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The Australian and Queensland governments have inked a landmark agreement to fast-track connection of the country’s largest wind farm precinct to the National Electricity Market.

A $160 million commitment from the Clean Energy Finance Corporation (CEFC) for the Southern Downs Renewable Energy Zone (REZ) will help power 700,000 Queensland homes and create hundreds of local jobs.

The $160 million CEFC financing commitment will unlock an additional 50MW 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 923MW 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.  

Powerlink, a Queensland Government company, will use the finance to build and operate 65km of high voltage overhead transmission lines and two new switching stations.

Federal view

Federal Minister for Climate Change and Energy, Chris Bowen, said the CEFC finance would help deliver more renewable energy to households and businesses in southern Queensland, and the east-coast states of Australia.

“The best way to put downward pressure on energy prices is to ramp up investment in renewables, transmission and storage and that is exactly what this $160 million commitment will do,” Mr Bowen said. 

“We are delivering on our Powering Australia plan which includes a major boost to renewable energy supplies to help create jobs and reduce emissions across the nation.”

This is the first account between a Queensland Government owned company and the CEFC, and it will be helping to establish one of the largest wind projects in the southern hemisphere.

Queensland Energy Minister, Mick de Brenni, said the agreement demonstrated how working together can help the nation achieve energy independence.

“Connecting the massive project to the national grid not only unlocks $2 billion worth of investment, it also boosts reliability of power across the three east Australian states, with clean Queensland-made energy,” Mr de Brenni said.

“It also presents another opportunity to build onshore capability and skill Queenslanders for renewable energy jobs of the future.

“This model also connects cheaper renewable generation in a way that minimises costs and risks for Queensland businesses and households.”

CEFC’s investment

CEFC CEO, Ian Learmonth said the investment 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,” Mr Learmonth 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.”

Powerlink will construct and operate 65km 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 August 2022 to deliver the new infrastructure required to connect the massive wind precinct to the grid. 

“Importantly, it will also deliver Queensland’s second REZ.  We are committed to maximising renewable generation capacity at the lowest possible cost to Queenslanders,” Mr Simshauser said. 

“The CEFC financing enabled unique contracting arrangements facilitating significant economies of scale.”  

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.” 

Simultaneous decarbonisation goal

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 per cent renewable energy target by 2030.  

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