A 320MW hybrid wind and solar project near Port Augusta in South Australia will begin construction in June after its new owner, Spanish energy giant Iberdrola, gave final approval for what will be its first investment in Australia.

The Port Augusta Renewable Energy Hub has been developed by DP Energy, and has taken various forms over the last couple of years. The first stage, now comprising 210MW of wind capacity and 110MW of solar capacity, has been sold to Iberdrola, while DP Energy retains ownership of a proposed second stage featuring more solar PV and a big battery.

Iberdrola has taken the decision to fund the $500 million balance sheet from its own resources, and there is no bank finance involved at this stage. Nor is there an off take agreement. Iberdrola is big enough to take on the merchant risk itself, but discussions are likely to be held with various off-takers.

The project adds to the slew of new developments in Port Augusta, once home to the state’s two highly polluting coal power stations. The 212MW Lincoln Gap wind farm is already operating, and nearly complete, and will feature a 10MW/10MWh big battery, and the Bungala solar farm is also operating, although Enel Green Power’s Bungala’s second stage has hit technical hurdles that have limited its output.

Sanjeev Gupta has also unveiled plans for a big 100MW battery – the Playford Utility Battery, while at least two pumped hydro projects – Cultana and Goat Hill – are being considered by their respective developers.

The Port Augusta Renewable Energy Hub will result in a significant increase in the share of wind and solar in the state’s grid, and has been welcomed by the Liberal state government, which aims to reach “net 100 per cent renewables” by around 2030, and will likely do so well before then.

“South Australia’s reputation as Australia’s leader in renewable energy investment and our credentials of producing 52 per cent of our energy capacity from renewable sources, is helping to attract further investment into our state, creating jobs for our communities,” state trade and investment minister David Ridgway said in a statement.

DP Energy’s Catherine Way said the company had been encouraged by the huge level of support from the Port Augusta community.

“Since the closure of the coal-fired power station at Port Augusta the city has become a hub for innovative renewable energy projects due to the areas unique natural strengths, and PAREP is set to be an important part of that future energy mix and the landscape of the region,” Way said in a statement.

“More broadly, Australia has incredible natural renewable energy assets across the country, which will allow DP Energy to develop other projects inAustralia.”

DP Energy announced in 2017 that Danish wind turbine manufacturer Vestas and Australian engineering group Downer had been appointed EPC contractors for the project. Way told RenewEconomy that Vestas will supply the turbines, but the new owner Iberdrola will make the final decision on contracting.

Iberdrola’s Country Manager Fernando Santamaria said securing the company’s first project in Australia was an important milestone.

“A 320MW hybrid wind and solar project is of great significance to our team and we look forward to working with local communities in South Australia throughout the lifetime of the project,” Santamaria said in a statement.

Way said the combination of wind and solar meant it could capitalise on the excellent solar resource and also its position at the head of the Spencer Gulf, where the thermal winds resulting from the temperature differences between land and sea meant wind energy production normally peaked in the early evening when demand is greatest.

When combined with the mid-day solar generation this results in a generation output better matched to the SA electricity demand profile when compared to a weather system driven wind or solar only project.