CEFC funding to unlock 1.5 GW of hosting capacity in Queensland REZ

The federal government’s Clean Energy Finance Corporation (CEFC) has committed $160 million to connect new clean energy assets being develop in Queensland’s planned Southern Downs Renewable Energy Zone (REZ) to Australia’s main grid.

Queensland government-owned transmission network service provider Powerlink will use the funds to construct and operate two new switching stations in the southern portion of the Southern Downs REZ and a planned 65-kilometre high-voltage overhead transmission line which will connect the 1,026 MW MacIntyre Wind Precinct being built 60 kilometres west of Warwick to the National Electricity Market (NEM), helping power an estimated 700,000 homes.

Queensland Energy Minister Mick de Brenni said the new investment would also allow another 500 MW of new capacity to be connected in the same area.

“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,” he said.

CEFC chief executive officer Ian Learmonth said the funding agreement demonstrates a new way to deliver a renewable energy zone with the project marking the first time that generator contributions will cover the cost of building critical REZ assets.

Learmonth said the CEFC capital will enable Powerlink to develop the infrastructure at scale, rather than in stages, keeping connection costs down for the initial or foundation generators while unlocking greater renewable generation capacity in the Southern Downs REZ.

“The CEFC has created an investment structure that helps Powerlink bridge the financing gap for generators through an initial lower connection charge,” he 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.”

Energy Users Association of Australia (EUAA) chief executive Andrew Richards said the new market-driven model “fundamentally changes the way that transmission businesses are looking at delivering this type of infrastructure,” and said it should be replicated across Australia.

“It is fantastic, and we want to see more of them adopt this approach across the country,” he said.

The first of projects to be connected in the Southern Downs REZ will be the MacIntyre Wind Precinct which comprises the 923 MW MacIntyre Wind Farm majority owned by renewable energy firm Acciona, and the 103 MW Karara wind project which is controlled by Queensland government-owned renewable generator CleanCo.

Powerlink chief executive officer Paul Simshauser said work on the new transmission infrastructure has already commenced.

“At more than 1 GW, this is easily Powerlink’s largest connection project to date,” he said. “Importantly, it will also deliver Queensland’s second REZ development, unlocking an additional 1,500 MW of hosting capacity in the region.”