Partners Group has agreed to invest A$700 million ($527.4 million; €453.6 million) in developing a renewable energy platform in Australia in partnership with local developer CWP Renewables.
The Grassroots Renewable Energy Platform will be seeded with the 270MW Sapphire Wind Farm, in which Partners Group made its initial investment of A$250 million in 2016. Jointly owned and developed by Partners Group and CWP, the largest wind farm in New South Wales will power 110,000 Australian households every year once it’s completed in October, Partners Group said in a statement. The wind farm has secured a 20-year power purchase agreement for 100MW of its capacity with the Australian Capital Territory government.
In addition to the seed project, the platform has a development pipeline of more than 1.3GW of wind, solar and battery storage assets across Australia for the next four years. The next project coming under the platform is the 135MW Crudine Ridge Wind Farm, also in NSW, scheduled to be operational in September 2019. It commenced construction this month after securing debt financing from the Clean Energy Finance Corporation, Westpac and Sumitomo Mitsui Banking Corporation.
Half of the energy from Crudine Ridge has been sold to Powershop, an Australian electricity retailer. The rest of the energy generated from the two projects under the platform is being sold progressively to other offtakers, primarily large corporate and industrial users of electricity, according to a spokeswoman for Partners Group.
Partners Group and CWP did not disclose financial details of the transaction, but according to the Swiss firm’s spokeswoman, Partners Group is funding its portion of the investment – which represents a majority equity stake in the platform – from several vehicles, including Partners Group Direct Infrastructure 2016, its latest offering for which it amassed €3 billion in February.
While Grassroots represents Partners Group’s first renewables platform in the country, it is not its first investment in the Australian renewables sector. In addition to Sapphire, Partners Group also invested in the 240MW Ararat Wind Farm in June 2015.
“In the case of renewable energy, a platform approach makes a lot of sense as it allows us to combine the benefits of clean wind and solar power generation with large-scale battery storage,” the spokeswoman for Partners Group told Infrastructure Investor. “This combination allows us to blend the wind energy produced in the mornings and evenings and solar energy produced during the day and then use large-scale batteries to firm up any remaining variability.”
She added that “as competition from low cost-of-capital buyers has driven down returns for operating renewable assets in Australia, we have focused instead on opportunities to build assets and expand them into platforms with the aim of exiting large, stabilised core assets in the long term”.
Prior to this latest commitment, Partners Group deployed around $800 million in renewables in Asia-Pacific since 2011, with the region accounting for half of its global renewables portfolio.
Its Asian platforms include a 550MW solar power development platform in Taiwan, in which it invested $200 million in 2016; and Japan Solar, a 610MW platform of Japanese solar power assets Partners Group exited in January this year, achieving a 3.2 times blended gross return from a $250 million investment in 2014.