Super fund firms up as major co-investor in Tasmania green hydrogen projects

Leading industry super fund Hesta has moved a step closer to making a $100 million – or more – investment in renewable hydrogen project development in Australia, with the firming up of a deal with ReNu Energy.

ReNu Energy says a Platform Agreement signed this week sets in motion potential co-investment in selected hydrogen projects being developed by Countrywide Hydrogen, a wholly owned subsidiary of ReNu.

The new deal follows a term sheet signed in November last year setting out the two companies’ “intention to jointly pursue green hydrogen projects and to advance definitive agreements” as yet unnamed.

ReNu says the Platform Agreement takes the potential partnership to the next step, where specific green hydrogen projects are pitched to Hesta for co-investment during 2023, starting with Countrywide’s Tasmanian plans.

It also opens up the potential investment amount, which was previously capped at $100 million.

Countrywide was bought by ASX-listed ReNu Energy in February of 2022, and although its four projects – two in Victoria and two in Tasmania – are still in early planning stages, it aims to be producing and selling green hydrogen in the Australian market within two years.

Countrywide’s Tasmania plans are for a 10MW electrolyser plant in Bell Bay and a 5MW version in Brighton, both of which would supply zero emissions fuel to industrial customers and look to put hydrogen into the gas network.

The agreement this week sets out a process and framework for co-investment – should Hesta decide to proceed – as well as for development and funding of the projects.

This would include the establishment of a project specific trust owned on a 50/50 basis to jointly acquire and invest in the projects, which would be developed, built and operated by Countrywide. ReNu Energy would be responsible for securing debt and grant funding.

The Platform Agreement also contains exclusivity arrangements, with Hesta given first right of refusal over all Countrywide’s green hydrogen project opportunities, while the super fund cannot invest in any competing hydrogen projects over the next 18 months.

“After considered and detailed analysis for the future pathway and partnership, this robust agreement provides ReNu Energy shareholders with a co-investment partner highly respected for its commitment to sustainability and responsible investments,” said ReNu executive chair Boyd White, in a statement.

“With Hesta’s support we look forward to delivering green hydrogen projects and contributing to a lower carbon future.”

Hesta’s support – assuming it reaches the co-investment stage – would certainly provide a boon to ReNU and Countrywide’s green hydrogen prospects, with no shortage of well-funded competition in the nascent Australian market.

In Bell Bay alone there is plenty of interest, including a $1.2 billion green hydrogen and methanol proposal from start-up Abel Energy that has the backing of renewables giant Iberdrola and, just last weekend, sealed a deal to buy prime land from the Tasmania government.

Hesta chief investment officer Sonya Sawtell-Rickson says the fund – with more than $72 billion in assets invested around the world and more than one million members – has been seeking out opportunities to invest in “innovative technologies and businesses at the forefront of decarbonisation.”

“By using our scale and expertise, we aim to support the development of a pipeline of potential projects that can help deliver strong long-term investment returns for members while accelerating the transition to a more sustainable future,” Sawtell-Rickson said in a statement.

“In doing so, we’re also supporting an emerging sector that we believe is poised for significant future growth.”

Meanwhile, Countrywide managing director Geoffrey Drucker says the company’s Tasmanian domestic supply projects are on track for final investment decision this year.

“Our goal in Tasmania is to create a state-wide ecosystem for the production, distribution and use of green hydrogen and then replicate the model on the mainland,” he says.

“Our project partners are critical to our success. We can think of no better potential co-investment partner than Hesta who we originally singled out as an ideal and environmentally responsible partner.”