Electricity provider Synergy is poised to partner with a Dutch investment fund to bankroll its obligations under Federal green energy laws in a move that could spare the cash-strapped State Government hundreds of millions of dollars.
Energy Minister Ben Wyatt confirmed yesterday that Cabinet had signed off on plans by Synergy to establish a green power fund that would be used to meet its commitments under the renewable energy target.
Although no final agreement has been reached, it is believed infrastructure investor Dutch Infrastructure Fund is in pole position to underwrite the venture, with Synergy to retain a minority stake. Investment bank Macquarie stands to make millions in success fees after acting as an adviser to Synergy on the formation of the fund.
The approval comes almost a year after the previous government unexpectedly torpedoed similar plans and paves the way for the next wave of green energy projects to be built in WA.
However, the Opposition queried why the Government would allow Synergy to effectively privatise its green energy arm while refusing to sell off other electricity assets such as Western Power to pay down debt.
Shadow energy minister Dean Nalder said the initiative smacked of double standards.
Independent power providers will also likely be outraged, after previously claiming the fund plan would “crowd out” private-sector players and hand more market power to Synergy.
Under the plan, Synergy will transfer the Albany and Grasmere wind farms into the fund along with the Greenough River solar project near Geraldton.
Crucially, the fund will also house the rights to expand Greenough River to 40MW and develop the massive Warradarge wind-farm project in the Mid West.
Warradarge, widely regarded as WA’s best undeveloped renewable-energy project, has a development capacity of 240MW, although it is believed the project will initially be 180MW. Construction is expected to cost more than half-a-billion dollars.
It is understood the design of the fund will allow Synergy — and therefore the State — to keep the cost of developing the projects off the Government’s battered balance sheet.
The commercial design of the fund was believed to be a major selling point for the Government, which was facing a $463 million bill to pay for Synergy’s requirements under the RET.
Revised in 2014, the target stipulates that Synergy source up to 300MW of extra green power over the next three years.
Mr Wyatt lauded the fund as “fiscally responsible with minimal impact to electricity consumers and taxpayers”.
“I am delighted that after only six months in Government, we have delivered a plan to ensure that the State meets its 2020 renewable energy commitments,” he said.