(Reuters) – Construction is set to begin on one of Australia’s biggest wind farms after its developers secured funding in a unique deal for the A$2 billion ($1.3 billion) first stage of the project after years of delays.
The first stage of the Golden Plains project, being developed by privately owned TagEnergy, involves a 756-megawatt wind farm due to start generating in the first quarter of 2025, which will be crucial to help replace coal-fired power.
Danish wind turbine giant Vestas Wind Systems (VWS.CO) will supply the project’s 122 turbines.
In its single largest wind investment, the Australian government’s green bank, the Clean Energy Finance Corp, has committed up to A$175 million in financing as part of a A$1.8 billion commercial debt package.
For the first time for a renewable energy development in Australia, the lenders have provided funding ahead of the project lining up customers, TagEnergy Chief Executive Officer Franck Woitiez said.
Typically lenders have wanted projects to have power purchase agreements (PPAs) in place before financial close.
“The world has changed,” Woitiez told Reuters.
By signing up power contracts while the project is under construction rather than before construction begins, the developer can give customers more certainty about when it will start generating and charge a higher price.
“It’s like selling an apartment – it’s cheaper when it’s off the plan than when it’s built. Similarly with electrons – the more certainty you give to the offtaker, the higher price you get,” Woitiez said.
“We found lenders were very happy to support that strategy – very interested in financing Golden Plains on this basis.”
TagEnergy, majority owned by French investment firm Impala SAS Group, will provide the equity for the project in its first investment in Australia.
Eventually TagEnergy and its partner Westwind plan to add another 500 MW of wind capacity and build a 300 MW battery at the project which has been on the drawing board for 15 years.