Construction in the Australian Outback of what may become one of the world's biggest wind farms came a step closer Friday after AGL Energy Ltd. (AGK.AU) bought its development rights for an undisclosed sum.

With the potential to generate up to 1,000 megawatts of power from about 600 turbines, Silverton, near the town of Broken Hill, would be the biggest onshore wind farm in the world were it operational today.

The Roscoe Wind Farm in Texas currently generates close to 800 megawatts of electricity. Some large offshore windfarms are also under construction in Europe, as nations try to reduce their reliance on fossil fuels blamed for causing global warming.

Australia has been a global laggard in wind energy, partly because it has a natural abundance of coal to generate cheap electricity. Activity in the wind-power sector began to stir in anticipation of legislation introduced in 2009 that set a mandatory target to source 20% of national power needs from renewable sources by 2020.

Investment has also been encouraged by a national carbon pricing scheme, which kicks in from July 1.

AGL said construction of the project's 300-megawatt first stage could start next year, subject to market conditions. Silverton was sold to the Australian utility by an equal joint venture between unlisted Epuron and Macquarie Capital Windfarms, which counts Macquarie Group Ltd. (MQA.AU) and Portugal's Martifer SFPS SA (MAR.LB) as shareholders.

While Australia's carbon-tax legislation has passed through both houses of parliament, the Liberal-National opposition has pledged to repeal the levy if, as expected, the party takes power in elections due next year.

AGL Chairman Jerry Laycock said in October that the lack of bipartisan political support for the carbon tax had done little to lift the uncertainty hanging over energy investments. The absence of a carbon price could make renewable-energy projects less competitive compared with more traditional sources of power generation that are more carbon intensive.

Even so, AGL and New Zealand's Meridian Energy are constructing the A$1 billion Macarthur wind farm in Victoria state, a 420 megawatt development they hope to complete by early next year. While a cost estimate hasn't been provided for the Silverton facility, the 300-megawatt first stage may cost around A$700 million based on numbers supplied for the Macarthur project.

Epuron Executive Director Andrew Durran said its joint venture had always planned to sell the development rights to Silverton.

"Primarily, we're not large or long-term asset holders," Durran said. "It was always our intention to select the site, prepare it for development and sell it to a utility in a position to construct."

Durran declined to comment on whether the venture was paid what it expected. The value of the deal cannot be material to AGL, else it would have to have been disclosed, in accordance with Australian share-market listing rules.

The market for renewable energy certificates in Australia "is getting hotter and hotter," according to Durran, who said Epuron can now focus on preparing other sites, including Liverpool Range in New South Wales state.

-By Ross Kelly, Dow Jones Newswires; +61-2-8272-4692; ross.kelly@dowjones.com

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