Hydro Tasmania and leading Chinese renewable energy business Guohua Energy Investment Corporation has signed an agreement for the joint ownership, operation and management of the Musselroe wind farm.
The $395 million, 168 megawatt wind farm is under construction in north-east Tasmania and due to be completed and operational by 1 July 2013.
Guohua Energy Investment Corporation is a wholly-owned Chinese state enterprise and will hold the investment via its Australian subsidiary, Shenhua Clean Energy Holding Pty Ltd (SCE).
The share-sale agreement will see SCE take a 75 per cent share in the Musselroe wind farm, with Hydro Tasmania retaining a 25 per cent share.
The agreement signed in Beijing today is subject to several conditions precedent, including project finance, execution of a formal connection agreement and Chinese regulatory approvals. The deal is expected to reach financial close by the end of 2012.
Tasmanian Premier Lara Giddings took part in the formal signing ceremony in Beijing as part of her 12-day Asian trade mission.
Hydro Tasmania’s CEO Roy Adair said the agreement followed an extensive due diligence process undertaken by SCE during an exclusivity period that followed the acquisition by SCE of 75 per cent of the Woolnorth wind farms in north-west Tasmania in February 2012.
Mr Adair said under the sale, Hydro Tasmania would provide operational, maintenance and administration services at Musselroe. It would also retain ownership of the Musselroe land with the wind farm operating under a 30-year lease.
The agreement is a continuation of the business model Hydro Tasmania adopted for the development of its wind farms whereby it retains minority 25 per cent equity participation while releasing funds from the sale of the 75 per cent equity stake for reinvestment in other wind farm opportunities.
The Musselroe project is supported by a 17.5 year offtake agreement with Hydro Tasmania for energy and Large Scale Renewable Energy Certificates.
“Hydro Tasmania is pleased to reach agreement with SCE,” Mr Adair said. “They are a first-class strategic partner and their involvement in our wind farms will inevitably lead to further Chinese investment and job creation in Tasmania.
“Strategic partnerships are the future for wind farm development as we look to build our renewable energy resource. Our wind strategy is about a small percentage interest in the development with a continued interest in the power purchase agreements to support our retail load through Momentum Energy and its mandatory requirements under the federal government’s Large-scale Renewable Energy Target.
“We also look forward to developing further investment opportunities with SCE into the future.”
Guohua Chairman Mr Jianning Xie said Guohua is pleased to further develop its relationship with Hydro Tasmania.
“Woolnorth represented our first investment in the renewable energy sector in Australia in line with our overseas strategy. We welcome today’s signing, and look forward to working with Hydro Tasmania to conclude this arrangement,” Mr Xie said.
Mr Adair said Musselroe was on schedule and expected to be completed by 30 June 2013.
National Australia Bank Ltd has been mandated as the sole lead debt and Export Credit Agency arranger. The Danish Export Credit agency, Eksport Kredit Fonden, will also be participating in the project financing.