The solar industry is on the rise as solar energy continues to grow as a major contributor to electricity supply in Australia. According to the Clean Energy Australia 2024 Report, renewables account for 39.4% of Australia's energy supply with around 17% of Australia's supply arising from solar energy. This capacity will continue increasing, with (i) the combined large and small-scale renewable capacity reaching approximately 5.9 GW in 2023 including more than 3.1 GW from rooftop solar (up significantly from 2022) and (ii) 337,498 additional roof top solar systems installed across Australia in 2023 (again, representing a significant increase on 2022 numbers).
Australia's solar industry is accelerating quickly and given our abundant sunshine and vast open spaces, there is capacity for even faster growth in commercial (large scale), as well as home (domestic scale), solar projects moving forwards.
Excitingly, the opportunity in the Australia market is not just solar power generation, but also the ability for Australia to increase its role in the manufacture and development of plant and equipment, such as solar panels, to support the vast number of new solar projects being undertaken right here at home. In fact, while Australia leads the world in the use of solar panels on a per capita basis - with approximately one in three Australian households using rooftop solar panels to generate household electricity plus some of the biggest large-scale solar projects in the world - only 1% of solar panels installed in Australia are manufactured locally.
In this regard, the Albanese Government recently announced $1 billion in funding to support Australia’s solar photovoltaic (PV) manufacturing industry as part of its "Future Made in Australia" program. This initiative aims to create a domestic solar manufacturing industry, with the goal of supplying 20% of Australia's solar PV panels according to Minister for Climate Change and Energy, Chris Bowen. This initiative will be crucial to achieving Australia's net zero emissions target by 2050.
With the solar industry on the rise across manufacturing and production, it's no wonder that 2024 has seen a lot of activity in the energy transition M&A market. Of note, Lander & Rogers recently acted for the founder-sellers of Australian solar technology company Smart Energy Group in its sale to Japan-headquartered multinational appliance manufacturer, Rinnai. Founded in Byron Bay in 2016, Smart Energy Group is a supplier and installer of residential rooftop solar and battery systems. The company is one of Australia's fastest-growing providers of residential renewable energy solutions, already generating $50 million in annual revenue.
Some other recent high profile deals in this space include:
-AGL announcing it had entered into a binding agreement to acquire Firm Power, a Battery Energy Storage System (BESS) developer, and Terrain Solar1, a solar project developer, for total consideration of approximately $250 million.
-Origin Energy acquiring a 20 per cent stake in Climatech Zero, a leading provider of energy management and decarbonisation projects.
-Blackstone acquiring a minority stake in renewables infrastructure services platform Symphony Infrastructure Partners for $300 million.
-Wollar Solar Holding Pty Ltd agreeing to acquire TPC Consolidated Limited (ASX:TPC) for $100 million by way of a scheme of arrangement (subject to regulatory approvals).
-Pacific Partnerships Pty Ltd (part of the CIMIC Group) acquiring the Cobbora Solar Farm, being a 700MWac solar farm and battery energy storage system situated in the NSW Central-West Orana Renewable Energy Zone.
We expect to see a lot more M&A activity in this space in the near future as the renewables and energy transition sector continues to represent an attractive investment opportunity (including for foreign investors), driven by strong consumer demand and generous government support at state and federal level.
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