AGL Energy Ltd has announced on Thursday that it will partner with New Zealand's Meridian Energy to build a wind farm in Victoria State by early 2013, which will cost about one billion Australian dollar.

This shows that policy measures made by Australia to encourage renewable energy investment have started giving good results.

AGL said that the 420-megawatt wind farm will be the largest in the southern hemisphere and it will have the capability to give power to more than 220,000 households.

It will consist of 140 wind turbine generators, which will be provided by Vestas Wind Systems, a Danish company.

The wind farm will be situated 260 kilometers west of Melbourne and will be constructed by Vestas and Leighton Holdings Ltd.

Australia has always lagged behind, when it comes to using wind energy. Activity in the sector of using renewable resources started few years ago, when legislation was formally introduced in 2009, which made it mandatory that 20% of national power needs to be generated from renewable sources by 2020.

The market lowered its price and was rushed with renewable energy certificates, when solar hot water, rooftop solar and heat pumps were included in the target of 20%.

However, this year an amendment was introduced in the legislation, which split the target into two fragments for small and large-scale projects.