ICG buys stake in 40 small solar farms, option to dabble in hydrogen battery storage

Australian green investment firm Infrastructure Capital Group (ICG) has made its first foray into solar energy, with the acquisition of a majority interest in more than 40 PV projects – both operational and in the development pipeline – from Providence Asset Group.

ICG said on Wednesday that it had made an initial $100 million commitment to buy the projects, known as the Ginan Solar Portfolio, with the option to significantly scale the investment further to include co-located batteries and hydrogen.

At this stage, the deal will see ICG’s Australian Renewables Income Fund (ARIF) take a majority interest in 16 operational solar sites in Victoria (total of 132MWDC/73MWAC), with exclusive rights to develop a further 25 solar projects across NSW, totaling a further 156MWDC/115MWAC.

The projects are all roughly 5MW(AC) solar farms, which ICG said on Wednesday offered “numerous advantages” over larger scale projects, including speed of approval, construction, and connection; and flexibility to add storage.

The smaller-scale of the solar farms also meant they could be bundled together for “networked off-take” under various PPAs, ICG said in a statement – 10 of the Victorian projects already have such a deal in place, with Smartest Energy.

Perhaps most interestingly, ICG said the deal with PAG provided a “low-risk opportunity” for the firm to dabble in hydrogen, via the integrated hydrogen energy storage technology called Lavo that Providence has been developing alongside the University of NSW.

Providence, or PAG, made the news last October with its plans to pilot the innovative all-Australian made hydrogen hybrid battery storage solution across tens of sub-5MW solar farms across regional Victoria and NSW winning backing from the Commonwealth Bank.

The $33 million project finance deal with the CBA agreed on the bankroll of 10 operational solar farms in regional Victoria, each of which would be fitted with a Lavo Heos green hydrogen energy storage and production unit.

A further 29 solar projects in New South Wales would bring the total portfolio to 40 sub 5MW solar farms across regional Victoria and New South Wales, all with a Lavo storage system.

According to ICG, an operational solar farm at Stanhope in north central Victoria will pilot the Lavo hydrogen system in Q1 2022, to assess the broader deployment of the technology, and monitor the wider development of the industry.

“Opportunities may exist to deploy the Lavo technology not only across the PAG portfolio but also several ICG portfolio companies, assets and future acquisitions,” an ICG statement said.

Tom Laidlaw, ICG’s managing director said the deal with Providence marked the group’s first investment into operating solar assets, providing further diversification of the existing ARIF portfolio.

Last year, ICG agreed to buy the Australian renewable energy infrastructure assets of New Zealand’s Meridian Energy, including the Mt Mercer and Mt Millar wind farms and the Hume, Burrinjuck and Keepit hydro power stations.

“Importantly [the PAG deal] also provides the opportunity to assess long duration hydrogen storage applications across ICG managed assets,” Laidlaw said.

“We are pleased to be working with the ICG team as they diversify into solar for the first time and look to incorporate new clean energy technology across this portfolio as well as ICG’s managed assets,” said PAG co-founder and chief investment officer, Alan Yu.

“Through PAG’s integrated LAVO technology, we offer broad clean energy solutions including long-duration hydrogen storage for a wide range of clients.”

All told, ICG now has a stake in operating renewable energy generation assets with a total capacity of 1.16GW across wind, hydro and solar and has expanded the development pipeline of ARIF to more than 2.7GW of wind, hydro, solar and storage opportunities.