Big, bigger, biggest: Forrest’s energy ambition ‘on fire’

Solar, wind and batteries are already proven technologies in green transition. They are mature, profitable and highly sought after by infrastructure investors. Companies including Spanish utilities giant Iberdrola, QIC’s Tilt Renewables, and Canadian pension fund CDPQ and Origin Energy were in the auction room for CWP but missed out when Forrest came over the top with an offer of more than $4 billion.

Those big consortiums have large war chests to invest in renewables – Forrest will need to muster outside funding.

What this deal delivers for Forrest is scale – and with it the ability to bring down energy costs.

He admitted to this masthead that the purchase was “a big swing” but it is only a fraction of the investment required to take the assets in the company’s pipeline to be fully operational, probably over the coming decade.

The Canadian-based Brookfield, which has bid for Origin Energy, suggests the capital needed to transition its power generation assets will be in the order of $20 billion.

When billionaire Mike Cannon-Brookes mounted a failed bid for AGL he suggested a similar amount would be needed to build it into a green energy provider.

Forrest said: “We are happy to take the initial risk. And [we] look to bring long-term investors like industry funds and super funds and sovereign wealth funds alongside us [as well as] project finance.”

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He says there is an imbalance between the enormous amount of capital looking to invest in renewables and the lack of large-scale projects to invest in.

The assets that Squadron has acquired from CWP reportedly produced revenue of circa $300 million and earnings before interest, tax, depreciation and amortisation of about $200 million.

But Forrest has no vision to take Squadron to the public market anytime soon.

What this deal delivers for Forrest is scale – and with it the ability to bring down energy costs.

“Squadron has the renewable energy critical mass to help Australia step beyond fossil fuels,” Forrest said.

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