The federal government-funded Clean Energy Finance Corporation (CEFC) has committed up to $1.92 billion to infrastructure developer Transgrid for construction of two major power lines needed to transmit renewable energy to major population areas.
The projects are HumeLink and the NSW element of the Victoria-NSW Interconnector (VNI West).
The CEFC has structured the financing to attract private capital investment in projects which are expected to cost a total of around $5 billion.
The CEFC says the projects are critical parts of Australia’s net zero transition and will help provide low-cost and low emissions energy for users in NSW and Victoria.
The commitment is the largest to date made by the CEFC and will be drawn from the $19 billion Rewiring the Nation Fund.
According to Transgrid, main construction works on the two projects will begin in early 2025.
HumeLink will link the Greater Sydney electricity load centre with the Snowy Mountains Hydroelectric Scheme (Snowy 2.0), Energy Connect in south-west and the NSW element of VNI.
The infrastructure will deliver up to 2,000MW of pumped storage power to major population areas. Transgrid modelling estimates this firming capacity on the power grid will also enable the transmission of an additional 2,570MW of renewable energy.
The CEFC’s commitment is a combination of concessional senior debt and subordinated notes, designed to attract additional private capital to the projects. The CEFC’s total includes $140 million in debt finance previously provided to VNI West.
The total cost of the project is estimated at $4.895 billion.
CEFC chief executive Ian Learmonth said: “HumeLink and VNI West (NSW) are vital parts of the clean energy solution. 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.
“When we think about our energy system of the future, it’s clear we want the most reliable, lowest cost and lowest emissions solution. Renewable energy backed by storage delivers on all three elements, with a modernised transmission network the key to delivering this energy to consumers.
“Importantly, our RTN Fund transactions are backing projects that AEMO, the energy market operator, has identified as the most cost-effective solution to Australia’s clean energy transition and the achievement of our net zero ambitions.”
Image: Transgrid plans to start major work on the projects in early 2025.