Australia’s largest electricity retailer Origin Energy has tapped an investment bank — believed to be Barrenjoey — for a $1bn-odd process to find a backer for its Yanco Delta wind development.
A beauty parade for the role has been run in recent weeks, and sources were pointing to the Matthew Grounds-led advisory firm as the successful candidate.
Barrenjoey previously advised Origin with Jarden when it was in the crosshairs of Brookfield’s $16bn buyout proposal last year, which was rejected.
Origin, which has an $18.6bn market value amid a period of soaring energy costs, announced the purchase of the renewable energy project in April.
Now it wants to find a partner to help fund the development, expected to cost more than $3bn, with help from an investment banking adviser.
It is expected a group prepared to provide passive funding such as a pension fund is being sought.
Analysts say about two-thirds of the project would likely be funded with debt, leaving Origin searching for a candidate to inject $1bn into the business.
It comes as part of a move by the firm to transition to renewables and away from fossil fuels, such as coal-fired power stations, with the government’s target of having net zero carbon emissions by 2050.
Origin told the market in April it would acquire Virya Energy’s Yanco Delta wind farm, one of the largest and most advanced wind and energy storage projects in NSW, as it accelerates its strategy to expand renewable energy and storage in its portfolio.
The project is located in the NSW government-designated South West Renewable Energy Zone (REZ), and consists of a 1.5 gigawatt wind farm and a 800 megawatt hour battery.
The project is located next to key transmission infrastructure on a 33,000ha site, 10km northwest of Jerilderie in the Riverina.
The project has received both state government development approval and Environment Protection and Biodiversity Conservation Act approval.
Origin paid Virya $125m upfront and would pay a further $175m, subject to development milestones being achieved.
At the time, it said it would assess a range of capital efficient options to finance construction of the project, including through partnerships.
Origin’s portfolio of renewable and storage projects includes Walcha Energy’s proposed Ruby Hills Wind Farm and Salisbury Solar Farm projects in the New England REZ, with a planned capacity of more than 1300MW. And nearby the Warrane 500MW greenfield development, now known as the Northern Tablelands Wind Farm.
It also continues progress on large-scale batteries at Eraring and Mortlake power stations.
Another renewable energy asset up for sale is Lightsource BP through Bank of America.
BP purchased the remaining 50.03 per cent it did not own last year but is now shopping the asset to buyers to deconsolidate the debt from its balance sheet.
Zenith Energy, advised by RBC and Azure Capital, is also up for sale for about $2bn through Pacific Equity Partners.
The focus for the business is on financing before Christmas before a sale process is expected to get going in earnest in the new year.
Zenith provides contracted power to miners in remote locations and generates well over $120m of annual earnings before interest, tax, depreciation and amortisation.
The Gresham-advised KKR is looking, as is APA, while AustralianSuper, GIP, Stonepeak, IFM and EQT are all potential suitors.
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