost of building critical REZ assets. Importantly, the CEFC capital will enable Powerlink to future proof the REZ by developing it at scale and keep connection costs down for the initial or foundation generators.
By stepping in with concessional finance, the CEFC has provided a scale efficient solution to unlock greater renewable generation capacity in the Southern Downs REZ. This cost effective solution has ensured a scale efficient build out shared across future generation capacity.
CEFC CEO Ian Learmonth said: “This is an exciting demonstration of the transformative power of CEFC capital. Drawing on our experience developing Australia’s large-scale renewable energy sector, the CEFC has created an investment structure that helps Powerlink bridge the financing gap for generators through an initial lower connection charge.
The CEFC is excited to work with Powerlink to help develop the Southern Downs REZ which will make an important contribution to Queensland efforts to reach its 50 per cent renewable energy target by 2030.
CEO, CEFC said.
“Our innovative finance is helping overcome the financial challenges of these early generators which means lower power prices for their customers. And by backing Australia’s energy pioneers as they develop a REZ as part of a stronger, cleaner grid, we are supporting energy system transformation, which is critical to Australia’s transition to net zero emissions.
“Accelerating the development of renewable energy zones is an important part of AEMO’s Integrated Systems Plan (ISP). The ISP recognises that much of the NEM’s new renewable energy resources will be developed in these areas with good solar and wind resources, and potential for strong network connection as well as strong community support,” Mr Learmonth said.
Powerlink will construct and operate 65 km of high voltage 330kV overhead transmission lines and two new switching stations in the southern portion of the Southern Downs REZ. It estimates that the project will create 400 jobs overall during construction of the wind farms and support a further 220 jobs in building the transmission connection.
Powerlink Chief Executive Paul Simshauser said work on-ground had started this month to deliver the new infrastructure required to connect the massive wind precinct to the grid.
At more than one gigawatt, this is easily Powerlink’s largest connection project to date,
Chief Executive, Powerlink
“Importantly, it will also deliver Queensland’s second REZ. We are committed to maximising renewable generation capacity at the lowest possible cost to Queenslanders.
“The CEFC financing enabled unique contracting arrangements facilitating significant economies of scale.”
Once complete, 180 turbines on site across both wind farms will generate enough power to supply about 700,000 Queensland homes, with room on the network for future renewable projects.
Energy Users Association of Australia (EUAA) CEO Andrew Richards said that the model used by Powerlink to deliver Renewable Energy Zones should be replicated across Australia.
“Powerlink’s market-driven REZ model is one that we fully support. This model connects cheaper renewable generation in a way that minimises costs and risks for Queensland businesses and households,” Mr Richards said.
“This is a real first in that it fundamentally changes the way that transmission businesses are looking at delivering this type of infrastructure. It is fantastic and we want to see more of them adopt this approach across the country.”
This latest CEFC grid infrastructure investment follows commitments to two critical electricity infrastructure projects – EnergyConnect and Snowy 2.0 – and takes total grid investment in the past 18 months to $580 million. This is a substantial contribution to support the delivery of critical electricity transmission infrastructure that will transform Australia’s energy system to a high renewables penetration future.
Mr Learmonth added: “Our third commitment to support network investment in the NEM highlights how critical CEFC capital is to the ongoing decarbonisation of Australia’s energy sector.
“As the largest contributor to Australia’s greenhouse gas emissions, accelerating the energy sector’s transition to low emissions will be a significant step toward reaching net zero emissions by 2050.”
The REZ also supports Queensland’s energy transition away from fossil fuel and towards its 50% renewable energy target by 2030.