Origin buys 20pc stake in decarbonisation company

Origin Energy has acquired 20 per cent in a specialist decarbonisation firm that works with major companies on projects to slash their emissions.

Origin Energy says buying into Climatech Zero ‘provides us with exposure to a fast-growing segment’. Picture: Bloomberg

Origin Energy has acquired a stake in a specialist decarbonisation firm that works with manufacturers, miners and commercial property owners on projects to slash their emissions.

In another push to bolster Origin’s green credentials, the company has acquired a 20 per cent interest in Climatech Zero, which has worked with major clients including Scentre Group, Walker Corporation and Built on emissions reduction projects.

Climatech Zero was established in 2018 through a joint venture between Sydney-based mechanical services contractor Climatech Group and Irish environmental software and engineering provider CoolPlanet.

It now stands as a stand-alone business within the broader Climatech Group, which is one of Australia’s largest HVAC (heating, ventilation and air-conditioning) and refrigeration businesses serving large commercial buildings, data centres and industrial projects across Australia and New Zealand.

Climatech Zero, which provides energy management and decarbonisation services to industries ranging from mining through to manufacturing and food production, claims its “energy as a service” offering has delivered more than $4m in savings, and reduced emissions by close to 30,000 tonnes, through 29 completed projects.

They have included working with Scentre Group on energy ­efficiency upgrades at Westfield malls across Sydney, as well as using advanced data analytics to slash energy usage in office buildings at Walker’s Parramatta Square development.

James Magill, who heads up Origin’s business and industrial unit Origin Zero, said the acquisition “provides us with exposure to a fast-growing segment”.

“Through this agreement, Origin and Climatech Zero will also be able to pursue opportunities to partner on the delivery of end-to-end energy and decarbonisation strategies for large industrial customers,” he said.

“Climatech Zero’s tailored engineering solutions for industrial customers complement Origin’s strengths in front of the meter and behind the meter, solar and ­demand-side management solutions.

“Ultimately, we believe these arrangements will help accelerate our ability to reduce customers’ carbon emissions at the same time as reducing their energy costs.”

Climatech Zero employs the latest technologies and an in-house team of engineers, data analysts and project managers to design and deliver projects for clients across Australia and New Zealand. Co-founder and chief executive Peter O’Connell said Origin’s backing would “supercharge” Climate Zero’s growth as it looked to scale.

“With Climatech Zero, we identified a gap in the market for practical energy management and decarbonisation solutions that make economic sense for Australian businesses,” he said.

“The energy transition is a long-term and messy challenge and this partnership adds a potent new solution to the debate.

“We’re helping industry improve existing infrastructure with modest, fast capital investment and accurate predictive data, leading to immediate energy reduction and decarbonisation benefits with very short payback.”

Mr O’Connell said the company’s team of engineers, data analysts and project managers had doubled in the past 18 months and, with backing from Origin, it was now looking to employ another 20-30 people in the next 12 months. “We’re on target for 300 per cent revenue growth in FY2024 off a strong base,” he said.

“From an ambitious start-up in 2018 to now generating double-digit million revenue, having the support of one of Australia’s leading energy companies is significant and offers potential for further growth.”

Climatech Zero was advised by Tiger & Bear Partners.

The investment in Climatech Zero comes after Origin increased its stake in Britain’s largest energy retailer, Octopus Energy, to 22.7 per cent in December.

Origin’s stake has jumped in value, to about $3.1bn, according to a later capital raise in May, which Origin wasn’t involved in.

But UBS analysts on Friday estimated the stake could be worth nearer to $4bn, lifting its 12-month price target for Origin by 15 per cent to $12.10. Shares rose 0.6 per cent to $10.93 on Monday.

“We believe Octopus’ growth potential in both the retail business (in the UK and globally) and Kraken, its SaaS technology business, whilst operating at a profitable level provides substantial value upside,” UBS said.

In an update on its own green push earlier this month, Origin reaffirmed its commitment to building 4-5GW of renewable energy to service its more than 4 million customers.

The energy giant told investors its newly acquired Yanco Delta wind farm development was a priority renewable energy project beyond its already announced spate of battery projects.

Origin acquired the proposed 1.5GW wind farm and 800 MWh battery earlier this year. The project recently became the first wind farm in NSW to secure planning approval in nearly three years.

Originally published as Origin buys 20pc stake in decarbonisation company