Royal Dutch Shell Plc took another step in its ambition to double its power sales by 2030 with the purchase of a retailer that provides renewable electricity to Australian households.
Shell will buy Powerhouse Australia from Meridian Energy Ltd. in a A$729 million ($573 million) accord that sees fund manager Infrastructure Capital Group take over the Christchurch, New Zealand-based company’s Australian generating assets. Shell has signed offtake agreements with ICG to buy electricity from the hydro and wind assets to supply Powerhouse Australia’s more than 185,000 residential and small business customers, The Hague-based company said in a statement.
The oil major aims to double its global power sales to 560 terawatt-hours by 2030, and serve more than 15 million electricity customers worldwide. In 2019 it bought Australia’s second-biggest electricity retailer to commercial and industrial clients and last year it acquired an Australia carbon farmer.
Meridian Energy Australia owns and operates two wind farms and several hydro plants. As it has a relatively small project development pipeline, ICG is confident that it’s not paying a high premium for prospects that may not eventuate, said Tom Laidlaw, the fund manager’s managing director.
ICG, a specialist infrastructure investor with over A$2.1 billion under management, last year paid A$400 million to acquire the Willogoleche wind farm from a consortium led by Mitsui & Co. It also bought the Bald Hills wind farm, also from Mitsui, four years earlier and the Hallett 4 Wind Farm in 2015, both for undisclosed sums.
There’s institutional investors like us who are getting demand from their clients to deploy capital into renewables and ESG-positive type investments, Laidlaw said by telephone. Then there’s also demand from energy majors such as AGL Energy Ltd., Shell or Enel SpA to either diversify their portfolios or change their businesses as this energy transition continues to occur. I think we’re fairly early on in that journey and it is only building momentum.