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Private capital flows driving renewable transition
Government policy continues to lag private markets when it comes to the energy transition, with Federation Asset Management’s latest deal to buy two battery assets a sign of the things to come.
The fast growing group which seeks to invest across private equity, venture capital, real assets and energy with a sustainable focus has picked up the Riverina and Darlington Point Battery Energy Storage Systems from Edify Energy.
Totalling 150MW or 300MW hours, the assets will become the seed assets of the Sustainable Real Asset Fund to be run by Federation under the leadership of Stephen Panizza. Panizza was previously Investment Risk Officer at the Clean Energy Finance Corporation, so is uniquely positioned in his knowledge of the sector.
Commenting on the acquisition he highlights that “Battery energy storage capacity is critical to accelerating the energy transition in the National Electricity Market, and supporting the electricity grid.” More importantly, he says that battery energy storage is “an excellent asset class” with the Edify deal supported by long-term off-take contracts from Energy Australia and Shell Energy.
The deals comes on the back of number of similar opportunities in 2021 including a $600 million partnership with BlackRock for their $600 million portfolio of childcare assets and teaming with Goldman Sachs on within the Disability Accommodation Fund dubbed Synergis.
Edify has carved out a niche in developing, structuring and financing renewable energy and storage assets in Australia and will retain a small stake in the vehicle. CEO John Cole said “Edify is excited to be partnering with Federation on the delivery of the Riverina Battery Projects, with our shared view that battery energy storage is vital to advancing the dispatchability and resilience of a renewable power system.
The Edify team acutely understands the need for, and functionality of, crucial inverter-based power system infrastructure. We look forward to the successful delivery of the Riverina Battery Project into commercial operation.
One of the biggest challenges for renewable energy assets in recent years has been the connection to the grid, but these two projects will connect to Transgrid Network at the Darlington Point Substation, which has long been a core part of the energy grid. Supported by the Tesla Megapack batteries, the sites “will serve to add more flexible, dispatchable capacity to the NSW market and will complement the significant presence of renewable generation in the region” according to the release.
Due for completion during the summer of 2023/24 and developed on traditional lands of Wiradjuri Country, the Darlington Point and Riverina Battery Energy Storage Systems have the potential to power more than 46,000 homes for two hours of peak demand before being recharged.
