New Energy Solar has acquired its first Australian asset with the purchase of 100 percent of the Manildra Solar Farm in New South Wales for an enterprise value of about A$113 million ($83.86 million; €72.02 million).
The seller is US photovoltaic manufacturer First Solar and the deal represents New Energy Solar’s first foray into the Australian market after building up a significant portfolio of assets in the US since it was established in November 2015.
Manildra is an operating asset with a capacity of 55.9MW. It has a 10-year power-purchase agreement with EnergyAustralia, the third largest electricity retailer in the country, with an option to extend to 2030.
In a statement, New Energy Solar said Manildra had a target unlevered five-year annual average gross yield of 7.6 percent per annum compared with the current gross annualised yield on its existing operating portfolio of approximately 6.6 percent per annum. The project yield is expected to grow with underlying price escalation in the PPA.
The plant is expected to generate more than 118,000MWh of electricity annually, equivalent to displacing more than 91,000 tonnes of CO2 emissions per annum.
Speaking to Infrastructure Investor, New Energy Solar CEO John Martin said the company had considered investing in Australian assets before, but that changes in market conditions meant that now was the right time for the firm to make its move.
“We’ve always said that any Australian investments would need to be consistent with the investments we’ve made in the US,” he said. “That means they have long offtake agreements, generate good yields, and have been developed by credible developers using tier one equipment.
“I’ve said before that too many investors with Australia-only mandates were chasing too few deals [in renewables]. We’ve seen a change in the Australian market now, where a lot of the froth and bubble from last year has dissipated, and the market is pricing things more sensibly now.”
In particular, this meant a recognition that renewables would help push down wholesale energy prices in future, he said. The Manildra acquisition was also attractive from a portfolio diversification perspective, Martin added.
On the prospect of whether New Energy Solar would make further investments in Australia, Martin said: “I really hope so. We’ve been looking at a few projects here that we like the look of, but it will always have to be consistent with our other investments as we see tons of opportunities.”
Investors should not be deterred by the National Energy Guarantee, he added. “The NEG’s not transformative – everyone’s just saying we need a framework to work with, and think the NEG is workable from that perspective,” he said.
Once the Manildra transaction is complete and committed and in-construction assets in the US are operational, New Energy Solar’s portfolio will comprise interests in more than 730MW of operating solar projects across the US and Australia, with a weighted average PPA term of 17 years.
Its operational assets include the 124.9MW-capacity Boulder Solar I project near Boulder City, Nevada, in which New Energy Solar holds a 49 percent stake. It is currently constructing the 199.6MW-capacity Mount Signal 2 project in Imperial Valley California, alongside several other projects.
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