ACCC approves Brookfield’s ‘Plan B’ deal for Neoen after Origin snub

The ACCC will not oppose Brookfield’s acquisition of French renewable energy developer Neoen, so long as the Canadian private equity giant divests windfarms and batteries in Victoria.

The Australian Consumer and Competition Commission will not oppose Brookfield’s acquisition of the French renewable energy developer Neoen, but has said the Canadian private equity giant must divest a series of wind farms and batteries in Victoria.

The approval is a major fillip to Brookfield’s ambitions to rapidly grow renewable energy development in Australia, an aspiration stymied by the shareholder rejection of its near $20bn offer for Origin Energy.

Brookfield had said it planned to nearly triple Origin’s renewable energy pipeline, a commitment that won favour with the ACCC and policymakers who were keen to accelerate Australia’s transition away from fossil fuels.

But the deal collapsed at the final hurdle, and Brookfield instead turned to acquiring Neoen – already one of Australia’s largest renewable energy developers – in a $10bn deal.

The deal sparked some competition concerns as Brookfield already owns AusNet, the sole transmission company in Victoria, but the ACCC said it would allow the deal if the private equity company sold assets in the state.

ACCC commissioner Philip Williams said the divestment was critically important.

“The ACCC considers that, without the divestment, the acquisition would have increased Brookfield’s incentives to delay or increase the cost of connections works on rival projects or operate the AusNet transmission network to benefit Brookfield’s related assets,” Dr Williams said.

“While there are some regulatory protections to limit obvious and blatant conduct disadvantaging rivals, there is still a clear potential for anti-competitive tactics.”

Brookfield will now be required to divest Neoen’s operational assets and six further development projects in Victoria. The operational assets are the Victorian Big Battery, Numurkah Solar Farm, Bulgana Wind Farm and Battery.

Neoen’s development projects in Victoria that will also be divested include Navarre Green Power Hub Stage 1 and 2, Kentbruck Green Power Hub Stage 1 and 2, Kentbruck Storage, Moorabool Battery Energy Storage System – also known as Victorian Big Battery Stage 2 – Loy Yang Wind, and Bulgana X.

Sources familiar with the sales process said there has been significant interest in the portfolio, which was the catalyst for Brookfield’s offer to the ACCC.

Although Brookfield must divest all of Neoen’s projects in Victoria, it does not prohibit the company from developing new renewable energy sites once the deal is completed.

Neoen has about 4GW of capacity of renewable energy completed or in construction in Australia, and Brookfield has committed to bolster its footprint. The ACCC approval is a boost for the company, which has seen two major deals in Australia fail.

In 2022, Brookfield partnered with billionaire Mike Cannon-Brookes in a tilt for AGL Energy, though it turned its attention to Origin. That deal appeared destined to succeed but Origin’s share price jumped in 2023 and shareholders subsequently rejected the Brookfield offer.

Brookfield said then it had alternative plans, dubbed a so-called Plan B by some observers, and a deal was struck earlier this year for Neoen.

Under the terms of the deal, Brookfield will acquire a majority stake in Neoen

Any acceleration of the roll-out of the renewable energy pipeline of Neoen would be greatly appreciated by the federal Labor government, which is under pressure to demonstrate that it can hit its transition targets.

Labor has set a target of having renewable energy generate 82 per cent of the country’s electricity by 2030, a plan that Australia is not on course to hit.

Labor insists the roll-out is accelerating, and impetus has been injected by its plan to use taxpayer funds to underwrite some 32GW of new capacity by 2030.