John Laing explores sale of Australian renewables portfolio

The firm booked a £66m write-down on its Australian renewable energy assets last year due to changes in marginal loss factors and halted new investment, but is now considering exiting the sector altogether.

John Laing is exploring a potential sale of its renewable energy generation portfolio in Australia, Infrastructure Investor understands.

The firm has engaged Macquarie Capital to sound out the market on the sale, with the launch of a formal sale process or auction still some way off.

John Laing’s renewable energy portfolio in Australia comprises stakes of varying sizes in six renewable energy assets: Cherry Tree Wind Farm and Kiata Wind Farm in Victoria; Granville Harbour Wind Farm in Tasmania; Finley Solar Farm and Sunraysia Solar Farm in New South Wales; and Hornsdale Wind Farm in South Australia. Only Kiata Wind Farm, Finley Solar Farm and Hornsdale Wind Farm are operational.

John Laing declined to comment on a potential sale of the portfolio.

The firm put all new investment in Australian renewables on hold in August 2019 after booking a £66 million ($86 million; €77 million) write-down on projects due to changes in marginal loss factors, the system used to determine transmission loss values in Australia’s National Electricity Market.

At the time, the firm said that the final MLFs for 2019-20 published by the Australian Energy Market Operator in June 2019 had produced “unfavourable results” for three of its assets in the country.

John Laing did not specify which three assets had suffered, but AEMO figures showed that all three of the firm’s operating assets had seen MLF downgrades. Kiata Wind Farm saw its MLF fall from 0.9911 in 2018-19 to 0.9066 for 2019-20, while Finley Solar Farm saw its MLF drop from 1.441 to 0.9895. All three stages of Hornsdale Wind Farm were also downgraded slightly from 0.9744 to 0.9698.

The firm said that it had taken draft MLFs for under-construction assets into consideration as well, although these are not made public by AEMO.

It also said in August 2019 that active asset management had led to it recognising £29 million of value enhancements in the Asia-Pacific region, primarily on its Australian renewables assets, which helped to offset some of the write-downs attributed to MLFs, with further value enhancements expected in the second half of last year.

John Laing has been a prominent member of the Clean Energy Investor Group, a group of 20 investors in Australian renewables that is lobbying for changes to marginal loss factors.

The group warned last year that there were “pretty serious implications” for ongoing investment in Australian renewables should disagreement over MLFs continue.