Breakingviews – An antipodean wind turbine uses three power sources

MELBOURNE (Reuters Breakingviews) – An over-Tasman M&A Sea deal puts a high price on clean energy assets. On Monday, New Zealand – based Tilt Renewables agreed to sell itself to two companies, one in the domestic market and one in Australia, which will then go bankrupt. At nearly NZ $ 3 billion ($ 2.1 billion), buyers are paying a 99% base price to the worry-free trading level in December, and 96 hours of next year’s estimated earnings for the year financial resources, using Refinitiv data. Given the strength of that, the sale uses three viable energy sources.

Only a dozen or so companies in Australia generate more than 400 megawatts per green energy. The largest buyer is Tilt’s Aussie fund, PowAR, or Powering Australian Renewables, a joint venture between the country’s sovereign wealth fund, Queensland Investment Corporation and AGL Energy. And it generates only 800 MW, almost 1% of Australia’s installed capacity from all energy sources.

But there is also a lack of targets. Almost every other major regenerative player in Australia is owned by larger organizations such as Iberdrola in Spain or Neoen in France.

That sparked interest, with several companies still bidding at the end of last week. The winners had a few things going on. New Zealand industry buyer Mercury NZ already owns nearly 20% of Tilt, so he has a good knowledge of it. In addition, the company is largely owned by the New Zealand government, which is likely to help with any regulatory approval. Similarly, PowAR’s links with the Australian authorities are positive.

What really motivates buyers is the price for building Tilt with the expectation of helping governments deliver on net-zero emissions promises. They have a long way to go. New Zealand gets around 60% of its supply from fossil fuels, mainly oil and gas. Australia is dependent on coal for around 70% of its needs.

Last week the Victorian government unveiled a deal to close Yallourn, a privately owned brown coal plant that supplies 20% of the state’s electricity demand, for a renewable favor. New South Wales last October announced an A $ 32 billion ($ 25 billion) plan to green its energy system. Tilt buyers must keep such big promises, or their promises will be blown away by the wind.