Based on our comprehensive analysis of Australia's battery energy storage systems (BESS), we have identified Victoria and New South Wales as the primary markets for BESS mergers and acquisitions (M&A) activity in the country. This is driven by the high intermittency in power transmission in these regions and the presence of diverse revenue streams through daily spot markets for power and system frequency control services. Despite the risk of lower returns, the conditions in these markets make BESS investments viable. Private equity firms such as Brookfield and Octopus Investments, as well as independent power producers/utilities such as Origin Energy, are expected to lead the M&A activity by tapping into the under-developed portfolios of local private firms.
Furthermore, we anticipate a significant increase in deal activity in Western Australia in the coming years. This is due to the expected expansion of renewable energy systems in the South West Interconnected System (SWIS), which will raise the demand for storage, and the continuous support from the state government in the form of grants and funding packages. Additionally, easier interconnection approvals will provide further incentives for investors to enter this market.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.