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Accelerating the energy transition means delivering competitive, renewable, and secure energy through investment in decarbonised solutions. Securing finance through debt and equity remains essential for developing renewable energy assets and portfolios. What’s equally important is achieving this in a way that’s economically viable, community supported, and environmentally considerate.
Renewable energy transactions are set to grow as strong market signals, together with emissions reduction targets, capacity investment schemes, and decarbonisation frameworks continue to support investor confidence.
Domestic and international investors’ contribution to the energy transition and the renewable energy needs of economies, industry and consumers requires both technical and commercial insights for sound investment decision-making. Aurecon is helping clients make informed investment decisions and, in this article, Dr Ben McGarry, Stan Kaluwin, and Makenzie Moor share their perspectives on the forces reshaping Australia’s energy transaction landscape and what’s driving its rapid growth.
Aurecon’s Dr Ben McGarry, Stan Kaluwin and Makenzie Moor unpack the complexities and emerging trends shaping the growing scale and frequency of energy transactions in Australia.
1:30Dr Ben McGarry, Decarbonisation Leader, highlights how the energy transition is creating new types of partnerships, between industrial participants, project developers, and communities. The scale and size is affording the opportunity for new partnerships to be formed.
1:55Stan Kaluwin, Energy Transactions Advisory Leader, explains how early engagement between the builder of electricity and consumer of electricity is dealing with the complexity of risk and opportunities associated with energy transactions.
1:01Makenzie Moor, Decarbonisation Manager, highlights that there’s a huge wave of new market entrants, at the same time as technology advancements, making industry and government seek flexibility in a constantly changing system.
Five years ago, 90 per cent of transactions that Aurecon was a part of were smaller than 100 megawatts, whereas today, 90 per cent of transactions are larger than 100 megawatts.
As energy transactions become increasingly central to a company’s decarbonisation plan, they want to be a part of shaping their involvement in the energy transition and obtain returns on their investments.
What we’re hearing from organisations is they need durable, long-term investment opportunities – and that need is coming from both the supply and demand sides of the equation. Buyers require security of supply and predictable costs, and developers, or investors, are looking for certainty of demand and financial returns.
We’re seeing buyers and sellers of renewable energy engage much earlier in transactions, focusing less on lowest cost and more on fair value, secure supply, and allocating risk to where it’s best managed.
Many are better understanding the benefit of early collaboration with portfolio and project developers to help navigate complex stakeholder, environmental, and project-scale challenges – giving financiers greater confidence sooner and enabling projects to progress more effectively.
As global industries transition towards using more sustainable materials, demand for low-carbon products and supply chains is rising and this requires industrial processes and large amounts of energy. Technology, automotive, construction, and transportation industries are seeking greener materials with low embodied emissions to meet climate goals and sustainability efforts.
The increasingly energy-hungry digital infrastructure underpinning our economy is also rapidly scaling, demanding new, sustainable energy supplies. Large emitters have no option but to change their risk appetite and profile to order to prepare for decarbonisation, including engaging with new technologies, innovating and transforming their assets, and participating in energy markets.
These high use cases combined with strong market signals in Australia continues to drive investor confidence. Combined with strong solar and wind resources, expanding transmission and storage infrastructure, and rising demand for renewable energy supply, Australia is expected to see continued growth in renewable energy deal activity across all types of renewable energy portfolios.
Early energy investments and transactions bring sellers and buyers together in a way that builds confidence; confidence to invest, to innovate, and to commit for the long term. But, to really make this work, we need three critical enablers:
There should be no winner or loser in an energy investment or transaction. The goal is to ensure the buyer obtains reliable, affordable, sustainable energy supply or assets for decarbonisation objectives. The seller or developer in return secures a fair value on investment and long-term viability.
In addition, financiers find credible, bankable projects or portfolios, and in turn, an economy benefits from greater energy security and renewable energy supply.
The way to achieve this is to engage early, with both the buyer and seller remaining in a risk sharing conversation all the way through to the commercial operation date, or when the generator commences producing electricity.
Looking back at Australia’s history, traditional electricity assets have been foundational at underpinning the original development of our electricity grids and electricity market. This highlights the importance of large-scale renewable energy projects in shoring up future energy supply for Australia’s powerhouse industries that contribute to our national productivity and prosperity.
Energy investments and transactions are now helping future-proof these industries. They also provide an early signal of underlying demand, giving the public sector the confidence to prioritise infrastructure investments for renewable energy grid connections in the future.
As energy transactions continue to grow in scale and regularity, the challenge, and opportunity, lies in connecting renewable energy project investors and developers, and buyers of electricity, through collaboration and open engagement.
Aurecon is helping clients make informed investment decisions through strategic energy transaction advice; this may be in the form of investment or divestment of a single renewable energy asset, or portfolio of assets, or Power Purchase Agreements (PPAs) This is informed by:
Contributing author & reviewer: Stan Kaluwin
Design Director – Australia
Manager, Infrastructure & Energy Advisory
Principal, Infrastructure & Energy Advisory – Australia
Manager, Infrastructure & Energy Advisory
