Swedish renewables giant plans rapid Australia expansion after buying out solar developer

Swedish renewable energy giant OX2 has bought Australian solar farm developer Esco Pacific in its first move outside of its European base, and says it is looking for significant growth in the Australian market in solar, storage, wind and hydrogen.

Esco Pacific has built about 800MW of large scale solar projects in Australia – including the Ross River, Childers, and Susan River solar farms in Queensland, and the Finley solar farm in NSW – and has a pipeline of another 1200MW of solar projects, plus 200MW of battery storage.

Global oil giant Shell bought a 49 per cent stake in Esco Pacific in late 2019 as part of touted plans to become a major player in the Australian solar market. Shell has agreed to sell its stake as part of the $126 million deal, and will negotiate with OX2 on future off take agreements.

The biggest winner from the transaction appears to be founder Steve Rademaker – who started the company in 2015 and who will stay for two years, initially as managing director and then an advisor – and unnamed private investors.

Rademaker had retained a 34 per cent stake in the company after the Shell transaction, and so has a $42.8 million share of the OX2 transaction.

Rademaker can pocket a further $17 million from the sale if Esco reaches certain “margin” targets on the existing portfolio between 2025 and 2027. That will be on top of whatever monies he received from the Shell deal.

Another 17 per cent stake in Esco was held by unnamed private investors. OX2 says Esco’s operating costs are around $7.4 million a year and had an operating income of around $6 million. OX2 expects an operating margin of well above 10 per cent.

OX2, which operates in 11 European countries, says it is looking for opportunities in Australia in both solar and storage, and also in onshore and offshore wind, and green hydrogen. It is also looking to buy projects, rather than focus solely on greenfields expansion as Esco did.

“Watch this space, there will be a lot of things coming from Down Under,” CEO Paul Stormoen said in a webcast announcing the purchase.

In a statement OX2 said it plans to scale up operations through acquisitions in solar and energy storage and will expand into onshore wind and explore options for offshore wind and hydrogen.

It said the Australian market offers significant growth potential for renewables, noting the federal Labor government’s intention to make the country a renewable energy superpower.

“Through this transaction, we get an attractive development portfolio in a growing market, while also significantly strengthening our capabilities within solar and energy storage,” said Kristina Wright, the chief operating officer at OX2.

“This gives us a solid foundation for profitable expansion in Australia.”

OX2 has a total development portfolio in Europe, based around onshore and offshore wind farms, and also solar and energy storage. It is also exploring opportunities in hydrogen production and pipelines. Its total development portfolio comprises of about 33,000 MW.

PwC Australia acted as lead financial advisor and legal advisor to OX2. Lazard acted as lead advisor to the sellers.