AGL Energy is set to begin construction on its 200MW Silverton wind farm in western New South Wales after agreement was reached on the terms of the project’s sale to the Powering Australian Renewables Fund, the first greenfield project of its kind to be acquired by the joint venture fund.

AGL will pay a price of just $65/MWh for the output of the wind farm in the first five years – the lowest known off take agreement yet struck in Australia, and comparing with the $73/MWh price struck in the ACT wind auction for the Hornsdale wind farm, although that price was fixed for 20 years.

The off take price is also cheaper than current wholesale prices in the Australian market. CEO Andrew Vesey said there was an option to extend the contract for another five years at the same or a lower price.

ITK analyst David Leitch said that base load futures in NSW are currently trading around the $70/MWh mark.

“So this is cheaper than the prices being charged by coal generators, including AGL in NSW. Of course the location is some distance from major load centres,” Leitch said.

GE will supply 58 of its 3.4MW wind turbines to the $450 million project, with Catcon to act as EPC, the contractor to build the project, which is estimated to create 150 jobs at the site west of Broken Hill.

Geoff Culbert, CEO of GE Australia & New Zealand noted the sale of the project to PARF demonstrates the potential of the joint venture fund to stimulate renewable project growth in Australia.

“Not only is this project innovative in its technology, but it’s also a clear demonstration of how an innovative financing structure can be used to unlock investment in large-scale renewable energy projects,” Culbert said in a statement.

The PARF was launched in early 2016 to help reduce the financial burden on AGL to meet its obligations under the renewable energy target.

Location of the 200MW Silverton wind farm west of Broken Hill

The partnership withQIC and the Future Fund has already acquired AGL renewable assets including the 102 Nyngan and 53 MW Broken Hill solar projects. PARF is aiming to develop around 1 GW of large-scale renewable capacity.

The Silverton wind farm is expected to be completed in 2018. It will be sited in New South Wales’ Barrier Ranges, around 25km north-west of Broken Hill.

AGL’s Silverton project manager Adam Mackett said the company was pleased to be bringing a second major project to the region.

“We are very thankful for the support we have received from the local community during the development phase,” said Mackett, in a statement.

AGL will be hosting a communication consultation meeting on the project tonight Silverton Youth Hall.