Renewable Energy — Simples?

It appears that electrifying everything with renewable energy isn’t as simple as it sounds. As Australia moves towards a 100% renewable grid (it was 70% across the eastern states at midday yesterday as I write this), there have been many hiccups along the way. I have read and written about issues to do with financing, installing, and connecting both small generating devices (like rooftop solar on apartment buildings) and large solar farms in the rhombus of regret in Victoria. Renewable energy, simples? It can get complicated.

A recently announced initiative involving finance by a PATRIZIA/Mitsui partnership and installation by local South Australian company YES is aiming to simplify the process, speed up installation, and increase access to green energy in regional areas by targeting the 5 MW power plus batteries market. PATRIZIA/Mitsui have invested AU$70 million in YES Group to fund a diversified solar and battery portfolio of up to 150 MW for regional Australia. This portfolio is expected to reduce CO2 emissions by 3,335,000 tonnes and provide power to approximately 65,000 homes. The injection of capital will enable YES Group to expand.

PATRIZIA is “a leading partner for global real assets” and Mitsui is “one of the largest trading and investment companies in the world.” They have formed a joint venture called the APAC Sustainable Infrastructure Fund (A-SIF) to invest in YES Group.

“Founded over 15 years ago, YES Group is a licenced, vertically integrated energy solutions provider, covering energy markets services and retailing, project origination and EPC [engineering, procurement, production], high voltage services and asset management. The company has successfully installed over 1,700 rooftop solar systems (sub 1MW), over 120 ground mount solar farms (sub 5MW) and works on major infrastructure projects across the national electricity network. PATRIZIA and YES Group have worked together since September 2020 [through SEI], delivering over 60MW of approved projects with a further pipeline of over 70MW identified, in addition to the target of over 150MW through A-SIF.”

The Group also needs to make sure it can sell the power produced, so: “Last week YES group in conjunction with Sustainable Energy Infrastructure (SEI) signed an innovatively structured renewable energy agreement with ZEN Energy for the off-take of energy generated by our growing portfolio of solar farms. ZEN (which stands for Zero Emissions Now), have a strong focus on accelerating Australia’s path to becoming a renewable energy superpower, sharing YES Group’s vision for a clean energy future,” said Mark Yates, Managing Director of YES.

“Bringing on a series of 5MW assets enables us to support the regional aspirations of our customers. It means they can access offtakes where they are located, like regional distribution centres. Small assets mean we can service sustainability-focused customers, fast,” said ZEN Energy CEO Anthony Garnaut.

PATRIZIA/Mitsui and YES Group expect that focusing on mid-size generation units will mean that it will be easier to comply with local regulations, that the spread of assets closer to the end user will mean less transmission cost and power loss, and, hopefully, all of this will mean shorter construction times. An issue might be construction costs in remote areas. Rural communities and landowners should benefit by being able to create an income stream from land that is currently not suitable for farming and the provision of employment opportunities. As with many developments around renewable energy, it will be important to create goodwill among locals to provide a social license for development.

“Decarbonisation and climate change are two core megatrends that underpin our global investment philosophy at PATRIZIA. As a thoughtful and strategic investor for our clients, this first deal for A-SIF demonstrates our strong conviction to energy transition and the attractive long-term returns renewables can generate for our institutional investors. Our vision in APAC for both PATRIZIA’s real assets platform and our flagship mid-market fund is to collaborate with like-minded investors and regional partners to build a portfolio of infrastructure assets that deliver positive sustainable outcomes,” Saji Anantakrishnan, Head of Infrastructure for Australia and Asia at PATRIZIA, says. I would summarize this as — green energy makes green money.

This is backed up by the International Energy Agency’s forecast that US$1.7 trillion will be invested in renewable power globally, almost twice what is being invested in oil production. “For every dollar invested in fossil fuels, about 1.7 dollars are now going into clean energy. Five years ago, this ratio was one-to-one. One shining example is investment in solar, which is set to overtake the amount of investment going into oil production for the first time. Annual clean energy investment is expected to rise by 24% between 2021 and 2023, driven by renewables and electric vehicles, compared with a 15% rise in fossil fuel investment over the same period.”

Client polling by PATRIZIA highlighted an increase in investor appetite for renewables, with 55% of international institutional investors saying that they planned to increase the share of renewables in their portfolios over the next five years.

“With operations around the world, PATRIZIA has been offering investment opportunities in real estate and infrastructure assets for institutional, semi-professional and private investors for 39 years. PATRIZIA manages around EUR 58 billion in assets and employs over 1,000 professionals at 28 locations worldwide. PATRIZIA has been making an impact since 1984 by helping children in need, since 1992 in close collaboration with Bunter Kreis (‘colourful circle’) in Germany for aftercare of children with severe diseases and since 1999 through its support for the PATRIZIA Foundation. The PATRIZIA Foundation has given more than 600.000 children and young people worldwide access to education, healthcare, and a safe home to get the chance to live a better self-determined life over the last 24 years. You can find further information at www.patrizia.ag and www.patrizia.foundation.”

YES Group has been working with PATRIZIA (formerly Whitehelm Capital) since 2020 through a partnership with Sustainable Energy Infrastructure (SEI). “SEI was established in 2018 by PATRIZIA on behalf of forward-thinking local institutional investors, who purchased a portfolio of high-quality, established energy assets from AGL. With the ongoing financial backing of a consortium of large Australian superannuation funds, SEI plays an active role in developing and providing sustainable energy solutions throughout regional Australia.” See, I told you it was complicated.

Despite the inherent complications, it is great to see distributed renewable energy production moving into the regional areas of Australia. And the solar panels make great shade for sheep and cattle!