Snowy Hydro Ltd., Australia’s largest hydropower producer, is considering raising as much as A$2 billion ($1.6 billion) by the end of 2018 for a project expansion, which will boost its 4,100 megawatt capacity by as much as 50 percent.
The company, jointly owned by the federal government and the Victorian and New South Wales state governments, has begun talks with global infrastructure funds and banks over financing options, Snowy Hydro Chief Executive Officer Paul Broad said in an interview. The company aims to have funding in place by the second half of 2018 before taking a final investment decision on the project’s expansion by year-end.
“Infrastructure funds globally are hot at the moment, so we’re not short of suitors who’ve been banging the door down to try and come and talk to us about it,” Broad said. “We need to get funds locked away and the board comfortable in advance of bringing the final proposals to them by the end of the year.”
The proposed Snowy Hydro 2.0 expansion, which may cost as much as A$4.5 billion, aims to add a further 2,000 megawatts of generation capacity and 350,000 megawatt hours of energy storage by late 2024 to the project located in New South Wales. Snowy Hydro will select a financial adviser in the next few months to help guide its funding plans, according to Broad. Lazard was hired last year by the Australian government to advise on its plans to boost its ownership in the company.
One of Australia’s biggest infrastructure projects, Snowy Hydro took a quarter-century to build. On completion in 1974, it consisted of seven power stations and 16 major dams reaping energy from some of the nation’s strongest rivers. The expansion has been championed by Prime Minister Malcolm Turnbull who said in December the project would help Australia overcome surging electricity prices and supply constraints.
Snowy Hydro also operates gas and diesel power plants that aren’t part of the expansion plan.
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