Shell sells its stake in solar developer Esco but gives the go-ahead for big battery

Shell has sold its 49 per cent stake in Australian solar power developer Esco but given the green light to a big battery with Macquarie in outer Melbourne.

Shell has sold its 49 per cent stake in Australian solar power developer Esco Pacific.

Energy giant Shell has sold its 49 per cent stake in Australian solar power developer Esco Pacific three years after buying into the renewable company, and given the go-ahead to one of Australia’s biggest battery projects in a deal with Macquarie.

Shell sold its share in Esco Pacific to Swedish renewable developer OX2 for $126m, covering a 1420 megawatt generation portfolio made up of 1220MW of solar and 200MW of energy storage.

OX2 will buy the entire company, including Shell’s stake and with the balance of the firm from founder Steve Rademaker and private investors.

The deal marks the first foray into Australia for the Swedish developer.

“I am very happy to announce our entry into the Australian market and to welcome an experienced local team to OX2,” said Paul Stormoen, OX2’s chief executive.

“Through this transaction, we get an attractive development portfolio in a growing renewables market, while also significantly strengthening our capabilities within solar and energy storage. This gives us a solid foundation for profitable expansion in Australia.”

Shell is expected to hold talks about offtake deals with OX2. It said it regularly reviewed its portfolio to optimise value.

“Participating in this sale process was an opportunity for Shell to realise value from our investment in Esco Pacific,” a Shell spokeswoman said.

The 2019 tie-up with Esco saw Shell arrange a strategic partnership to accelerate development of Esco’s 1000MW pipeline of projects, which cover a string of solar farms spread through Queensland, NSW and Victoria.

The move was unexpected given Shell’s stated desire to build its green business in Australia as part of a gradual transition away from its mainstay oil and gas business.

The energy major also struck a separate deal on Friday with Macquarie’s Green Investment Group, which underlines its intentions to add extra storage options to its bulging portfolio.

The 200MW, 400 megawatt-hour battery, dubbed Rangebank, will be located in outer suburban Cranbourne, Melbourne. It will have storage capacity to power the equivalent of 80,000 homes across Victoria for an hour during peak periods.

The project has reached financial close and is expected to be completed in late 2024.

Shell Energy will have access to 100 per cent of the battery’s offtake over 20 years.

“The Rangebank project is our first grid-scale battery investment in Victoria and marks Shell’s first direct equity investment in a utility-scale battery energy storage systems globally,” Shell Energy Australia chief executive Greg Joiner said.

“This signals Shell Energy’s commitment to accelerating the energy transition and contributing to growth of firming ­capacity.”

Shell on Thursday promoted Arrow Energy boss Cecile Wake to become the multinational’s new Australian chair. Incumbent Tony Nunan is heading to London as chief of staff to global chief executive Wael Sawan.

The company previously paid $729m to scoop up Meridian’s highly prized retail business, Powershop Australia. It then bought a 49 per cent stake in WestWind Energy Development, its first exposure to wind power in Australia, along with a 3GW project pipeline across Victoria, NSW and Queensland. It also owns ERM Power, co-founded by Trevor St Baker.

In October 2022 Shell said it would build a 500MW, 1000 megawatt-hour battery in Wellington in central NSW.