INPEX buys stake in renewable developer Enel Green Power

Japan’s largest oil and gas company is targeting a significant increase in renewable capacity in Australia.

INPEX has acquired a 50 per cent stake in Enel Green Power Australia valuing the business at €400m ($654m), as Japan’s largest oil and gas company looks for a decarbonisation and diversification pipeline.

The deal is the latest in a spate of mergers and acquisitions activity in the renewable energy space as heavyweight corporates come under sustained pressure to accelerate decarbonisation efforts.

Should the deal clear remaining regulatory hurdles, Enel Green Power Australia will have significant access to capital to grow its renewable energy capacity.

Enel Green Power Australia has three solar projects with a combined capacity of around 310MW. It also has three projects in late-stage development that will bring an additional 285MW of capacity, but the developer has said it is targeting a significant increase in installed capacity.

The stake acquisition also hints that INPEX still sees value in Australia despite publicly criticising the federal Labor government earlier this year for its intervention in the gas market.

INPEX CEO Takayuki Ueda in May accused Australia of “quiet quitting” the LNG industry as he urged the government to demonstrate its commitment to gas through actions and not words. The unusual criticism of the government by a traditional ally stoked suggestions INPEX could look to temper its commitment to Australia.

INPEX is Australia’s largest Japanese investor through its $60bn-plus Ichthys project in Darwin.

But INPEX is now committing to strengthening its ties to Australia, and Enel Green Power Australia said the combined entity is targeting growth.

“This ensures Enel Green Power Australia will continue to drive the energy transition underway in Australia, accelerating its contribution to achieve the country’s net zero target,” the Italian-based renewable energy developer said.

INPEX’s deal, which includes about $140m in debt, still requires approval from Australia’s Foreign Investment Review Board. Enel said it could not provide any certainty about when the deal will close.

The acquisition is a boost to Australia’s hopes of meeting its ambitious renewable energy target. Coal is still the dominant source of Australia’s electricity, but Canberra is targeting a rapid shift to renewable energy. The federal government earlier this year legislated a target of having zero emission energy provide more than 80 per cent of Australia’s electricity by the end of the decade.

But Australia remains well off the pace, and a rapid influx of investment is needed to catch up. A failure to meet the target could force Australia to extend the lifespan of coal power plants or risk price spikes and even blackouts.

A growing number of energy experts are increasingly alarmed by Australia’s sluggish pace of development, as new projects struggle to secure transmission line security and overcome social licence issues.

Federal Energy Minister Chris Bowen has acknowledged the transition timetable is challenging but insists Australia can still meet the ambitious target.

The rapid-fire exit of coal power plants this decade will require 45 gigawatts of new power supply by 2030, nearly the entire capacity of the current national electricity market, the Australian Energy Market Operator has said.

Some 150 gigawatts of energy supplies, nearly triple the current generation and storage capacity of the Australian market, has been proposed by companies and investors by 2032 with large-scale solar and wind backed up by battery storage accounting for 88 per cent of the project pipeline.

Originally published as INPEX buys stake in renewable developer Enel Green Power