Lyon Group $1.5b solar battery sale brings new players

Nov 23, 2017 News

A major new player will enter the eastern states electricity market in the next couple of years as a result of the imminent sale of a $1.5 billion slate of solar and battery projects developed by Brisbane-based Lyon Group – one of Australia’s largest renewable energy deals ever.

Lyon Group partner David Green said the infrastructure group was close to sealing the sale of three solar battery projects in North Queensland, Victoria and South Australia boasting a combined 545 megawatts of solar photovoltaic panels and 200MW of battery storage with four hours duration.

The fee for developing the projects is believed to be in the high tens of millions and the winning bidder will have to hand over a cheque for the balance of the estimated $1.5 billion completion cost to the engineering and procurement contractor at the same time. Downer is the preferred contractor.

Mr Green said the projects were attracting strong interest from international groups “who really want to make an impact in the Australian market”. The negotiations were first reported in Street Talk and the bidders include Lyon Group’s development partner Mitsubishi Corp, fellow Japanese trading house Mitsui, Shenzhen Power, one of China’s largest utilities, and two giant Japanese utilities.

They have completed their due diligence and Lyon is in the final throes of negotiating power purchase agreements – at rates below those typically charged by gas peaking plants – with large industrial buyers and utilities for the output of the three projects. It expects to finalise a sale of the projects by Christmas.

The winning bidder will gain a strong foothold in the Australian market and be able to out-compete gas peaking plants, creating a substantial new generation competitor at a time when concern is mounting about the market power of the three big “gentailers” AGL Energy, Origin Energy and EnergyAustralia.

Read more on the AFR.

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