Brookfield to double pace of Neoen projects, with focus on wind and batteries, and sell some assets

Brookfield, the global asset management giant that has bought the French-based renewable and storage developer Neoen for more than $10 billion, says it intends to double the rollout of its projects, and sell some of its assets.

Neoen, although French-based, conducts most of its business in Australia, and has proved to be one of the most successful developers of renewable and storage projects in Australia, including the original Tesla big battery at Hornsdale, and the giant 560 MW, 2240 MWh Collie battery in W.A. currently in commissioning.

Its operating assets include the Hornsdale wind farms and the new Goyder South wind project in South Australia, the Western Downs solar and battery project in Queensland, the Kaban wind farm, and the Culcairn solar project in NSW, along with a number of smaller solar farms in NSW.

It also has a host of projects under development, including the Goyder North wind project in South Australia. Brookfield had to sell Neoen’s Victoria assets, including the Victoria Big Battery, the Bulgana renewable hub and the Numurkah solar project as part of a deal with regulators on competition issues.

Connor Teskey, the president of Brookfield Asset Management and head of Brookfield’s Renewable Power and Transition business, recently told analysts that the company intends to double the rollout of Neoen’s projects from around one gigawatt a year, to two gigawatts.

Teskey said the focus would be on wind power and storage, given the oversupply of solar projects in Australia’s main grid, and despite the fact that Neoen has only recently completed the Western Downs solar project in Queensland, at one stage the country’s biggest, and is building another large solar project at Culcairn.

But he also flagged the company would be recycling capital by selling off some of the established, low risk projects, although he did not say which assets.

“The first thing we want to do (with Neoen) is we want to provide capital to that business to accelerate its development activities,” Teskey said.

“One thing we felt in our due diligence of the company is it had one of the most attractive, most derisked, and highest value development pipelines, we’d seen in the industry.

“But as a public company, it lacked access to capital to to build it out as fast as they could. And we want to take the regulators off that business, give the management team access to capital to accelerate that growth.

“And we’re going to double the pace of development from about one gigawatt a year to two gigawatts a year within that company.”

On technology choices, Teskey said: “Neoen’ focus on Australia is a lot of wind, and a lot of batteries. And that is because similar to other markets around the world that have a very high degree of solar penetration, there is a premium on those asset classes that offer a differentiated load profile to solar.

“So, while it is diversified across solar and batteries, I would say that the focus of Neoen in Australia is largely on wind and batteries, because that’s certainly where the greatest value is for a developer.”

Teskey says Brookfield’s scale would enable Neoen to have a more efficient capital structure, more buying power on the purchase of equipment – such as battery modules and wind turbines – and access to more corporate customers to buy the output of its projects.

Teskey also flagged the likely sale, or recycling, of Neoen assets – in contrast to the French company’s previous strategy, which was to be a long term holder of its renewable projects.

“One of the unbelievable things about Neoen is it comes with eight gigawatts of either operating or under construction assets. These are recently built, contracted, high quality assets in very attractive markets around the world.

“We will look to begin to sell some of those de risked assets to lower cost of capital buyers and use the proceeds from those sales to reinvest into accretive development and or pay distributions up to Brookfield Renewables.”

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