AGL Energy divests Hallett 4 wind farm to EII

Australia-based AGL Energy has sold its 132.3MW Hallett 4 wind farm to the Energy Infrastructure Investments consortium, which is made up of Marubeni and Osaka Gas each with 39.9% and the APA Group with 20.2%. AGL expects to realize a development fee of $88 million from the transaction.

The development fees will be recognized progressively on a 'completion of construction' basis with $50 million to $60 million currently anticipated to be recognized in fiscal year 2010, and the balance in fiscal year 2011.

AGL will continue to operate and maintain the wind farm, as well as retain the rights to all Renewable Energy Certificates (RECs) and electricity output until 2036. Energy Infrastructure Investments (EII) will take an active role in the monitoring of construction and operation of the facility.

The Hallett 4 wind farm is currently under construction on the Hallett Hill range approximately 40km from Burra in South Australia. It will utilize 63 Suzlon S88v3 turbines and is being constructed by Indian wind turbine supplier Suzlon under a fixed-price turnkey contract.

Using a transaction structure similar to AGL's September 2008 sale of the Hallett 2 wind farm, EII has acquired Hallett 4 and will fund all remaining development and construction costs under project finance facilities established as part of the transaction.

EII will own the wind farm, while AGL will buy all of the electricity and RECs produced as well as operate and maintain the facility under long term fixed cost arrangements.

Michael Fraser, AGL's CEO, said: "The structure of this transaction where AGL retains all output, renewable energy certificates and operatorship, is consistent with the company's strategy to maintain its leadership position in renewable energy generation. The transaction demonstrates the solid appetite for quality projects which deliver significant benefits to both parties.

"AGL has a substantial pipeline of projects which include up to 2,600MW of renewable generation and up to 1,600MW of gas generation. Our renewable energy portfolio places AGL in a market leading position to benefit under the expanded Renewable Energy Target."

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