ICG moves into hydro with Meridian Energy deal

MD Tom Laidlaw says the A$729m acquisition, in partnership with Shell, will scale and diversify the firm’s renewables portfolio.

Sydney-based Infrastructure Capital Group is partnering with Shell to acquire the Meridian Energy Australia Group for A$729 million ($525.2 million; €468.5 million).

The firm is the majority partner in the acquisition which, upon completion, will see MEA divided between ICG and Shell, with the former acquiring full ownership of the group’s wind and hydro assets through its open-end Australian Renewables Income Fund. Shell will take ownership of MEA’s energy retail business Powershop and has agreed to acquire all output from the wind and hydro assets under a PPA.

ICG managing director Tom Laidlaw told Infrastructure Investor the deal – which marks the firm’s first move into hydro energy – is an opportunity to scale and diversify ARIF’s portfolio. As part of the deal, the firm is set to acquire three operational hydro power stations and the Hume Battery Energy Storage System project, which is still in development. It will also acquire two operating wind farms in South Australia and Victoria and one development wind farm in New South Wales.

“It’s great to have a battery in development at the Hume hydro plant and we’re highly confident it’ll happen,” Laidlaw said. “We’re certainly of the view that batteries have a big role to play in helping Australia’s energy transition. Pumped hydro energy storage is arguably the best renewables combination, providing a constant flow of zero-emission energy and being very cost-effective.”

He said the firm is committed to further diversifying ARIF’s portfolio via the addition of a solar project in the near future, but that it is less keen overall on solar projects when compared with other renewable energy options.

“[In terms of what’s next], the fund is already well diversified and ICG benefits from being one of the top players in Australia’s renewables space,” he added. “I’d hope that, in five years’ time, that absolutely continues to be the case.”

The acquisition of MEA is expected to reach financial close early next year, and is subject to Shell being granted approval by Australia’s Foreign Investment Review Board.