What could increased investment into the clean energy economy mean for the energy transition M&A market?

Introduction

According to the Climate Change Authority, Australia needs to accelerate its emissions reductions if it is to meet its legislated targets of 43% below 2005 levels by 2030 and net zero emissions by 2050.¹ The Clean Energy Council (CEC) found in its latest quarterly report that Australia has experienced record-breaking investment into the clean energy economy since 2018.²

The increased investment is a collective effort from government and private sector investors, a move aimed at accelerating the development and deployment of clean energy assets in a push for Australia to achieve its net zero emissions target by 2050.

In this article we examine what the increased investment into the clean energy economy could potentially mean for the Australian energy transition M&A market.

Increased investment into clean energy

In addition to the 2050 net zero emissions target, the Australian Government has set itself a target of achieving 82% renewable energy generation by 2030.

In a major boost to Australia's energy transition efforts of achieving its net zero emissions target by 2050, Prime Minister Anthony Albanese and Minister for Climate Change and Energy Chris Bowen announced on 23 January 2025 that the Clean Energy Finance Corporation has been allocated an additional $2 billion into its General Portfolio to support and incentivise Australian households, workers and businesses to make the shift to cheaper, cleaner, and more reliable renewable energy.³

Other key policy developments by the Australian Government include significant expansion to the Capacity Investment Scheme (CIS) to accelerate investment into renewable generation and energy storage. CIS uses a competitive tender process to encourage new investment in renewable capacity and dispatchable capacity, such as battery storage.⁴

Additionally, all Australian state and territory governments appear to have aligned their respective policies to help support Australia's emissions target by deploying capital and establishing renewable energy zones or targets. CEC has concluded that in 2024, there was $9 billion of financial investment commitment injected into the clean energy economy.

Private sector investors such as green investors and super funds also appear to be positioning themselves for the opportunities that the transition to clean energy may present. Macquarie Group's Green Investment Group (GIG) mobilises and invests third party institutional capital to support the green transition and manage capital on behalf of investors. GIG had significant involvement in the development and financing of the Cranbourne Battery Energy Storage System which opened in December 2024.

UniSuper also appears to be seeking to diversify its investment portfolio by committing to investment in the clean energy sector. In 2024, UniSuper committed up to USD $400m to Macquarie Green Energy and Climate Opportunities Fund (MGECO), an open-ended fund that invests in large-scale, mature sustainable technologies to support the transition to net zero. Through the MGECO fund, UniSuper invested in Aula Energy, an onshore renewable energy business dedicated to developing, building and operating renewable energy projects across Australia, with plans to expand to the New Zealand market. This diversification of its investment portfolio aligns with UniSuper's objective of achieving net zero in its investment portfolio by 2050 and to contribute to Australia’s goal of achieving a 43% reduction in emissions by 2030. UniSuper are not the only superfund diversifying in this manner and we expect to see the superfunds become extremely active in this space.

Possible impact of increased investment into clean energy

Sustained and collective deployment of capital by governments, investors and corporations in the clean energy sector is likely to boost confidence in the energy transition M&A market and provide much needed stability and certainty throughout the clean energy economy - which may be a catalyst for helping drive the creation of a diverse range of opportunities in the energy transition sector.

Improving market conditions may also play a role. In recent years the Australian economy has been growing at a slower pace, this may be attributable to enduring effects of the COVID-19 pandemic, recent geopolitical uncertainties, high interest rates and ongoing costs-of-living pressures. However, the February 2025 lowering of the cash rate target by 25 basis points to 4.10% by the Reserve Bank of Australia could be perceived as a sign that market conditions may be improving, which could ease financial pressures experienced by households and businesses as a result of extended periods of high interest rates.

Improved market conditions are likely to help drive up M&A activity in the energy transition sector by mobilising and attracting more investment into the renewable energy sector. We may therefore expect to see more M&A activity in relation to energy generation, energy storage and smart grids projects due to improved market conditions and economic upturn in Australia.

Conclusion

The increased investment of capital into the clean energy economy by governments and private sector investors is likely to accelerate the pace and scale of the deployment of renewable energy assets in Australia. Improved economic and market conditions in the short term is also likely to help attract investors which could help drive up M&A activity in industries with a focus on energy transition.

Lander & Rogers continue to assist a broad range of players in this space. Please reach out if we can assist your business navigate the evolving world that is energy transition.

¹ Climate Change Authority, 2024 Annual Progress Report - Australia's Progress, p. 30. ² Clean Energy Council, Quarterly investment report: large-scale renewable generation and storage Q4 2024, page 4. ³ Australian Government, Media Release: Albanese Government builds Australia's future with new investment in Clean Energy Finance Corporation, 23 January 2025. ⁴ Climate Change Authority, 2024 Annual Progress Report - Australia's Progress, p. 52.