Three in race for $4bn NSW renewable zone project

Billions of dollars in renewable investments are still being held back by a lack of short-term certainty, says major investor group.

Wind turbines from the Silverton Wind Farm. The NSW government wants to build a series of renewable energy zones across the state. Picture: Mick Tsikas.AAP

A $4bn contest to build a major renewable energy zone in NSW has narrowed to three groups as the state charges ahead with a plan to replace coal with green generation.

Three joint venture groups remain in the race to build – and potentially operate – the zone in the state’s central west, one of five dotted through the state as part of NSW’s 20-year energy blueprint.

Sources close to the bidding process told The Australian that a group led by CIMIC and APA Group, advised by Macquarie, were in contention to secure the infrastructure project known as the Central West-Orana Renewable Energy Zone.

Other parties remaining in the process include a joint venture known as Secure Energy – Elecnor and construction engineering firm Clough alongside Essential Energy and the Plenary Group – and another group which includes Endeavour Energy, Acciona and Capella Capital.

The Central West-Orana project is the first of five zones being established in NSW, and at least one bidder who did not make the final cut off said his listed-company would put its hand up for the next clean energy hub.

Collectively the zones are expected to generate $20.7bn of private sector investment, providing cheap energy generation to help replace the state’s existing coal power stations as they close over the coming decades.

Transmission infrastructure such as high-voltage poles and wires to deliver energy will be key to the project, which also combines renewable energy generation such as wind and solar and storage through batteries.

While renewable spending in the state remains strong, energy executives on Tuesday warned billions of dollars of investment dollars are being withheld from Australia due to concerns over the lack of clear climate policy.

“There are billions of dollars being held back by the lack of policy certainty,” Rebecca Mikula-Wright, the chief executive of the Investor Group on Climate Change told Macquarie’s annual conference on Tuesday.

“Those billions are going offshore and international investors are hesitant to invest in Australia because it’s easier to invest in economies where the policy signals are very clear.”

Clean energy investors this week called on the next federal government to prioritise energy reform after the election, warning that confidence has been rocked by recent geopolitical shocks.

The Morrison government has committed to net zero emissions by 2050 but Ms Mikula-Wright says a more detailed policy is needed in order to open the floodgates to investment in renewables in Australia.

The Investor Group On Climate Change believes $17bn has already been committed to large scale renewable energy projects, supporting 13,500 jobs.

Clean Energy Finance Corporation chief executive Ian Learmonth said while the government policies currently in place provided a strong framework, one key area of focus would be improving transmission.

Over $14bn of power transmission projects are required to be built over the next 10 years to keep pace with a rapid influx of renewable energy and storage in different locations to the big coal generators which have historically provided the bulk of supply.

Much of the existing framework for transmission of energy was built around supplying energy from coal-fired power stations but as the sector transitions to greater use of wind, solar and hydro power, significant investment needs to be made in power lines from those new plants, as well as substations and converters.

Investors at the Macquarie conference said that making this transition successfully will involve significant regulatory and policy reform, improvements in technology, private capital investment, and an overhaul of the network infrastructure that underpins the system.

“We need greater transmission to transition to clean energy,” one banker commented.