Australian investor plans multibillion-dollar long-duration energy storage platform

Sydney-based Federation Asset Management has announced it will launch a multibillion-dollar platform to specialize in long-duration-battery investment.

Federation, which manages more than AUD 2 billion ($1.27 billion), said it sees significant investment potential in Australia’s energy storage market, citing strong risk-adjusted returns and the increasing need for grid stability as the amount of renewables entering the system ramps up and the nation’s aging coal plants retire.

“As Australia continues to expand its renewable energy capacity, particularly solar, storage solutions are critical to ensuring a reliable and cost-effective electricity grid,” the investor said, in a statement. “Battery energy storage systems (BESS) offer an efficient solution to both grid stability and surplus energy storage.”

Federation, which teamed with Edify Energy to deliver the 150 MW/300 MWh Riverina and Darlington Point (BESS) in New South Wales (NSW), estimates that Australia’s battery energy storage sector represents an investment opportunity exceeding AUD 100 billion.

Federation Partner Stephen Panizza said significant investment in infrastructure, technological advancements to improve storage efficiency, and coordination of storage systems are essential to meeting Australia’s growing demand for renewable energy.

“BESS is proving to be an excellent asset class – multiple revenue sources, low construction risks, minimal environmental impact, and low operating costs – all while playing a critical role in energy security,” he said.

Panizza told the Australian Financial Review that Federation has committed between AUD 10 million and AUD 30 million to the new platform with the aim to have between six and eight separate battery projects, with a combined capacity of about 4 GWh, ready to take to financial close by the end of 2027.

The batteries are likely to be located across NSW, Queensland, and Western Australia and will be supported by long-term offtake contracts, with some exposure to the spot market.

“To support continued growth in solar generation, lower energy costs, stabilize the grid, and enable the retirement of aging coal plants, large-scale investment in BESS is essential,” Panizza said. “Federation is committed to leading the way and to remain at the forefront of Australia’s energy storage sector.”

From pv magazine Australia.