Origin Energy will buy one of the most advanced wind and energy storage projects in NSW to help plug the gap left by the planned closure of the country's largest coal-fired power station.
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The electricity and gas company announced on Friday an agreement with Virya Energy to acquire its Yanco Delta Wind Farm, one of the largest in the state.
Capable of powering more than 750,000 households, the $4 billion project is forecast to avoid up to 4.5 million tonnes of emissions a year by displacing coal generation.
Origin CEO Frank Calabria said Yanco Delta was a large-scale, advanced wind development project next to existing transmission infrastructure, with key planning and regulatory approvals already secured.
The purchase consists of an up-front payment of $125 million and an additional payment of up to $175 million conditional on the project achieving development milestones, with construction financing to come.
"The acquisition of Yanco Delta represents a major step forward in our journey to transition Origin's portfolio to cleaner energy," Mr Calabria said.
The 33,000-hectare wind farm development is located 10 kilometres northwest of Jerilderie in the Riverina district and will have a 1.5 gigawatt wind farm and a 800 megawatt/hour battery.
With potential for further expansion, Yanco Delta can quickly bring renewable energy into the market, according to Origin.
The NSW government is yet to announce whether it will pay Origin to extend the life of the Eraring coal-fired power station, which is slated to close in 2025.
Origin confirmed discussions with the government continue, and said both parties were working to bring the process to a resolution.
Eraring provides a quarter of the power in a state that is still the nation's largest electricity generator despite lagging on renewable energy targets.
RBC Capital Markets estimated the Yanco construction cost at $4 billion, pending final sizing, and expected the project to generate less than a third (29 per cent) of Eraring's annual electricity generation.
"This project will replace a material portion of the gap left by the closure of Eraring, and represents over double the existing wind generation Origin currently contracts (700MW)," RBC said.
Located to the north of the Victoria/NSW link, the project will supply the high demand central NSW region and avoid any bottle-necking on the transmission interconnector, analysts said.
The next regulatory choke-point for the project is transmission access, which Virya Energy was targeting for late 2024.
Australian Associated Press
