I am delighted to welcome you to one of our signature annual events, Partnerships 2024 – thank you for joining us.
Now in its eighteenth year, this event has become synonymous with big ideas, debate and discussion about infrastructure and beyond. We hope the day offers plenty of food for thought as well as an opportunity to catch up with colleagues at a crucial time for our sector.
Our agenda has been carefully curated with sessions which bring into focus the year that was, what may come to bear in the years ahead and how we, as a sector, are responding.
Much like last year, together we continue to confront a biting fiscal reality from the ongoing rising costs of inputs, an emerging ‘air bubble’ of latent capacity as the transport pipeline slows, tightening budget bottom lines and geopolitical uncertainty. No doubt, many of these themes will shape the conversation throughout the day.
However, on a more positive note, we have welcomed some certainty back into the sector with 2023, otherwise known as the year of reviews, firmly in the rearview. This newfound certainty will allow us to get on with the transport projects we need to deliver, however, more certainty is needed, particularly in regard to the nation’s energy transformation.
The tsunami of road and rail investment that has defined the last decade is markedly slowing down and renewable projects are poised to fill the emerging void. While some progress has been made to get these projects into the ground, or out into our oceans, more heavy lifting – and a keen dose of realism –will be needed if we are to reach net zero by 2050.
I look forward to hearing insights from leaders across the private and public sectors about how we solve some of the nation’s most enduring challenges and opportunities – not least how we ensure Australia prevails in the global competition for private capital, resources and talented labour.
Following the tradition of previous years, we welcome the Treasurer of our host State, New South Wales – The Hon Daniel Mookhey MLC – to open the conference with a keynote address on the NSW economy and the state’s forward project pipeline.
We are also fortunate to feature on today’s agenda the Federal Minister for Infrastructure, Transport, Regional Development and Local Government, The Hon Catherine King MP, and Sydney Water Managing Director, Roch Cheroux, who will both deliver keynote addresses on their respective portfolios
The day will also feature several panel discussions with leaders from industry and the public sector covering topics from the renewable energy supply chain, to delivering social infrastructure assets, to productivity.
Infrastructure Partnerships Australia Chief Executive, Adrian Dwyer will sit down with two of Australia’s most prominent Chief Executives – Macquarie Group’s Shemara Wikramanayake and Transurban’s Michelle Jablko.
Once again, a warm welcome to Partnerships 2024. I look forward to catching up with many of you throughout the day.
Lastly, a huge thank you to all our sponsors – many of them longstanding supporters of Infrastructure Partnerships Australia – as well as all the speakers and contributors for ensuring this event continues to be at the forefront of thought leadership for the sector and thank you for joining us.
Yours sincerely,
Sir Rod Eddington AO Chair, Infrastructure Partnerships Australia
REIMAGINING SYDNEY’S CIVIC AND FINANCIAL CENTRE
In the heart of Martin Place, the culmination of more than 10 million hours of work by 10,000 people over six years has been unveiled. The Sydney Metro Martin Place project seamlessly integrates a major interchange for Australia’s largest public transport project, Macquarie’s new global headquarters at 1 Elizabeth Street, a second landmark office tower at 39 Martin Place and the future home of the ASX, with both towers rising above a vibrant new quarter of shops, restaurants and public amenities.
Catalysed by the New South Wales (NSW) Government’s announcement of the Sydney Metro project in 2015, Macquarie identified an opportunity to connect capital with community need to make a significant impact on the reinvigoration of Martin Place, which has been its headquarters for more than 25 years.
The proposal
Macquarie acted as sole proponent and developer, alongside its design and construction partner Lendlease, for the most complex integrated transportation and commercial development in Australia, devising a bespoke proposal that included delivery
of Sydney Metro’s new flagship station, two commercial office towers, retail areas and a pedestrian tunnel directly underneath the heritage 50 Martin Place building.
Many months of work and refinement resulted in Macquarie’s final 2018 proposal to design and build the new Martin Place station and surrounding precinct. A cross-Macquarie effort, led by Macquarie Capital, it brought together the Group’s skills and expertise in greenfield project development, project advisory and financing, risk and financial analysis with Macquarie’s Corporate Operations Group’s operational expertise in managing global real estate assets.
The unique and ambitious contracting structure would see the integrated delivery of a Metro station and commercial office towers. This significantly reduced the project’s interface risk and created key community outcomes, including design integration elements such as the penetration of natural light to the station platform and completion of the office towers in advance of the station opening.
One of the differentiating factors of the proposal was a public underground pedestrian link above the station level, a 67-metre tunnel directly underneath the heritage 50 Martin Place
building, linking Martin Place to Hunter Street, where it will eventually connect to underground thoroughfares that extend to Barangaroo.
As former Macquarie Group CEO Nicholas Moore said at the time of the project’s inception, “We offer a proposal that integrates a world-class Metro station with the development of a vibrant new precinct, maximising the value of the state’s investment and ensuring Martin Place remains a place for everyone. For Macquarie, Metro Martin Place was an opportunity to play our role in the transformation of the place we call home. Our proposal unequivocally affirms our commitment to work side-by-side with New South Wales to realise a shared vision, and to deliver on every aspect of that commitment with integrity. It reflects our deep connection to Martin Place: past, present and future.”
Macquarie Capital’s infrastructure expertise
The unique combination of Macquarie Capital’s infrastructure and real estate expertise across complex projects enabled the development of a sophisticated project brief incorporating everything from tenant requirements to the retail mix of the station. The brief included a multiparty ownership and precinct management statement, and the arrangement of all of the project’s financing and security.
David Wickstrom, a Division Director in Macquarie Capital’s Infrastructure team said,
“Multidisciplinary infrastructure is a fundamental component of Macquarie Capital’s DNA. We have a 30-year track record of investing in, and advising on, infrastructure projects and working with government to deliver key pieces of urban infrastructure, including rail and rolling stock PPPs in Australia. Being able to draw on this experience was critical to quickly formulating an initial proposal to government in 2015.”
Leveraging a team with combined industry experience across infrastructure, real estate advisory, and project development, Macquarie engaged with a team of over 200 architects, engineers, project managers, cost planners, statutory planning advisers, design and construction advisers, legal, valuation, tax, accounting, and insurance advisers to ensure a fully scoped, priced, and committed offer to the State with the objective of delivering the ideal project solution.
John Pickhaver, the development’s earliest senior business proponent and an Executive Director in Macquarie Capital, said,
“Our deep skillset in developing and managing infrastructure and real estate around the world gave us confidence in our ability to work with Sydney Metro to deliver a once-in-a-generation outcome for both our local community and our people.”
Workplaces of the future
Integrating 1 Elizabeth with its existing heritage-listed 50 Martin Place building, Macquarie has created a new workplace that brings together its Sydney teams – previously based across four offices in the city – in one campus for the first time in more than 25 years, better supporting the Group’s future growth, evolution and globally connected culture.
The precinct has been designed with sustainability in mind and achieved one of the highest possible sustainability credentials: a 6-Star Green Star Design Review rating from the Green Building Council of Australia. Key features include the capture and re-use of rainwater, landscaping and greening throughout the public spaces, enabling full electrification in normal operations, and implementing smart technology.
A place for everyone
The development of the precinct was underpinned by four guiding principles which informed how users would engage with the space, as well as how it gives back to the city: Community; Sustainability; Connection to Country; and Wellbeing.
The public art on display in the precinct is a leading example of cultural integration within transport hubs and privately-owned public spaces and tells the story of the site’s past, present and future.
From the inception of the project, Macquarie consulted with the communities that surround Martin Place – from daily commuters to small business owners – to create a place that brings people together and provides shared value to all.
Connecting ideas with capital
Macquarie Capital connects unmet community need with capital through its unique capabilities in project financing and capital markets and supports businesses growth with market leading strategic insights driven by the depth and breadth of its teams’ expertise around the world.
In roles which pair its capabilities in advising, investing – including alongside clients – and developing with deep sector expertise across infrastructure, real assets and energy transition, Macquarie Capital partners with businesses, startups and governments to help unlock growth.
Image credit: Brett Boardman
TRACKING MOBILITY TRENDS: HOW WE’RE TRAVELLING TODAY
Ameel Khan | Insights, Digital and Social Media Manager, Transurban
The results are in for Transurban’s latest Urban Mobility Trends report, tracking people’s travel habits and preferences over time.
When Transurban produced its first Urban Mobility Trends report in 2020, what the future held was anyone’s guess. Our mobility trends research was intended to give us – and our government and industry partners – a handle on how people expected they would be moving around their cities post-pandemic. Given how rapidly the world was changing, this research also looked at what factors were likely to influence people’s future travel decisions.
As pandemic restrictions lifted and people began travelling freely again, we continued this research. Annually since 2020, we’ve surveyed around 5,000 people with driver licences from in and around the cities where we operate: Melbourne, Sydney, Brisbane, Greater Washington DC, and Montreal.
We’ve found that hybrid work has become standard and driving has remained the mode of choice for people’s daily travel.
Most commuters don’t factor the price of fuel into their driving decisions, despite being concerned about how much they’re spending on fuel.
Travelling to work
Our post-pandemic commuting habits appear to have become routine, with most Australians surveyed heading to their workplaces 3.9 days a week in 2024.
Averages for different professions vary slightly: Australian tradespeople are travelling to (or for) work an average of 4.5 days a week; para-professionals such as nurses, technicians and police are commuting an average of 3.9 days a week; and clerical and secretarial workers an average of 3.6 days.
Average
days travelled to/for work, by occupation
Q. In a typical week, how many days do you travel to or for work?
Source: Transurban
In Australia, 61% of respondents are using their private vehicle for their commutes, while around the Greater Washington Area (where Transurban operates express lanes on three major roads) the number of people driving their own vehicle to work jumps to 82%.
Consistent with our 2023 findings, around 15% of our 2024 survey respondents said they expect to be travelling to their workplace more often over the next year, with most heading back due to employer requirements. An additional 40% said that increased productivity and collaboration with colleagues were other reasons workers said they would be heading into the workplace in the future.
Around Greater Washington, 33% of respondents said concern about job security was a factor in their attending the workplace, compared to 23% in Australia and Montreal.
Transport mode choices
Driving remains a part of everyday life for many – on average, more than half (53%) of all respondents say they’re using their private vehicles every day. The highest levels of daily private vehicle use across all surveyed cities were recorded in Greater Washington (60%) and Brisbane (58%).
Those who travel a few times a week say they’ve been out and about more often in 2024, using a mix of private vehicles and public transport. The number of people driving a few times a week is up 3% on last year, from 30 to 33%, while the number of people using public transport increased 5%, from 25 to 30%.
Australians also like to walk or jump on their bike to get around, with 42% on average using active transport every day, up slightly (1-2%) from 2023. Respondents in all cities aspire to be more active in the future, predicting they’ll be cycling, walking, or e-biking an average 5% more than today.
Transport modes used daily
Q. How often do you currently use the following modes of transport?
Q. And how often do you expect to use the following modes of transport in the next 12 months?
* Previously active transport included just bicycles as a mode choice. From 2023 transport figures include bicycles, e-bikes, and walking.
Source: Transurban
Cost of living and transport costs
Ongoing cost-of-living challenges continue to shape household spending patterns. In Australia, 76% listed cost of living as the top issue, followed by housing affordability and housing supply. In Greater Washington, jobs and economic growth came second to cost of living, while in Montreal hospitals and healthcare were the second most important issue.
When it comes to the specific items causing stress on the household budget, groceries came out on top for all cities surveyed, followed by fuel.
In Australia, 71% of commuters say they do not, or only occasionally, consider the price of fuel when making decisions about their daily trips. And almost half of daily North American commuters surveyed said the price of fuel is not a factor in travel decisions.
Congestion concerns now and in the years ahead
Traffic congestion remains a major concern for most respondents. More than 70% of Australian respondents are concerned about current congestion levels, and 80% fear it’s going to get worse in the next 10 years. Melburnians and Brisbanites are the most worried. Almost half are ‘completely concerned’ about congestion and transport infrastructure’s ability to keep pace with population growth in the decade ahead.
In North America, 54% are concerned about congestion now, and even more – 63% – are concerned about the levels of gridlock they may face in a decade.
Funding infrastructure
Population growth is expected to put further pressure on transport infrastructure, especially in urban areas, compounding future congestion already on motorists’ minds. And this pressure is coming at a time when government budgets are constrained by high levels of debt and many public priorities (including transport needs) are competing for funding.
In Australia, 65% of respondents think that governments should meet infrastructure needs through a mixture of public and private funding. In the United States, 68% of respondents favour this funding mechanism.
Transurban data and insights
This research is one way we share data and insights with government, industry, and the wider community. We also produce regular reports on road safety, technology and more. You can read all our research reports at: insights.transurban.com
ACCELERATING AUSTRALIAN DATA CENTRE DEVELOPMENT
Lessons from CIMIC Group’s global knowledge-sharing approach
Australia’s need for data centres is growing. Investors are eager for digital infrastructure opportunities, while data centre owners and operators require projects to come online quickly to meet demand from tenants and end users.
CIMIC Group is leveraging its global critical digital infrastructure capabilities to identify the strategic levers that enable data centres to be deployed at pace overseas. With experience constructing data centres in the US, Europe1 and Asia, CIMIC has identified best practices that Australian asset owners and developers can adopt to expedite project timelines.
Surging demand
Mass digitalisation has fueled demand for data centres the world over. As the backbone of the digital economy, Australian data centre storage capacity is forecast to increase by a factor of 20 in coming years.2 Adding to demand is the fast adoption of artificial intelligence (AI), requiring roughly 2.5 times more computing power than non-AI digital workloads.3
In terms of asset size, the global data centre market is projected to hit $263 billion, doubling operating capacity by 2027.4 According to Global Data, by late 2023 $15 billion had already been invested in Australian data centre projects. But there is far more to come. Australia’s technology sector is growing four
times faster than the rest of the economy,5 and analysts suggest another 1500 megawatts (MW) will be required by 2030.6
“The market size and opportunity in the region are significant”, says Andrew Aliprandi, Senior Vice President Design, Engineering and Construction, APAC at Vantage Data Centres, a leading global provider of hyperscale data centre campuses. “Australia is well positioned with a highly developed market economy, a stable political environment, a robust supply chain, a variety of land options, and a well-established general contractor market. While cloud computing is more developed in EMEA and North America, many AI services don’t need the same connectivity and latency as cloud, which opens up a number of other potential locations, leading to the growth we’re seeing in Australia.”
AI is also driving data centres to become larger and more complex. “The scale of projects is growing enormously”, says Cathy Hayes, Head of Client Strategy, NSW and ACT at CIMIC’s CPB Contractors. “Our group started building 16 MW facilities in Asia, and now we’re rolling out 300 MW projects.”
Overcoming speed bumps
Speed is critical to meet the intensifying demand for complex critical facilities, meaning attention is being paid to sourcing available sites with sufficient power, and effectively managing planning approvals and the supply chain.
It is increasing demand for skilled resources, power, and strong supply chains. “We’ve seen demand for major plant and equipment quadruple”, says Aliprandi.
Chris Poiner, EGM Development at CIMIC’s Pacific Partnerships says navigating the market requires extensive experience in endto-end delivery. “It is about having access to global experience in order to unlock the value creating potential of the next generation of infrastructure for our partners and for our company”, he says. “We also bring 2.5 gigawatts (GW) in operational and development renewables projects.”
As data centres grow, so too will their energy requirements.
Morgan Stanley forecasts data centres will consume 8 to 15% of Australia’s national grid capacity by 2030, up from 5% today.7 Getting access to new, preferably renewable, energy is a focus.
“APAC is a highly sought-after region for many of our hyperscale customers”, says Aliprandi. “We are committed to reaching net zero carbon emissions globally for Scopes 1 and 2 by 2030, which includes the procurement of renewable energy and designing our data centres to be as energy efficient as possible.
Tapping into infrastructure connections
CIMIC’s UGL plans to leverage its experience building largescale grid transmission and renewable energy infrastructure, and complex mechanical and electrical expertise, to fit out and power data centres.
“UGL has deep connections with most of the electrical providers and distribution network providers nationally”, says UGL’s Matthew Olsson, General Manager of Transport Projects. “This means we can expedite the energy connection process.”
“In addition to getting access to power, using power as efficiently as possible is essential for operational performance, as well as minimising costs and carbon emissions”, says Hayes.
“Understanding that a client wants a certain amount of energy distributed around the building per kilowatt is crucial.” Global tech giants have highlighted the challenge of reducing emissions at the same time as powering their AI innovations.8
“Building in renewable energy systems such as battery and solar power will help” says Olsson. “We work closely with renewable developers and see a great opportunity to bring the two markets together during the design phase.”
Insights from Asia and the US
CIMIC’s Leighton Asia has made compelling efficiency gains by pre-fabricating mechanical and HVAC modules offsite for Malaysian and Indonesian data centres. In the US, Turner Construction Company, CIMIC’s sister company, reduces costs and speeds up construction through innovative supply chain procurement solutions and strategic offsite prefabrication.
“We’ve seen the benefit of having strong relationships in the supply chain”, says Hayes. “Those data centre clients that bring us in early to value engineer the design process have enjoyed efficiencies in layout, lighting, cooling and airflow management.”
Olsson says the Group’s global experience with different commercial models informs their Australian approach. “When we are engaged under early contractor involvement arrangements to scope, design and implement, we can provide constructability input to the design which results in a quicker and more efficient delivery process.”
CIMIC’s end-to-end offering – spanning finance, engineering, construction, offsite manufacturing, commissioning, operations and maintenance – drives project performance and reduces whole-of-life asset costs. “Our group-wide approach means we can connect clients with the latest thinking across all stages of a project lifecycle”, says Hayes.
CIMIC’s advanced technology leadership group shares expertise from data centres worldwide. “We’ve been able to expedite procurement and leverage more sustainable energy and water efficiency innovations from the learnings shared between our US and Asian data centre developments”, says Hayes. “By transferring best practices, we can speed up the rollout of
Australian data centres. This is a powerful lever for driving delivery certainty and market speed.”
CIMIC Group is at the forefront of data centre construction globally. Turner Construction Company, CIMIC’s sister company, is a leading data centre builder in the United States, delivering US$14 billion in projects at 4700 MW operating capacity in the past five years.
Leighton Asia builds data centres across the region, delivering bespoke facilities for industry leaders.
In Australia, CPB Contractors and UGL combine to expedite construction. The Group is investing in nextgeneration infrastructure through Pacific Partnerships to strengthen Australia’s digital economy.
1. Via Turner and HOCHTIEF
2. BDO, A-REIT Survey, 2023
3. JLL, Data Centers 2024 Global Outlook
4. Global Data, Beyond Bites: data center evolution for peak performance, Innovation Radar, April 2024 and S&P Global Market Intelligence, March 2024
5. Australian Trade and Investment Commission, Digital Technology Report, 2023
6. Carl Kitchen, Data Centres and Energy Demand – What’s Needed?, 27 June 2024, Australian Energy Council
7. Carl Kitchen, Data Centres and Energy Demand – What’s Needed?, 27 June 2024, Australian Energy Council
8. Financial Times, Google emissions jump nearly 50% over five years as AI use surges, 2 July 2024
POWERING THE FUTURE: GRID EXPANSIONS FOR DIGITAL GROWTH
Susan Taylor | Partner, Clayton Utz
There has been exponential growth in the number of data centres and Bitcoin miners applying to connect to the power grid, with global electricity consumption from data centres, AI and the cryptocurrency sector now expected to double by 2026 1 – to a level roughly equivalent to the electricity consumption of Japan.2
Network augmentations are often needed to facilitate the additional capacity when the site first seeks connection to the grid. These augmentations are typically proponent-funded augmentations which can add tens of millions of dollars to investment costs, just to connect to the grid. Once the facility is up and running, massive charges for power usage will accumulate.
Navigating this process can be complex and confusing for proponents. Even among participants in the National Electricity Market (NEM), the rules can differ between jurisdictions. Some elements of the augmentation are required to be undertaken by the relevant network owner, while some can be subject to a competitive tendering process, which will depend on the location and value of the augmentation. In some cases, different components of the network augmentation will be constructed by different parties.
Connection process
In the NEM, connection applicants must follow Chapter 5 of the National Electricity Rules (NER).
From initial inquiry to connection, it typically takes up to 2 years, but may be considerably longer.
As part of this process, the network owner to which the facility is to be connected must undertake a system strength assessment, to determine whether the connection will have a material impact on stability of the grid — both in the location of the connection and the grid more broadly. For large users of electricity, this may result in a requirement to augment the grid to accommodate the additional capacity required.
Augmentation can include reinforcing power lines for additional capacity by duplicating them or bolstering the capacity of existing lines, or by installing devices to stabilise the network, such as synchronous condensers, harmonic filters or new grid technology.
In Victoria, if the cost of the augmentation will be over $10 million and can readily be separated from the main grid, the augmentation is subject to a competitive tendering process. The State’s main transmission network service provider (TNSP) may win the right to develop the augmentation, but another TNSP could also be successful.
Some elements of the augmentation must necessarily be undertaken by the ‘host’ TNSP, to manage interface works needed to ‘cut-in’ the augmentation to its own network. A connection applicant must work with both the host TNSP and the winner of the tender to progress the augmentation.
When an augmentation is needed to connect a private connection applicant, like a data centre, it usually follows a ‘negotiated service’ process, as the augmentation is primarily developed for the applicant, who will also pay for the connection and augmentation.
These are augmentations which do not typically provide systemwide benefits, but may have an indirect, consequential impact on the grid. It is inappropriate for all users to pay for such augmentations.
If subsequent applicants seek connection in the same location, the initial augmentation costs can be shared by those new applicants. In New South Wales, this occurs under the Pioneer Scheme, where the first to connect will be reimbursed proportionately by those who follow.
Once funded, the new augmentation becomes part of the assets owned by the host TNSP. Although funded augmentations are not rolled into the regulated asset base on which the TNSP’s regulated revenue recovery is based, the TNSP is entitled to recover revenue for reasonable operation and maintenance costs for the new augmentation.
Maximising the benefits of an augmentation
After paying the millions of dollars that a large augmentation requires, how do investors capitalise on this massive investment?
Some elements of the augmentation could be characterised as connection assets and could feasibly be retained by the applicant. Having a major power consuming site coupled with valuable electricity connection assets may enhance the value of the investment and provide potential tax benefits for the site owner. This may warrant up-front technical analysis for applicants.
Data Centre owners can also add solar and battery facilities. This will assist with reducing power costs, but the site may also be capable of offering ancillary services such as frequency control or demand management under programs managed by the Australian Energy Market Operator to achieve grid stability.
Many large power users also enter into Power Purchase Agreements (PPA) with major solar and wind farms. This allows
their consumption of mixed power from the grid to be offset by renewable power dispatched somewhere else in the grid. While it is not possible to directly consume the renewable power purchased under a PPA, it can alter the amount of renewable power dispatched into the grid. Moreover, a PPA will enable the large user to hedge the price it pays for power, providing a more certain revenue stream at a pre-agreed strike price. This can enhance the bankability of the development.
Conclusion
There is a growing trend for mega users of power to seek connection to the grid. As the community becomes more dependent on power, such connections are likely to become more common. The way in which the grid accommodates such users will likely need to adapt, just as it is doing to accommodate new intermittent energy generators such as solar and wind resources.
It is yet another aspect of the energy market that is in transition.
ADVANCING TOWARDS NET ZERO: NSW GOVERNMENT’S PROGRAM ON REDUCING EMBODIED CARBON IN PUBLIC INFRASTRUCTURE
Dena Jacobs | Executive Director, Strategy, Planning and Innovation, Infrastructure NSW
The NSW Government is committed to achieving Net Zero by 2050. In line with this, it has released the Decarbonising Infrastructure Delivery Policy that integrates carbon considerations into decision-making.
Infrastructure NSW, in collaboration with NSW Government agencies, is working to reduce embodied emissions from infrastructure through the release of the Decarbonising Infrastructure Delivery Policy (the Policy) and Technical Guidance: Embodied Carbon Measurement for Infrastructure (Measurement Guidance).
There has been a gap in action to reduce embodied emissions associated with public infrastructure globally, stemming from the construction, maintenance and end-of-life disposal of assets. These are set to form an increasing share of infrastructurerelated emissions, as the electricity grid transitions to decarbonised sources and operational emissions decline.
Infrastructure NSW’s significant engagement with industry revealed that policy clarity and consistency in measurement are needed to enable action and target
setting on embodied carbon.To address these two roadblocks, Infrastructure NSW launched the Policy and supporting Measurement Guidance in April 2024.
Driving action on embodied carbon
Both documents were developed in close consultation with members from across the construction supply chain, including contractors, designers, infrastructure peak bodies, sustainability ratings bodies, and materials sector peak bodies.
Best practice carbon management was drawn from international standards such as PAS 2080:2023, the experiences of other jurisdictions and more advanced agencies like Transport for NSW, and research from peak bodies like Infrastructure Partnerships Australia and the Green Building Council of Australia.
These carbon management practices are now being integrated into NSW Government business-as-usual decision-making procedures, such as business case development and procurement. The Policy emphasises that the greatest opportunity for carbon reduction is early in project development and the need to consider carbon in early design.
More broadly, the Policy incorporates consideration of embodied emissions into all project lifecycle stages, starting from project inception, through four key principles:
1. Apply the carbon reduction hierarchy (“avoid, switch, improve”): encourages government agencies to challenge the need for new infrastructure by mandating the inclusion of options in a project business case to build nothing, to upgrade or repurpose an asset, to consider multipurpose use for an asset, and to use a lower carbon design and construction method.
2. Assess the upfront carbon impact: requires estimation of (at a minimum) upfront carbon at the business case, planning approval, and practical completion stages. Agencies with mature capabilities are encouraged to set carbon targets from the business case stage.
3. Engage with the market: provides guidance on engaging with the market to design lower carbon solutions.
4. Develop a Carbon Management Plan: requires documenting the governance, monitoring, and reporting activities related to managing carbon on a project.
The Measurement Guidance is the first guidance in Australia to set out consistent scopes, inputs, and approaches for embodied carbon measurement across the project lifecycle and infrastructure asset types. The guide provides emission factor sources, default transport and waste parameters, and asset-level carbon intensity benchmarks to enable measurement even when project information is limited.
National consistency in embodied carbon measurement
Harmonisation across jurisdictions is crucial for industry action, with most large organisations working across state boundaries. Recognising this, Infrastructure NSW has collaborated with other jurisdictions to deliver the national embodied carbon measurement guidance, which received approval for national adoption at the Infrastructure and Transport Ministers’ Meeting in June 2024. The approved document is aligned to the NSW Measurement Guidance and is available here
This approval marks a key step towards measurement consistency across the country to enable the industry to decarbonise. The NSW Government will continue to collaborate with other jurisdictions to support harmonised measurement and reporting to reduce embodied carbon.
Government and industry panel from the Decarbonising Infrastructure Delivery Policy Launch in April 2024.
Speakers from left to right: Alison Scotland, Executive Director at Australian Sustainable Built Environment Council; Rebecca McPhee, Deputy Chief Executive, Customer Operations and Place-making at Sydney Metro; Adrian Dwyer, Chief Executive at Infrastructure Partnerships Australia; Jonathan Cartledge, Chief Executive Officer at Consult Australia; and Said Hirsh, Head of Strategy Planning and Innovation at Infrastructure NSW.
Next steps
The Measurement Guidance becomes operational in April 2025 and will be mandatory for all NSW Government infrastructure projects over $50 million in the building sector and over $100 million in other sectors. Subsequently, Infrastructure NSW has launched an implementation program to support Government and industry in complying with the Policy, consisting of:
• Capability uplift and toolkit: involves a survey of NSW Government agencies and industry assessing current readiness to comply with the Policy. The survey responses will inform a targeted training program and a toolkit, such as standard contract clauses templates and case studies.
• Monitoring: Infrastructure NSW has been collaborating with the NSW Environment Protection Authority (EPA) and NSW Department of Climate Change, Energy, the Environment and Water on the Protection of the Environment Policy. This will be a regulatory mechanism that will require agencies to provide data on policy compliance to the EPA. Infrastructure NSW has also been working with other agencies to streamline reporting requirements.
• Measurement: to support ease of measurement, Infrastructure NSW is developing a comprehensive repository of high-quality emission factors. Infrastructure NSW is also engaging with commonly used carbon measurement tools in the market, to ensure that they are aligned to the approach set out in the Measurement Guidance.
Collaboration with other jurisdictions and industry stakeholders has been key to achieving the progress to date and embed carbon management practices on projects.
The Decarbonising Infrastructure Roadmap, co-created with Transport for NSW, outlines the forward looking NSW Government program. Infrastructure NSW will continue to engage with industry through the implementation of the Policy and on further decarbonisation initiatives.
HOW CHANGES TO AUSTRALIA’S RENEWABLES FINANCING LANDSCAPE ARE RE-ENERGISING THE ENERGY TRANSITION
The development of major renewables infrastructure assets in Australia has picked up pace over the past few years as both state and territory governments and the Commonwealth have set ambitious emissions reductions targets; the Australian Government has a target of reaching 82 per cent renewable energy in the country’s electricity grid by 2030.1
The level of capital required for large-scale renewables projects, together with the unique risks they carry, has, however, slowed the pace of their growth. But changes to the way investors manage these risks and developers secure the required capital for large projects are helping overcome these challenges.
“The use of portfolio financing for the development of new renewables assets is enabling developers to realise the benefits of scale, enhance project economics and increase flexibility across construction and operations,” according to Danish Aleemullah, Division Director at Macquarie Capital.
“By securing borrowing against a portfolio of assets rather than
just one, it makes financing easier and enables the construction of new assets, supporting a growing role for large-scale renewables in Australia’s energy mix,” he adds.
The capital intensity of energy infrastructure
“Renewables already account for 35 per cent of Australia’s electricity mix2,” Macquarie Capital Division Director, Nick Cowling, notes. “But, as our coal-fired power plants start to go offline over the next two decades, renewables and storage are necessarily going to have to carry an even greater share.”
To date, however, Cowling says a serious challenge in speeding up the development of large-scale projects within Australia has been obtaining competitively priced and flexible capital that can be deployed at scale and matches the requirements of developers.
“Developers are facing the challenges of an increasingly capitalintensive industry, with the number of projects growing in terms of size and volume,” says Cowling. “The average onshore wind farm in Australia now costs between $A3 million and $A3.5
million per megawatt to develop3. That means constructing a 400-megawatt wind farm can cost upwards of $A1.2 billion, putting a strain on developers’ balance sheets and testing lender market capacity for single asset financings.”
Securing investment
With so much capital potentially at stake, lenders have traditionally sought to de-risk their positions by ensuring certain requirements are met by the asset owner. This has included securing power purchase agreements (PPA) for the majority of a project’s output and ensuring that construction risks are covered under a fully wrapped price and time delivery framework.
“The asset owner essentially becomes a price taker because they have to lock in long-term agreements to sell electricity for a fixed price, regardless of where the price of electricity goes,” Cowling says.
“On top of this, increasing costs of construction and minimised availability of traditional contracting structures are slowing project development.”
It’s just one of the factors that contributed to the development of new solar farms shrinking by more than a third over 2023 ($A1.5 billion compared with $A6.5 billion in 2022) despite the supportive political backdrop.4
Image credit: Sapphire Wind Farm & Squadron Energy
Image credit: FRV Australia
Aleemullah notes that one area where features of the portfolio financing structure have allowed developers to be more creative is in how they sell the electricity they produce.
“When you sign a PPA, you are essentially tied in to supply electricity for a fixed price. However, the spot price of electricity can fluctuate from a negative price to well over $A15,000 per megawatt hour.7
“Portfolio financing structures open up substantial flexibility for a business in maximising the value of their output,” says Aleemullah. “In place of securing large volumes of ‘vanilla’ PPAs for individual projects, developers can have increased freedom to secure a more innovative, diversified revenue strategy for their portfolio.
“Some generation volume may be covered by contracts with price ‘floors’ and ‘ceilings’, while some output may remain uncontracted to retain trading flexibility or wait for a time where PPA pricing is more favourable. The growing availability and lower prices of batteries helps create more flexibility within these portfolios.”
By using batteries and other storage technology, energy producers that finance their projects via a portfolio structure can take better control of their output, storing electricity when prices are low and selling it when they’re high. This lets them manage price risk and significantly increase their potential profitability.
Potential headwinds
Even developers that can use their competitive advantage to access capital and drive greater profitability may still face issues. Many of these relate to community concerns around the building of infrastructure close to residential or agricultural land.
“It is a simpler discussion with a landowner or neighbour that a wind farm should be built when they are being directly compensated for it,” Cowling observes.
As a result, Macquarie Capital Division Director, Bethwyn Cowcher, notes that successful developers appreciate the importance of proactive and thorough community engagement and are investing heavily in programs such as employment and indigenous programs.
“Successful developers understand community concerns around a particular renewable asset, identify ways in which communities can benefit from it over the longer term and deliver on their commitments,” she says. “This may include facilitating skills development and training, as well as investing in social infrastructure to support increased population during construction and operations.”
Another challenge is likely to come in the form of securing regulatory approval for projects, with each state and territory having different requirements. For instance, one study estimated it costs 25 times more to get project approval in New South Wales, Australia’s most populous state, than in neighbouring Queensland.8
Finance essential to Australia’s transition
Despite the challenges, the potential upsides are enormous, Cowling says – most notably that greater access to flexible financing arrangements, and the associated potential for profitability, will allow Australia to continue to build out its energy assets while being more likely to meet its decarbonisation ambitions.
“Under Australia’s current plan, coal-fired power plants are slated to be shut down by 2038, just 14 years away 9,” Cowling observes. “When you consider that they account for almost 60 per cent of Australia’s electricity supply10, that is a large amount of firmed energy supply that needs to be replaced quickly.
“If we’re to maintain much of this supply through renewables and storage, the only way we can do it is by rapidly building largescale projects that can meet the country’s dispatchable power needs,” he says.
“Creative financing that allows for flexibility, profitability and encourages development is an essential ingredient in the mix. At Macquarie Capital, we are pleased to be spearheading this and providing innovative solutions to our clients.”
1. ‘Bridging The Gap To 82% Renewable Electricity Generation By 2030’, Clean Energy Council, August 2023
2. ‘Australian Energy Statistics, Table O Electricity generation by fuel type 2022-23 and 2023’, energy.gov.au, April 2024
3. ‘GenCost 2023-24’, Final Report, CSIRO, May 2024
4. ‘Clean Energy Australia 2024’, Clean Energy Council, 13 March 2024
5. ‘FRV Australia secures A$1.2 Billion refinancing for 1GW Photovoltaic Portfolio’, FRV, July 2024
6. ‘FRV Australia secures A$1.2 Billion refinancing for 1GW Photovoltaic Portfolio’, FRV, July 2024
7. ‘2024-25 market price cap now available’, AEMC, February 2024
8. ‘A not so mighty wind: NSW lags in renewable energy approvals’, Sydney Morning Herald, May 2024
9. ‘2024 Integrated System Plan’, AEMO, 2023
10. ‘State of the energy market 2023’, Australian Energy Regulator, October 2023
Image credit: FRV Australia
WILL MODERN METHODS OF CONSTRUCTION LIFT PRODUCTIVITY IN THE INFRASTRUCTURE SECTOR?
Brett Hocking | Chief Executive for Modern Methods of Construction, The APP Group
Australia’s sluggish productivity figures have been an unwelcome fixture in headlines over the past few years. The underperformance is fast becoming an increasing worry amidst the backdrop of economic, social, political and environmental headwinds.
While low productivity is a challenge in many sectors of the market, it has been a long-term problem across construction and infrastructure.
Productivity in the construction sector has been going backwards for the past three decades. According to Oxford Economics Australia, raising construction productivity to the economy-wide average would unlock an additional $56 billion in construction capacity each year.
If we cannot remediate the productivity problem quickly, we will soon struggle to deliver the housing, hospitals, schools and vital infrastructure Australia needs to accommodate a growing and rapidly ageing population.
While some market sectors have seen rapid productivity growth driven by technology adoption and innovation, the construction sector remains relatively unchanged since the beginning of the last century. As traditional construction methodologies come under increased pressure to deliver, it is time to start considering innovative new ways to build.
Modern Methods of Construction (MMC) is a term used to describe a number of innovations in project delivery, most of which are offsite technologies, moving work from the construction site to the factory.
The benefits of MMC are related to time, cost and quality performance. The speed of construction is one of the main advantages, brought by the ability to conduct simultaneous offsite and onsite activities.
The drive for efficiency and sustainability in the delivery of infrastructure has led to increased interest in innovative construction techniques including modular construction and offsite manufacturing.
For example, major transport projects with many linear metres of asset types offer opportunities to prefabricate regular elements, such as parapets or duct banks.
For major assets, such as long viaducts, it is possible to replicate the benefits of offsite construction by deploying an
onsite ‘pop-up’ factory or using launching, sliding or off-line techniques to concentrate the fabrication works in a controlled environment, provided the design is optimised to suit the use of repeated elements.
The benefits of adopting MMC approaches for infrastructure projects are explored below.
Scale and longevity
The scale and longevity of complex infrastructure projects make them excellent candidates for MMC approaches. The ability to embrace the principles of repeatable design alongside premanufacturing techniques can allow for the rapid deployment of components such as box culverts, piles, tunnel segments, columns, beams and façade panels. These approaches can be extended to other repeatable assets such as signal boxes, cable management systems, and architectural features.
Health, safety and wellbeing
The health, safety and wellbeing of workers and visitors is critical to any construction site. Construction work on traditional sites pose many risks, from falls to equipment accidents. With offsite manufacturing, the majority of the process is carried out in a controlled factory environment by specialised machinery, and factory operations can continue 24/7 with less risk of noise and disruption in addition to shielding workers from the weather.
Furthermore, MMC provides an opportunity to improve diversity and inclusion within the workforce, such as driving greater female participation rates, by removing some of the barriers posed by the traditional construction process such as limited flexibility and long hours on site.
Quality and efficiency
The numerous efficiency gains offered by utilising MMC can help speed up construction times and reduce wastage. There is minimal wastage, and the manufacturing process can be heavily optimised. Time is saved by having components manufactured in one place and then only transported to site once they are ready to be assembled. Factory settings also allow for stricter quality checks and consistent production, resulting in components with fewer defects.
Sustainability
With the manufacturing of components taking place offsite, materials can be sourced and procured more efficiently with less wastage. The carbon footprint is also reduced with much less space required around the building. In addition, MMC approaches prioritise local materials sourcing, reduce transportation-related emissions and support local economies. Moreover, MMC often incorporate sustainable materials and technologies, contributing to a greener construction industry.
This year, The APP Group established a Modern Methods of Construction capability that embraces innovative construction techniques, and advanced technologies that improve efficiency, productivity, sustainability, and quality in the construction and manufacturing industries.
As a trusted partner appointed to major transport, energy, health and education projects across the country, we see the potential for MMC to significantly improve productivity, efficiency, and quality, transforming the delivery of major infrastructure projects right from the design and planning stages.
To quote Mark Farmer, industry-leading expert on construction innovation and author of the UK Government Review ‘Modernise or Die’,
“With Australia accelerating its adoption of Modern Methods of Construction (MMC), The APP Group is leading the charge with its innovative manufacturing solutions and MMC playbook.
I look forward to seeing how the innovation being pioneered can help address the national housing crisis and improve delivery of other critical social infrastructure programs in Australia.”
Fixing the productivity problem in construction is an issue of national priority. Unlocking productivity, through innovations like MMC, will need leadership and foresight to drive the way forward.
By tackling these issues and adopting new ways of doing, Australia can set a new standard for efficiency and innovation in infrastructure development, crucial for the future prosperity of our nation.
The APP Group
The APP Group is a Leader in Property and Infrastructure.
As a trusted partner, we work together with clients and key stakeholders to create possibilities and shape progress, for the organisations themselves and the communities they serve. By providing best practice initiatives, services and advice, we deliver results that create lasting value.
Our integrated services span the full asset capital investment lifecycle in the key sectors: Transport, Property, Social Infrastructure, Modern Methods of Construction, Energy & Utilities, and Defence & Security.
We provide market leading expertise and advice to help tackle the most complex projects and challenges, backed by our 550-strong team.
Key projects:
• Cross River Rail
• North East Link
• West Gate Tunnel
• New England Renewable Energy Zone (NEREZ)
• Marinus Link
• Sydney Metro
• John Hunter Health & Innovation Precinct
CREATING A BETTER LIFE WITH WORLD-CLASS WATER SERVICES
Greater Sydney’s population is growing, and so is Sydney Water, to meet the demands of an additional 1.1 million customers by 2040. Investing now, and in a new way, ensures we can continue to serve our customers and communities as we contribute to a thriving, sustainable city.
Responding to challenges
Sydney Water is now at a critical point in time with existing, new, and emerging challenges creating the opportunity to rethink how we provide essential services at the lowest long-term cost to our customers.
In the last few decades we have connected systems with spare capacity to support growth and resilience. This has helped maintain downward pressure on bills, but this capacity has been exhausted. Our infrastructure is ageing, climate change and extreme weather like bushfires and floods are putting added stress on our network, and we need to supply more water to meet the needs of Sydney’s growing population.
As we look to meet these challenges, we must also contend with those facing the wider sector. Local and global supply constraints for materials and skilled workers, along with high freight costs, have increased costs. The building boom that has seen the delivery of major transport projects and new housing has revealed capacity constraints in the construction sector.
To help deliver the vital infrastructure that will help the city grow and meet these challenges, Sydney Water has developed an adaptive Long Term Capital and Operational Plan (LTCOP) to set out how we will service Greater Sydney to 2050 and beyond. But to deliver what we have planned requires us to scale up the business and work with the market to help build certainty and capacity.
A vision for the future: our Long Term Capital and Operational Plan
The LTCOP is a milestone for Sydney Water. It represents a generational change in the way we plan for and deliver services. It highlights the need for us to invest in new assets and networks to secure our city’s water and wastewater services in ways that are independent of rainfall, resilient to extreme weather and contribute to thriving, sustainable cities.
As we look to deliver an unprecedented, long-term investment across our growing cities – $34 billion over 10 years – our
plan sets out a smooth transition to increased demand, while considering longer-term affordability for our customers. We will do this by:
• Ensuring we have resilient and reliable services.
• Integrating infrastructure to deliver long term value for customers.
• Maximising community value through healthy waterways and parks.
• Embedding circular economy principles across our planning, delivery and operations.
A number of projects are already underway to support these objectives. Our landmark Upper South Creek Advanced Water Recycling Centre will help activate a wider circular economy in Western Sydney, encompassing water, energy, bioresources, and job creation. Recycled water from this project will also support integrated water cycle management in the Western Sydney Aerotropolis – which will replace buried pipes and drains with natural waterways and wetlands – and help protect waterways from urbanisation and create cooler and greener public spaces. Other projects like Purified Recycled Water and desalination will help create a rainfall independent water supply.
Scaling up and building capacity
We know we can’t deliver this increased investment alone. That’s why we are scaling up our business by optimising our delivery, building our industry intelligence and collaborating more closely with our suppliers.
To be a more attractive partner, we’ve looked at how we can simplify our procurement processes to take down barriers and develop long-term purchasing models which create certainty for our suppliers.
Our Regional Delivery Partnership model, the largest of its kind in Australia, aims to deliver $8 billion in infrastructure by 2030. These 10-year strategic relationships provide partners with a secure pipeline of projects and emphasise safety, innovation, and collaboration. This innovative model is how we are ‘delivering differently’ and helps to attract quality partners incentivised to consider whole of life decision-making when scoping, designing, delivering and maintaining assets.
These strategic relationships also provide the market with certainty to ensure we can attract and retain the right resources required to deliver our infrastructure investment, despite strong competition in the market.
This has enabled us to focus our internal resources on delivering complex, high profile infrastructure investments through our dedicated Major Project stream, and strategically foster and build strong relationships with the suppliers that we will need to deliver that expenditure.
By partnering through the NEC contract framework, we can also deliver volume at value, safely.
While we have been working closely with industry, we have also built closer relationships with NSW Government agencies to help support the health of the infrastructure pipeline for the State and work together to better align delivery across sectors.
A sustainable and more resilient future
In 2050, Greater Sydney will be a very different place to what it is today. By striking the balance between supporting growth, securing our water supply, managing affordability and protecting the environment, Sydney Water is well-positioned to meet the challenges ahead.
Through innovation, collaboration, and a commitment to customer-centricity, we can create a better life with world-class water services.
BRINGING THE COMMUNITY WITH US
How Transgrid worked with Riverina communities to agree on the route for VNI West
As part of Australia’s energy transition, Transgrid is building 2,500 kilometres of new transmission lines to connect renewable generators to the grid. It’s an enormous task that must be accomplished at high speed – before coal generators retire.
Many Australians support the energy transition, with its promise of lower electricity prices, clean energy and jobs in renewables. But the regional communities at the heart of the energy transition, are often expected to accommodate the infrastructure, while the benefits will be shared with populations hundreds of kilometres away – or even in the next state.
For landholders, neighbours, and the broader community –
regardless of the need or the level of compensation – the arrival of a major infrastructure project can be stressful. When it comes to building new transmission lines, people worry about their homes, jobs and land values. Some are concerned about the impact on the environment or their view.
VNI West – national benefits; local opposition
This was very much the sentiment when we started engaging with the Riverina communities affected by the VNI West project.
Construction of the VNI West transmission line is a priority project in the Australian Energy Market Operator’s 2024 Integrated System Plan. The line will connect the high voltage grids between NSW and Victoria, allowing renewable energy to be exported between states.
Community Planting Day – Crookwell, Southern Tablelands of NSW
VNI West is forecast to deliver around $1.4 billion in economic benefits and improve electricity supply reliability and security by connecting the NSW and Victorian grids.
To give the local community the chance to hear about and voice their concerns and ideas about the project, we held 16 community information sessions. Over 270 landowners and community members attended those initial meetings, and provided 70, often very detailed, written responses.
Many members of the community were opposed to the project.
We were not surprised or disheartened by the community response. In fact, we learnt a lot from those early meetings.
What came through was that people were most worried about the impact to agricultural jobs if the transmission line was built on farmland – particularly in the areas used for irrigated agriculture and rice production at the western end of the draft corridor.
People also strongly supported protecting local endangered flora and fauna.
Taking community concerns onboard early
The locals made a lot of good points. Because we engaged in the early stages of planning, we had enough time to really consider these concerns, take on board community ideas and build them into our planning.
We went back to the community with a revised corridor, which aligned the route further to the north – away from productive irrigation land where possible to protect jobs and the local economy. The revised corridor also avoided areas of protected habitat. In some locations it followed public land corridors, including travelling stock routes, and aligned with existing road corridors.
After this, the atmosphere at our meetings was different. Our town hall sessions were attended by 190 local landowners and community members, and the conversation was much more constructive. People realised that we had listened and were taking their ideas seriously. Of course, there were still concerns with the revised corridor – and people had more ideas. We received lots of feedback in the sessions and another 48 written submissions.
Again – we listened. We adopted many ideas and amended our plans once more. This time, we put the route a greater distance from Moulamein township, preserving the amenity of the town. We also made changes that reduced the impact to irrigated land even further and minimised watercourse crossings to protect the environment.
A better outcome for everyone
Early community engagement allowed people to have their say and influence the location of the transmission line. The revised route is a win for the community, with the final transmission line:
• Situated further from houses and the townships of Moulamein and Wanganella,
• Impacting less high-value irrigated agricultural land, and
• Following existing infrastructure corridors and property boundaries, avoiding dissecting properties where possible, and preserving existing land uses.
It’s also a win for Transgrid by building community trust. We’ve had a high success rate when negotiating the land access agreements required for surveys and environmental studies, securing 75% per cent of the 230-kilometre Preferred Route through ‘consent to enter’ agreements with landowners.
We intend to take a similar approach on future projects because it demonstrates that listening and valuing local input early can garner community support and greatly benefit the project overall.
ADVANCING VICTORIA’S APPROACH TO INFRASTRUCTURE PROCUREMENT AND DELIVERY
Natasha Payze | Executive Director – Infrastructure Delivery Group, Department of Treasury and Finance, Victoria
Victoria’s modernised infrastructure procurement framework makes it easier for industry to partner with government to successfully deliver infrastructure that benefits all Victorians.
A decade of growth and change
Victoria’s modernised framework reforms respond to a decade of growth and change. It captures innovations and lessons learnt from successfully delivering some of the biggest and most complex projects in Australia.
A simple and modernised framework
The framework increases transparency and improves consistency in infrastructure procurement and contracting across government agencies. It encourages a wide application of procurement approaches that can be selected based on a project’s characteristics and risk profile. The framework, depicted in figure 1, introduces three broad categories of procurement:
1. lump sum
2. cost reimbursable
3. whole of life.
Each of the three procurement categories has its own procurement requirements document that outlines the mandatory government approval requirements and best practice expectations for that category of procurement.
Figure 1: Victoria’s whole of government infrastructure procurement framework
Nyaal Banyul Geelong Convention and Event Centre aerial
The three procurement categories support eight procurement models. Each will have its own suite of standard form contracts and accompanying guidance to minimise the need for bespoke legal and commercial drafting.
The full suite of policy, standard form contracts and accompanying guidance are being developed progressively.
Partnerships Victoria
A key element of these reforms has been to update the Partnerships Victoria model which utilises private investment to support the delivery of large and complex projects. Experience in Victoria shows that, when used for appropriate projects, the Partnerships Victoria model provides significant benefits for both the procurement and delivery phases of a project’s lifecycle.
Using a whole-of-life lens, private investment helps drive innovation, efficiencies and enhanced value combined with a greater focus on long-term service delivery and asset performance outcomes. These benefits have been expanded across three streams of partnerships under the updated
Partnerships Victoria model:
1. Community Partnerships
2. Economic Partnerships, and
3. Precinct Partnerships.
Use of the Community Partnerships stream suits projects that provide essential social infrastructure, including hospitals, schools, and justice facilities. The private consortium delivers and manages the infrastructure, allowing specialist practitioners to focus on providing key services for the community.
Economic partnerships suit economic infrastructure developments, including transport and utilities infrastructure, such as Victoria’s desalination plant and North East Link projects. Economic partnerships can leverage potential revenue and user payments to help fund these critical assets.
Precinct partnerships suit housing and other precinct developments. They use state investment to attract complementary private investment, activating broader precinct development and public benefits.
Banyul Geelong Convention and Event Centre
The recently awarded Nyaal Banyul Geelong Convention and Event Centre is an example of a successful precinct partnership; one that will deliver a thriving purpose-built convention and events precinct in Central Geelong.
Development Victoria, the Victorian Government’s development agency, is delivering the project, in partnership with the Plenary Conventions consortium. The consortium comprises Plenary Group as sponsor and investor, Built as builder, Woods Bagot as architect, and BGIS as services contractor. Melbourne Convention and Exhibition Trust will operate the Centre once complete.
Nyaal
Nyaal Banyul Geelong Convention and Event Centre Public Plaza
Nyaal Banyul Geelong Convention and Event Centre pre function
Work is well underway on what will be one of the biggest developments in regional Victoria with Plenary Conventions to finance, design, construct and maintain the facility for 25 years. The project is being delivered with the Victorian Government and its funding partners under the Geelong City Deal, the Australian Government and City of Greater Geelong. The project is being managed by Development Victoria and the Regional Development Victoria team, as part of the Geelong City Deal.
The integrated precinct includes the construction of the purposebuilt convention and exhibition space, incorporating a 1,000-seat venue, two large exhibition spaces, meeting rooms, conference facilities and flexible event spaces.
The precinct will also be home to retail spaces for food and beverage offerings, a large public plaza that promises to become a feature of the Geelong waterfront, a 200-room Crowne Plaza hotel and a mixed-use commercial development.
The decision to procure the project as a precinct partnership enables the optimal activation of the site. Consortia were invited to develop a solution to finance and deliver not only the core convention and event facility, but also the 200-room hotel, commercial development, and retail offerings.
This allowed the State to harness innovation and efficiencies to offset costs to Government and achieve a more integrated precinct outcome than could have been achieved under a traditional, multi-package procurement. The precinct partnership model also crystalised value capture opportunities, allowing the State to reinvest commercial revenues to deliver a functional and attractive precinct to leverage further economic benefits.
This precinct partnership is being delivered using the harmonised Public Private Partnership social infrastructure deed, developed between Victoria and New South Wales.
Additional information
More information on the infrastructure procurement framework is available on the Department of Treasury and Finance’s website including:
• an updated Procurement Guideline which includes information on how to select the optimal project structure, bundling and packaging approach and procurement model when preparing a business case
• a new Cost Reimbursable Procurement Category Requirements document
• Harmonised Public Private Partnership deeds. These deeds replace the 2018 versions of the Partnerships Victoria Standard Form Deeds
• a new Incentivised Target Cost contract suite, and
• a new Enhanced Design and Construct deed.
The second tranche of complementary reforms are expected to be released later in 2024. These include:
• new Whole of Life Procurement Requirements
• new Lump Sum Procurement Requirements, and
• a new Managing Contractor contract suite.
While there is still more work to do, the framework makes the path smoother for industry to partner with the Victorian Government to continue to deliver its significant infrastructure program.
For more information about the framework visit the Department of Treasury and Finance’s website at https://www.dtf.vic.gov.au/ infrastructure-investment or email infrastructure.delivery@dtf.vic. gov.au
Global Infrastructure Financial Adviser in Energy Transition1
Supporting the growth of a leading operator of zero-emission buses
As the definition of infrastructure continues to expand, Macquarie Capital is identifying and creating new opportunities that meet the challenges of tomorrow while helping our clients navigate an evolving ESG landscape.
In a transformative transaction, we acted as financial adviser to Kinetic Group, leveraging our deep infrastructure and debt markets expertise to successfully reposition its credit. This was the first infrastructure debt repositioning of scale for a private bus company in Australia and New Zealand.
Entering into the ~$A1.6 billion facilities means Kinetic is now well-positioned to fund its growth pipeline and meet its ambitious decarbonisation goals. This includes replacing diesel buses with zero emission buses and launching all-electric bus depots.2
Learn more about how Macquarie Capital is supporting the transition to a greener global economy at macquarie.com
