Federation buys NSW big battery projects in landmark deal

Infrastructure investor Federation Asset Management has agreed to buy a majority stake in the three batteries that make up the Riverina and Darlington Point battery storage system, in the first battery asset transaction of its type in Australia.

Federation will buy a majority stake in the 150MW and 300MWh of battery storage capacity spread over three distinct but co-located assets, and will use them as seed assets for a new pure play “energy transition” fund called the Sustainable Australian Real Asset fund.

The transaction is notable because it appears to be the first sale of a battery asset in the Australian market. All other battery assets operating in the Australian market have remained in the hands of their original owners, even if the operations are contracted to other parties.

The three batteries that make up the facility have been developed by Edify Energy, which will retain an unspecified minority stake in the assets, and which has secured long term off-take agreements with Shell and EnergyAustralia.

“Battery energy storage capacity is critical to accelerating energy transition in the National Electricity Market, and supporting the electricity grid,” said Stephen Panizza, co-founder and head of renewable energy at Federation.

“Battery energy storage is an excellent asset class, and the Riverina Battery Projects are quality projects; both technically with the Tesla Megapack, and financially via long term offtake contracts with strong counterparties in EnergyAustralia and Shell Energy.”

The Federation SARA fund will include investments in wind, solar, energy storage and behind-the-meter solar electricity generation and also waste solutions.

Edify will manage the construction and commissioning of the Riverina battery projects and will act as asset manager for the project throughout its operational life.

“Battery energy storage is vital to advancing the dispatchability and resilience of a renewable power system,” Edify CEO John Cole said in the joint statement.

“The Edify team acutely understands the need for, and functionality of, crucial inverter-based power system infrastructure.”

The three batteries will joint the grid at the Darlington Point substation in the Murrumbidgee shire of NSW, near Edify’s 275MW Darlington solar farm, and on the traditional lands of Wiradjuri Country. They are due for completion in the summer of 2023/34.

The 60MW/120MWh Riverina Energy Storage System 1 – has been signed up by Shell as part of its plans to service its NSW government electricity supply contract.

EnergyAustralia has signed up to take “market control” of the other two installations – Riverina 2 (65MW/130MWh) and Darlington Point (25MW/50MWh) – for a period of at least 10 years.