Shares in Spark Infrastructure Group (ASX: SKI) have slipped today with news its subsidiary has given the go-ahead for a key energy project. At the time of writing, the Spark share price is trading at $2.17, down 0.67%.
Project EnergyConnect will be built by TransGrid following the company's final investment decision. The project has all of the required regulatory approvals.
Spark Infrastructure, an energy-focused investment company, holds a 15% stake in TransGrid.
Let's take a closer look at the news that could drive the Spark Infrastructure share price today.
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Project EnergyConnect
Project EnergyConnect's 900 kilometre electricity interconnector will connect power grids in Robertstown, South Australia, and Wagga Wagga, New South Wales. It will also divert to Buronga in New South Wales and Red Cliffs in Victoria.
TransGrid will spend $1.834 billion to build the section of EnergyConnect between Wagga Wagga and the South Australian border.
The project is in partnership with ElectraNet, which will build the South Australian and Victorian sections.
According to TransGrid, Project EnergyConnect will save New South Wales residents $180 million each year – around $60 per household – by driving competition in the wholesale electricity market. The project will also inject $4 billion of economic activity into the state.
EnergyConnect could decrease Australia's carbon emissions by one million tonnes annually.
To fund EnergyConnect, TransGrid will receive $295 million in capital from the Australian Government's Clean Energy Finance Corporation (CEFC) in the form of an innovative subordinated note instrument. The funding is the CEFC's largest single investment yet.
Spark Infrastructure says its funding of Project EnergyConnect will come from the company's distribution reinvestment plan.
Construction is expected to begin late this year and finish in 2023.
Commentary from management
Spark Infrastructure's managing director Rick Francis commented on Project EnergyConnect, saying:
[EnergyConnect's] construction is a critical step towards unlocking the transfer capacity we need to support more renewables coming into our energy supply…
We are delighted with the support received from the Australian Government's CEFC to get this important project across the line…
The approval for EnergyConnect is not only a significant step in delivering on Spark's 'growth plus yield' value proposition to our investors, but is also a critical project to deliver lower electricity prices and reduce Australia's carbon footprint.
Spark Infrastructure share price snapshot
The Spark Infrastructure share price is having a sound year on the ASX.
The Spark Infrastructure share price is currently 1.87% higher than it was at the beginning of 2021. It has also gained 4.31% since this time last year.
Spark Infrastructure has a market capitalisation of around $3.8 billion, with 1.75 billion shares outstanding.
