Origin Energy has agreed to sell its under-development Stockyard Hill wind farm project in Victoria to Chinese wind power developer Goldwind for $110 million.
The sale is part of Origin’s asset sale program announced in 2015, which has targeted raising $800 million through divestment of non-core assets by June 2017. The proceeds will be used to reduce debt, the company says.
The energy producer and retailer will, however, sign a long-term power purchase agreement with Goldwind to buy all the power from the 530 megawatts project and associated renewable energy certificates once operations start in 2019 and until 2030.
That will boost its renewables capacity further, taking new commitments to 1200 MW in the past 12 months.
Earlier in May, Origin sold its under-development 110 MW Darling Downs solar farm in Queensland to gas pipelines operator APA Group, but agreed to buy all the electricity generated by the project until 2030.
That followed an agreement in April to buy all the generated power from the 220 MW Bungala solar plant in South Australia.
When completed, the Stockyard Hill project is slated to be Australia’s largest wind farm with power generated from 149 wind turbines.
On Monday, Origin said it had signed up to buy the wind farm’s power for a market leading price of below $60/MWh.
“Today’s announcement is important as it indicates just how fast the transition is occurring in Australia’s energy market,” Origin chief executive Frank Calabria said.
“Not only is renewable energy being rolled out rapidly, the costs have fallen at a very fast rate.”
RBC Capital Markets analyst Ben Wilson backed the assessment, calling the agreed rate “surprisingly low” in the context of current wholesale pricing of more than $80/MWh for renewable contracts.
“While we broadly see downward pressure on wholesale power pricing, we think Origin should generate good margins on the Stockyard deal,” he said.
By 1214 AEST, Origin Shares were trading three per cent higher at $7.56 each in a strong Australian market.