Australia’s biggest retailer and the owner of the country’s biggest coal generator has put out tenders for contractors and turbine suppliers for what will likely be the nation’s biggest wind farm once built.

Origin Energy is developing the Yanco Delta wind project in the south-west of NSW, with a planned capacity of 1.5 gigawatts, which would beat the 1.33 GW of the partially complete Golden Plains wind farm in Victoria.

In an interview with Renew Economy’s weekly Energy Insiders podcast, Origin Energy CEO Frank Calabria says tenders for what will undoubtedly also be the most expensive renewable project in Australia are out in the market.

“We’re in the midst right now (of) both turbine tenders and balance of plant (tenders),” Calabria said, when asked about the potential capital cost of the project, which Origin bought in 2024 for a total of $300 million.

Energy Insider co-host David Leitch had suggest a number of between $3 million per megawatt and $3.5 million. That would put the total value of the project at around $5 billion. Calabria demurred on the cost question, because the company is in mid-tender process, but said this:

“I feel very confident about the fact that we’ve got the best wind site in there, and the most economic,” Calabria told Energy Insiders. “It’s also a very large commitment.”

Yanco Delta is located in the south-west renewable energy zone near the town of Jerilderie – in the electorate of federal Opposition Sussan Ley – and is the only project in that REZ to receive full grid access rights. It will require more than 200 turbines.

Three other projects also obtained grid access rights, but took a hair cut in terms of capacity, while other major projects – some of them the same size as Yanco Delta – lost out completely because of the limited capacity of the new zone, blamed on the undersizing of the new transmission link, Project EnergyConnect.

One thing that is clear is that costs have gone up considerably since the last time Origin Energy set out on a large wind project, which was also the biggest in the country at the time.

The 530 MW Stockyard Hill wind farm, the largest in the country until overtaken this year by Golden Plains, struck what was then hailed in 2017 as a stunningly low off take price in the low $50s a megawatt hour.

Since then, prices have doubled – thanks to the inflation fuelled mostly by the Russian invasion of Ukraine and a global supply crunch. It is thought that capital costs of turbine parts may have peaked, but the wind industry, like all others, is also suffering from huge spikes in civil constructions costs.

“We feel we’ve got the most economic wind project in the market, but the costs of constructing those and the PPA prices people want for those is actually quite expensive right now in the system, and that’s actually probably been a more recent phenomena,” Calabria says.

Origin Energy’s strategy is likely to take the Yanco Delta project to the point of construction and then find a buyer, with Origin being the major customer. It did a similar deal with Stockyard Hill.

“Our intent would be that we would go through the development phase and therefore write the offtake contract and … then move most of that off balance sheet, and therefore recycle the capital so we could develop that into other assets we have,” Calabria said.

He noted the company has other renewable assets, including in the New England REZ, where it has bought its own land and is looking to develop the Northern Tablelands wind project.

“We continue to actively look at that,” he said. “It has been a sector that’s actually moved quite a lot, as you probably appreciate, in terms of the quality of the assets, the premium paid for those platforms and the opportunities and the timing they come to market.

“But wind would be one where we would be actively involved in the development and then basically secure the energy for our portfolio and for our customers, and then recycle that back, where we have committed $1.7 billion in the last two years.”

That has gone into battery storage, including the country’s biggest battery at Eraring – the soon to be commissioned 700 MW and 2,800 MWh facility – and the 300 MW, 650 MWh Mortlake battery next to its gas-fired power station in Victoria.

It has also written off-take deals for the giant Supernode battery near Brisbane, which will also overtake the Eraring battery to be the country’s biggest once complete.

“We feel we’ve got the most economic wind project in the market, but the costs of constructing those and the PPA prices people want for those is actually quite, quite expensive right now in the system, and that’s actually probably been a more recent phenomena,” Calabria says.

Origin has been criticised, including on this website and on the Energy Insiders podcast, for the lack of new wind and solar capacity it has built – zero – since it first announced in early 2022 (the last time Calabria was a guest of the Energy Insiders podcast) – the planned “early closure” of Eraring, which was then delayed from 2025 to at least 2027.

Calabria says the transition has been slower than expected, and he points to the delays in transmission, and also the attention diverted to the proposed $20 billion takeover bid led by Brookfield, which was ultimately voted down by institutional shareholders despite the support of the board.

“I think that we’ve got the balance about right in terms of this transition,” Calabria says. “It is all happening, though a little slower, and we’re still waiting for transmission to be built out.”

To hear more of the interview, and Calabria’s comments on the future of the Eraring coal plant, reported in a separate story, please go to the latest episode of the Energy Insiders podcast, to be published on Monday.

More information:https://reneweconomy.com.au/we-have-the-best-site-contracts-for-australias-biggest-wind-project-put-out-to-tender/