BlackRock’s Akaysha Energy raises $650m for large-scale battery in NSW

BlackRock’s Akaysha Energy has raised a record amount for a battery that is expected to boost NSW’s hopes of fast-tracking its transition away from fossil fuels.

Akaysha Energy's new battery in Wellington, NSW. Picture: Supplied by Akaysha Energy.

Akaysha Energy, owned by the world’s largest asset manager BlackRock, has raised a record $650m to begin construction of one of Australia’s largest batteries.

The development, set to be operational in 2026, will meet a major need for Australia’s energy grid as the country’s power system struggles to cope with a flood of solar generation.

Australia has record amounts of rooftop solar power, which during sunny days can push wholesale electricity prices into negative territory, a pattern that has created significant economic demand for batteries. During days with ample solar generation, batteries can be charged and money earnt, heightening the appeal to investors. When the sun sets or during peak demand periods, the batteries can be discharged.

Illustrating the opportunity, Akaysha said it has now closed funding for its Orana battery in Wellington, in central west NSW.

Akaysha said it had secured funding from 11 domestic and foreign banks to construct the project, which would be one of the largest four-hour batteries globally and add more than 1660MWh of storage capacity to the National Electricity Market (NEM).

The lender group is made up of domestic banks including ANZ, CBA and Westpac, and international banks BNP, Canadian Imperial Bank of Commerce, DBS, ING, Mizuho, Rabobank, Siemens Financial Services through Siemens Bank, and SMBC.

Central to the debt financing is a 12-year “virtual toll” offtake agreement secured with leading generator and retailer EnergyAustralia for 200MW of contracted capacity.

The deal is first of its kind for EnergyAustralia and, as a financial product, will allow it to “notionally” charge and discharge 200MW of a “virtual battery” within pre-agreed daily bidding parameters, separate from the physical operation of the battery by Akaysha.

Akaysha managing director and chief commercial officer Paul Curnow said the virtual toll with EnergyAustralia was the largest contracted in the NEM to date, and more significantly, on a non-recourse lending basis, increased Akaysha’s capacity in the NEM to 1GW.

“This groundbreaking and flexible offtake allows EnergyAustralia to virtually charge and discharge the 200MW virtual battery to manage its price and load commitments to its customers, particularly during high demand periods,” said Mr Curnow.

“This type of offtake product can be scaled in contracted capacity to better accommodate offtaker demand and was devised by Akaysha’s commercial and energy markets teams to allow offtakers to have the full benefits of a large-scale battery asset, while not actually having to build and operate one on their own balance sheet – Akaysha will do this for them.”

EnergyAustralia trading and transition executive Ross Edwards said the arrangement fitted the company’s needs.

Akaysha battery energy storage systems. Picture: Supplied

“The virtual toll solution fits perfectly within our portfolio. Our clear intention is to accelerate the development of renewable projects and help bring forward the investment needed to support Australia’s clean energy transition.”

BlackRock acquired Akaysha in August 2022, and Charlie Reid, co-head of climate infrastructure for Asia Pacific at the asset management giant, said the deal illustrated how much-needed storage projects could be financed.

“This type of financing serves the urgent need for large-scale batteries to support an orderly, energy transition in Australia. Akaysha’s scale allows it to not only deliver stable

energy to the Australian community, particularly during periods of grid and energy instability, but also creates opportunities to export its renewable energy and technological expertise globally as other nations navigate similar challenges in volatile energy markets,” said Mr Reid.

Early works have begun on the project ahead of operations beginning in 2026.

The deployment of a large-scale battery cannot come fast enough for NSW, which has set ambitious energy transition targets.

But Australia’s most populous state is struggling to accelerate the deployment of renewable energy projects and was earlier this year forced to extend the lifespan of the state’s largest coal power generator by at least two years.

By 2035, nearly all of NSW’s coal power stations are scheduled to close, heightening the state’s need to encourage replacements.

The state Labor government insists it is making progress, a trend it expects to improve as the federal government rolls out its centrepiece Capacity Investment Scheme, which sees taxpayers underwrite some 32GW of new capacity.