AGL Energy Limited (AGL) and Meridian Energy (Meridian) today announced they have entered binding contracts to construct a 420 MW wind farm at Macarthur in Victoria’s south west at a total capital cost of $1 billion.

On completion in early 2013, the Macarthur Wind Farm will be the largest wind farm in the southern hemisphere, and one of the largest wind farms in the world. It will join AGL’s market leading suite of renewable energy generation assets.

The wind farm will comprise 140 Vestas V112-3.0 MW wind turbine generators and be constructed by a Vestas/Leighton Contractors consortium. The wind farm will be situated near Hamilton, 260 kilometres west of Melbourne, in the Shire of Moyne.

The project will be formally launched today in Melbourne by the Premier of Victoria, the Hon. John Brumby MP, and the Minister for Climate Change, Energy Efficiency and Water, Senator the Hon. Penny Wong.

Scale delivers operating cost savings.

AGL and Meridian will each fund 50% of the capital cost of constructing the wind farm. AGL will fund its share of the cost and the costs associated with the construction of a substation at Tarrone from its existing balance sheet capacity. AGL will have 100% ownership of the substation, which will enable the future development of a gas-fired power station.

AGL CEO and Managing Director Michael Fraser said: “The joint venture between AGL and Meridian combines the considerable experience and complementary skill sets of the largest renewable developers in Australia and New Zealand. I have great confidence the partnership will deliver significant benefits for both parties.

AGL will acquire all of the wind farm’s energy output and renewable energy certificates.

Mr Fraser said: "This project is consistent with AGL's renewable energy strategy and entrenches our position as the leading developer, owner and operator of renewable energy assets in Australia.

"As a result of utilising Vestas’s new 3.0 MW V112 turbines, we have been able to increase the capacity of the wind farm while reducing the number of towers from 174 to 140. This reduces the environmental footprint of the project and achieves substantial operating cost savings in excess of $30 million over the life of the wind farm."

Operational as market demands more renewable energy

The recent enhancements to the 2020 Renewable Energy Target (RET) scheme will require around 9,500 MW of new renewable generation capacity to be built this decade.

The Macarthur Wind Farm is expected to be fully operational in 2013 at a time when it will be needed to meet the legislated demand for Renewable Energy Certificates under the RET scheme.

Good for the environment

Once operational, the Macarthur Wind Farm will have the capacity to power more than 220,000 average Victorian homes and abate more than 1.7 million tonnes of greenhouse gases every year - the equivalent of taking more than 420,000 cars off the road each year.

The Premier, Mr Brumby, said: "This $1 billion project will help cut emissions, create new jobs and provide clean energy for Victorians. Attracting a renewable project of this scale to Victoria is yet another example of how Victoria is leading the way towards a clean energy future."

Helping to reach the Renewable Energy Target

Mr Fraser said that the renewable energy from the Macarthur Wind Farm would make a significant contribution to delivering the expanded RET. "The changes to the Renewable Energy Target scheme provided the investment certainty we needed to make Macarthur viable."

The CEO of Meridian, Tim Lusk, said: “Wind generation has a substantial cost advantage over other grid scale renewable technologies that can be practically deployed in Australia.

We expect wind farms - and Macarthur in particular - to make a substantial contribution to Australian retailers meeting commitments under the Renewable Energy Target."

Jobs, economic growth and community benefits

AGL commissioned consultants Sinclair Knight Merz (SKM) to undertake an Economic Impact Assessment to calculate the benefits of AGL’s wind energy activities in the region and more broadly. In terms of employment, approximately 400 direct jobs will be generated at the peak of construction, as well as another 800 indirect jobs at the peak.

There will be ongoing employment for about 30 full time staff for 25 years following construction.

Direct construction expenditure in the region is estimated to be approximately $245 million between 2010 and 2013, with regional construction expected to add about 1.5% to the Gross Regional Product in 2013.

AGL and Meridian will jointly establish a Macarthur Wind Farm Community Fund which will operate for the life of the wind farm. Through the Community Fund, AGL and Meridian aim to bring positive benefits to the local community through grants that enable the broader community near the wind farm to participate in the benefits the project will bring.

Mr Fraser said:"One of the most important considerations in developing a wind farm is the need for a supportive local community. We believe there will be significant benefits for local people and businesses as the project gets underway. We are working closely with the Macarthur community to make sure we deliver these benefits in a way that protects the local environment.

Committed to renewable energy

On completion, the Macarthur Wind Farm will augment AGL's portfolio of renewable energy assets, which comprise about 30% of the company's generation capacity. AGL is developing the Hallett group of wind farms in South Australia, with the Hallett 2 Wind Farm formally commissioned in April and Hallett 4 and 5 Wind Farms under construction and Hallett 3 in development. AGL formally opened the 140 MW Bogong Hydro Power Station last November, the final stage of the 391 MW Kiewa scheme. This has brought AGL'shydro generation capacity to almost 800 MW.

Last month, AGL commenced construction of the 63 MW Oaklands Hill wind farm which is located 5km south of Glenthompson, also in western Victoria.

KEY FACTS: Macarthur wind farm
Location: 230km west of Melbourne
Total construction cost: $984m (wind farm); $27m (substation)
Contractors: Vestas/Leighton Contractors
Turbines: 140 x 3.0 MW V112
Capacity: 420 MW
Average wind speed: 7.6 m/s
Capacity factor:  35%
Construction schedule: Fully commissioned 2013
Grid connection: 14km to Heywood-Mooralbool 500kV transmission line.
Offer to Connect from AEMO scheduled for September 2010
Landowners: 3
Employment: Up to 400 direct jobs at peak during construction, 800
indirect, and 30 during operation

About AGL

AGL is one of Australia's leading integrated renewable energy companies and is taking action toward creating a sustainable energy future for our investors, communities and customers. Drawing on 175 years of experience, AGL operates retail and merchant energy businesses, power generation assets and an upstream gas portfolio. AGL has one of Australia's largest retail energy and dual fuel customer bases. AGL has a diverse power generation portfolio including base, peaking and intermediate generation plants, spread across traditional thermal generation as well as renewable sources including hydro, wind, landfill gas and biomass. AGL is Australia's largest private owner and operator of renewable energy assets and is looking to further expand this position by exploring a suite of low emission and renewable energy generation development opportunities.