The merged entity will retain the name CWP Renewables and will be majority-owned by Partners Group, with CWP’s founders holding equity stakes in the business.
Partners Group, acting on behalf of its clients, invested A$700 million ($515 million; €432 million) of equity financing into Grassroots after its launch which is now almost fully deployed. The company owns three windfarms in New South Wales: the 270MW Sapphire Wind Farm, 244MW Bango Wind Farm and 137MW Crudine Ridge Wind Farm.
CWP is also a consortium partner in the Asian Renewable Energy Hub, one of the world’s largest renewable energy projects. The merger with Grassroots will encompass CWP’s wind and storage assets in Australia only and does not include that stake or CWP’s other international assets, which will remain under the ownership of the wider CWP business.
“It’s like getting married after a period of engagement,” CWP Renewables co-founder Alex Hewitt told Infrastructure Investor. “[The merger] gives us a better platform to invest from and gives us a simpler and more agile way of doing business.”
CWP Renewables has a pipeline of 2.2GW of wind and storage projects which will transfer to the new entity. Hewitt said the aim is to deliver that over the next four years.
“There’s huge opportunity [in Australian renewables] – it depends on what your horizon is,” he said.
“If you take the longer horizon, the closure of coal-fired power stations is going to happen, and, in my view, quicker than is currently being spruiked by the owners of those stations. The demand is going to be huge – [the question is] how quickly it comes on. We’re obviously confident in the short to mid-term as well as the long term, which is why we’re structuring in this way and trying to move as fast as we can.”
On potential issues with grid connection to Australia’s National Electricity Market, which many investors have expressed concerns about, Hewitt said that consideration of these risks was always front of mind but that CWP Renewables had not been adversely affected in a significant way to date.
“There have been some horror stories to do with grid connection and marginal loss factors. Frankly, I don’t have too much sympathy for those that have built in the wrong place,” he said.
“We’ve suffered a little on MLFs on one or two projects, but our projects have always had grid very much in mind. All the work being done by the Australian Energy Market Operator and the grid companies means these issues are getting solved and going in the right direction, but there is still work to be done.”
Partners Group will keep ownership of three other wind farms in Victoria – Ararat Wind Farm and the two stages of Murra Warra Wind Farm – separate from the CWP Renewables platform.
Hewitt said that CWP Renewables would now be Partners Group’s largest renewable energy play in the world and the largest portfolio of operating and under-construction wind projects in Australia.
The merger has been signed and will reach financial close before the end of 2020.