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Origin (ASX:ORG) shares under the spotlight on major renewable energy deal

The Origin Energy Ltd (ASX: ORG) share price is up 0.6% after announcing it is buying a major wind development in NSW.

Origin is one of Australia’s largest energy generators and retailers.

Wind farm acquisition

Origin has entered into an agreement with Virya Energy to buy the Yanco Delta wind farm, which was described as one of the largest and most advanced wind and energy storage projects in NSW.

Yanco Delta is in the NSW government-designated South West Renewable Energy Zone (REZ) and consists of a 1.5GW wind farm and an 800 MWh battery. The project is located next to key transmission infrastructure.

The wind farm is located on a 33,000-hectare site, 10km northwest of Jerilderie in the Riverina district. This wind farm project has received NSW government development approval.

It costs $175 million upfront and there’s an additional variable payment of up to $175 million conditional on the project achieving certain development milestones. It’s not significantly material for Origin shares, but future renewable energy generation is an important initiative.

Origin’s renewable energy portfolio

The business has a number of projects on the go. It said:

Origin’s portfolio of renewable and storage projects includes Walcha Energy’s proposed Ruby Hills Wind Farm and Salisbury Solar Farm projects in the New England REZ, with a planned capacity of more than 1,300 MW. Nearby, Origin has also acquired ‘Warrane’, a 500 MW greenfield development opportunity now known as the Northern Tablelands Wind Farm, while progress continues on large-scale batteries at Eraring and Mortlake power stations.

Management commentary

Origin CEO Frank Calabria said:

Yanco Delta is a large-scale, advanced and therefore highly strategic wind development project. With the key planning and regulatory approvals secured, and with significant plans for supporting infrastructure and transmission in place, the acquisition of Yanco Delta represents a major step forward in our journey to transition Origin’s portfolio to cleaner energy.

Origin has made rapid progress in building out a portfolio of renewable and storage projects at varying stages of development, and Yanco Delta represents a unique opportunity to bring a material volume of renewable energy supply into the market relatively quickly, to help meet the needs of our customers.

Final thoughts on this deal for Origin shares

Australia needs to play its part in decarbonising, and energy generators like Origin can have the biggest impact by changing how the electricity is generated. It’ll be interesting to see if Origin buys more projects to de-risk and accelerate its green plans, or it starts them from scratch.

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