Australia clears $1.8 bln power line to boost renewable energy
By Sonali Paul
MELBOURNE, May 31 (Reuters) - Australia on Monday approved a A$2.28 billion ($1.76 billion) project to build the country's longest power transmission line, which the country's energy market operator considers critical to handling electricity supply from new wind and solar farms.
The Australian Energy Regulator, whose role includes ensuring power customers don't face excessive bills, approved the 900-km (560-mile) EnergyConnect project between South Australia and New South Wales after the companies cut its cost by 4%.
EnergyConnect, being developed by TransGrid and ElectraNet, is one of several interconnectors that Australia's energy market operator has said are needed to prevent blackouts, while keeping a lid on power prices.
"EnergyConnect ... will help to accelerate Australia's energy transition by connecting customers with more renewable generation," TransGrid Chief Executive Paul Italiano said in a statement.
Australia's grid was designed to deliver power from always-on coal-fired plants built near three big mining regions. But it has run into problems over the past five years as wind and solar farms, supplying intermittent power, have hooked up to parts of the network in remote locations where there is limited capacity.
The energy market operator forecasts that EnergyConnect could clear the way for up to 1,800 megawatts of low-cost renewable energy generation in South Australia, New South Wales and Victoria.
Financing was delayed as regulators had refused to revise cost recovery rules, which TransGrid and ElectraNet had said were making it hard to line up debt funding for the project.
To get the project over the line, TransGrid said on Monday it had secured A$295 million in hybrid debt funding from the national government's Clean Energy Finance Corp. The company said this was key to financing its A$1.834 billion section of the transmission line in New South Wales and helped cut the final cost of the project.
ElectraNet said it will spend A$457 million on the South Australian section.
TransGrid is owned by Spark Infrastructure SKI.AX and a consortium of investment funds. ElectraNet is owned by the international arm of State Grid Corp of China, Malaysian firm YTL Power Investments Ltd and Australian Utilities Trust.
($1 = 1.2953 Australian dollars)
(Reporting by Sonali Paul; Editing by Kenneth Maxwell)
((Sonali.Paul@thomsonreuters.com; +61 407 119 523;))
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