Shell teams up to buy into OZ retail energy buying Powershop for $729 million

Shell teams with ICG to buy Powershop for $729mAngela Macdonald-SmithSenior resources writerNov 22, 2021 – 7.23amSaveShareShell will enter the Australian household energy retail market after joining with Infrastructure Capital Group to buy Meridian Energy’s Australian operations for $729 million, with a plan to split the assets.Shell will take ownership of Meridian’s Powershop retail arm, while ICG will take the wind and hydropower generation assets and the project development portfolio. The buyers did not reveal how much each was paying.The move represents a long-awaited move by the UK-based energy major into the domestic retailing market in Australia, following its entry into business electricity retailing with the $617 million acquisition of ERM Power in 2019. Shell, which has since made acquisitions in Australia in carbon farming and battery storage, and which is developing a solar farm in Queensland, was one of the parties known to be in the running for the Meridian business, alongside Ampol and others.Shell Australia chairman Tony Nunan is taking the energy major into household electricity retailing on the east coast. Trevor CollensThe acquisition of Powershop, which has more than 185,000 customers and supplies electricity that is 100 per cent carbon neutral, is in line with Shell’s strategy and ambition to create an integrated power business, said the energy giant, which also retails power to households in the UK and Germany.The group’s chairman in Australia, Tony Nunan, said the deal would extend Shell’s 120-year history of providing Australians with energy, only now it would be in their homes. He said Powershop customers would benefit in future from access to Shell’s broader suite of energy products, linked also to e-mobility and battery storage.“Our aim is to become a leading provider of clean power-as-a-service and this acquisition broadens our customer portfolio in Australia to include households, said Elisabeth Brinton, Shell’s executive vice president of renewables and energy solutions, who knows the Australian market well from a stint at AGL Energy.The deal marks a further intensification of competition in electricity retailing on the east coast, where overseas majors such as France’s Total and UK-based OVO are also getting in on the act as well as huge local brand names in other parts of the utilities sector, notably Telstra. The trend further stiffens competition for incumbents such as AGL and EnergyAustralia, whose traditional generation businesses are also being hit by lower wholesale power prices.As part of the Meridian deal, Shell will acquire Powershop’s portfolio of renewable energy power purchase agreements with the Meridian generation assets, which cover all their output.RELATEDTelstra to take on energy market in 2022ICG and Shell are already partners in the Neerabup power generation assets in Western Australia and formed the consortium to buy Meridian Energy Australia to leverage their combined strengths, ICG said.It is acquiring the generation plants through its Australian Renewables Income Fund.“Not only does this significantly scale our renewables portfolio but the addition of hydro comes at an important stage as we look to diversify with well-established, well-located assets,” ICG managing director Tom Laidlaw said.The portfolio includes the proposed Hume large-scale energy storage project, which Mr Laidlaw said presented an opportunity to develop what would be “a meaningful milestone for renewables in Australia” and which ICG hoped to replicate elsewhere.The generation portfolio being acquired by ICG includes several operating wind farms in South Australia, Victoria and NSW, a wind farm under development in NSW and the Hume storage project on the Victoria/NSW border.ICG’s ARIF fund already owns several wind farms in both the National Electricity Market and in Western Australia, as well as 75 per cent of the Australian Renewables Energy Trust with Engie, which has a project pipeline of more than 2500 megawatts.New Zealand-based Meridian advised in June it would review the ownership of its Australian arm and explore a partial or full sale.Chief executive Neal Barclay on Monday described the deal as “an outstanding result” for Meridian’s shareholders and said it represented an opportunity for the new owners to grow the business as Australia shifts towards cleaner energy.“With emissions the problem, and renewable energy the solution, the buyers are readying to invest heavily in a cleaner future,” Mr Barclay said.Shell still requires approval from the Foreign Investment Review Board and completion is expected in early 2022.Under an agreement signed with Meridian, services provided by the parent company to the Australian subsidiary will be transitioned over a period of up to 12 months.