Australia's AGL Energy Ltd said on Thursday it had given final approval to build the biggest wind farm in the southern hemisphere and raised its price tag for the project in Victoria state by 25 percent to A$1 billion ($900 million).
Australia's largest energy retailer said it will fund 50 percent of the construction cost of the Macarthur wind farm and pay for its share from its existing balance sheet. New Zealand's state-owned Merdian Energy Ltd will pay for the balance.
AGL has previously estimated Macarthur would cost A$800 million.
The Macarthur wind farm, to be built by a consortium comprising Australia's Leighton Holdings Ltd (LEI.AX: Quote) and Danish wind turbine manufacturer Vestas (VWS.C Quote), will have a generation capacity of 420 megawatts upon its completion in early 2013.
"This project is consistent with AGL's renewable energy strategy and entrenches our position as the leading developer, owner and operator of renewable energy assets in Australia," AGL Chief Executive Officer Michael Fraser said in a statement.
AGL said it would acquire all of the wind farm's energy output and renewable energy certificates.
Approval of the Macarthur wind farm comes just two months after the Australian government made revisions to the Renewable Energy Target (RET) laws, aimed at giving the industry certainty to spend on major clean energy projects.
The revised law calls for large-scale projects like wind farms to provide and meet a 20 percent target of generating the country's power from renewable sources by 2020. Smaller projects will get different treatment.
AGL had previously said that it put on hold wind energy investments amounting to A$1 billion due to the uncertainty in securing renewable energy certificates, which saw their value tumble after the government began to issue them to solar hot water technology users. ($1=1.111 Australian Dollar)
