Cannon-Brookes tips $200m into debt fund, targeting renewables and batteries

Tech billionaire Mike Cannon-Brookes and his wife Annie have made another major play into the green energy transition, tipping $200 million and taking a “meaningful” stake in the privately held Infradebt, a major financier of renewables and battery storage.

The investment by the couple’s privately held Grok Ventures comes just days after it teamed up with global asset management juggernaut Brookfield for an $8 billion tilt for AGL, with a plan to fast-track the closure of its coal generators and accelerate the transition of the grid to zero emissions by 2035.

The backing of Infradebt is part of the strategy to make sure that enough renewables and storage is built fast enough to put that plan into effect, and to allow the coal generators to close.

The first investment under this new venture is the previously announced $35 million debt package for the Bouldercombe battery in Queensland, being built by the listed Genex. The 50MW/100MWh battery is about to start construction and will be operating next year.

Alexander Austin, the CEO of Infradebt, said batteries are a key part of transitioning the country’s energy networks and reducing the carbon intensity of Australia’s economy.

He told RenewEconomy that the fund would invest in renewables, storage and other “decarbonisation” activities, but most of it will go to renewable energy projects – it has already backed more than half a dozen – and battery storage.

“There will definitely be more batteries,” Austin told RenewEconomy. “We have got several other batteries in different stages of the process. We expect to do quite a few in 2022.”

Austin said the advantage of Infradebt’s approach was that it could be more flexible than traditional banks, and adapt its criteria to the various business models of the potential projects, rather than forcing them to fit some pre-conceived business plan.

“Bouldercombe is an example of that,” Austin said. “It doesn’t have a big retailer off-take, or government backing. It will generator arbitrage and contingency revenue, and will operate with Tesla’s autobidder system.”

Tesla will also underwrite revenue for Bouldercombe for the first eight years, a significant new move in the Australian storage market. See: Tesla big battery deal could provide blueprint for financing storage projects.

“I would expect, the bulk of it will be going into kind of renewable energy and, and so wind solar storage, but we’ll also look more broadly than that as well,” Austin added.

“So it could be energy efficiency projects, it could be electrification projects, anything kind of decarbonising real assets, is what we would look at.”

Cannon-Brookes has already been involved with Infradebt, having been a co-investor in its first ethical fund (IEF), along with Future Super. It was Australia’s first ethically screened infrastructure debt fund.

“As a foundation investor in IEF, we know capital flow is critical to our transition to a greener economy,” Cannon-Brookes said in a statement.

“The Bouldercombe BESS project proves that battery storage is not only sustainable, but delivers solid rates of return. It’s a win-win for Australia’s economy.”

The $200 million injection from Grok is over and above the “meaningful” investment in Infradebt itself, the scale and price of which remains undisclosed. Austin says the balance of the company is owned by Infradebt staff, including himself.

This week, Infradebt provided project developer Genex with a $35 million debt facility to partially fund the construction of the big battery project at Bouldercombe in Queensland.

On Wednesday, Genex finalised an additional $40 million capital raise to secure the remaining funds for the 50MW/100MWh Bouldercombe battery, allowing it to achieve contractual close. The battery equipment will be supplied by Tesla, with Tesla set to use its auto-bidder platform to operate the battery through an innovative revenue sharing deal with Genex.

See also: Brookfield: Why global funds giant is targeting coal industry from the inside out