CEFC caps year with record investment in clean energy “superhighway”

The CEFC confirmed its single largest investment commitment since inception, committing up to $1.92 billion to enable the construction of a clean energy “superhighway” connecting millions of consumers to low emissions, low-cost renewable energy as Australia pushes toward net zero emissions by 2050.

The CEFC finance, via the $19 billion CEFC Rewiring the Nation (RTN) Fund¹, is backing developer Transgrid in delivery of two major energy infrastructure projects: HumeLink and the NSW element of the Victoria-NSW Interconnector (VNI West). 

Transgrid today announced its Board had taken the Final Investment Decision (FID) on HumeLink², with the main construction works expected to commence in early 2025. 

HumeLink will link the Greater Sydney electricity load centre with the Snowy Mountains Hydroelectric Scheme (Snowy 2.0), Energy Connect in south-west NSW and the NSW element of VNI West (NSW)³.

The infrastructure will deliver up to 2,000 MW of pumped storage to major population centres, with Transgrid modelling estimating this vast firming capacity will also enable the grid transmission of an additional 2,570 MW of renewable energy.

The CEFC commitment of up to $1.92 billion⁴ is a combination of concessional senior debt and subordinated notes, designed to attract additional private sector capital to the landmark project. It includes $140 million in CEFC debt finance previously provided to VNI West (NSW).  

Financing nationally significant projects

CEFC CEO Ian Learmonth congratulated Transgrid on the achievement of FID and the required Australian Government environmental approvals for the landmark project.

“HumeLink and VNI West (NSW) are vital parts of the clean energy solution. These nationally significant projects will help bring low-cost and low emissions clean energy to energy users in NSW and Victoria, with CEFC finance helping reduce the level of project costs that may be passed on to consumers.

Ian Learmonth

CEO CEFC

"In making this very substantial investment commitment, we have drawn on the considerable scale and specialist expertise developed in our first decade of investment across the economy. Just as we used our capital to build investor confidence in the growth of our large-scale solar and energy storage sectors, we are now extending that focus to the crucial area of transmission. 

“When we think about our energy system of the future it’s clear we want the most reliable, lowest cost and lowest emissions solution. Renewable energy backed by storage delivers on all three elements, with a modernised transmission network the key to delivering this energy to consumers.

“Importantly, our RTN Fund transactions are backing projects that AEMO, the energy market operator, has identified as the most cost-effective solution to Australia’s clean energy transition and the achievement of our net zero ambitions⁵,” Mr Learmonth concluded.

Secure path forward for critically important infrastructure

Transgrid CEO Brett Redman said: “We have a secure path forward for this critically important infrastructure, following all necessary approvals and the Board’s decision to invest in this $4.895 billion project.

“Transgrid and our delivery partners are excited to be delivering HumeLink, to reinforce the southern NSW electricity grid and enable the integration of new renewable generation. 

“Bringing this energy online will benefit millions of Australians on the eastern seaboard by providing consumers with access to cheaper renewable energy. HumeLink will also provide substantial opportunities for suppliers and jobs at both the regional and national level. It is expected to deliver more than $1 billion in net benefits for Australians.

Brett Redman

CEO, Transgrid

Mr Redman continued: “HumeLink and VNI West (NSW) are essential to the delivery of Australia’s energy transition, meeting the Australian and NSW Governments’ net zero targets and providing consumers with access to more affordable renewable energy. The Australian Government’s commitment to these projects is critical and they would not be possible without the Rewiring the Nation program and the CEFC.”

Transgrid CFO Nadine Lennie added: “As the CEFC’s largest single investment under the Rewiring the Nation Fund, this transaction also represents the largest single investment by Transgrid’s security holders, who have now committed more than $2 billion to HumeLink and VNI West (NSW).”

New investment in generation, storage and transmission

The Australian Energy Market Operator (AEMO) forecasts the progressive closure of Australia’s remaining coal-fired power stations will see up to 90 per cent of today's capacity closed by 2035 and all before 2040, requiring new investment in generation, storage and transmission.

AEMO expects investment in transmission projects to be recouped while also saving consumers $18.5 billion in avoided costs and delivering emissions reductions valued at a further $3.3 billion. It also forecasts that building and maintaining energy infrastructure over the next 20 years will support more than 60,000 energy jobs⁶.

Innovative finance solutions

CEFC Chief Investment Officer – RTN, Paul McCartney noted Transgrid’s ongoing engagement with local communities in the planning and delivery of major projects like HumeLink. This includes Transgrid’s commitment to prioritise local employment, training and skills development and to invest more than $11 million directly into the community to provide enduring social legacy outcomes.

Mr McCartney added: “Transmission is complex, large-scale and requires specialist equipment and skills. It has unique financing needs, not least because of the impact that such an investment can have on credit metrics on project owners during the construction phase.

“These factors have been compounded by ongoing global economic and geo-political shocks, which have disrupted supply chains, driven up the price of critical equipment and contributed to project delays⁷.   

“CEFC capital through the RTN Fund plays an essential role by providing innovative finance solutions for projects such as HumeLink and VNI West (NSW) to help network service providers overcome these headwinds, giving them the confidence to make substantial, long-term investment decisions.

“At the same time, we are carefully structuring our investments so that we can extend the benefits of our capital to consumers, in the form of lower financing costs for transmission infrastructure, avoiding the need to otherwise pass such costs through to consumers.”