Mining magnate Andrew Forrest becomes Australia’s largest renewables player

Mining billionaire Andrew Forrest has transformed himself into the biggest player in Australia’s renewable energy sector after acquiring the country’s largest wind power company.

Squadron, Forrest’s energy company, has paid more than A$4bn ($2.7bn) to acquire CWP Renewables from Switzerland-based Partners Group, according to a person with direct knowledge of the deal.

The deal follows his A$3bn investment in Queensland renewable company Clark Creek in February and transforms Squadron into the country’s largest wind and solar operator.

Australia’s energy sector is under pressure as the government plots a switch to renewable sources, after the country’s largest energy companies including AGL and Origin brought forward the date for the closure of coal-fired power stations.

Forrest told the Financial Times that Australia could become a pioneer in the energy transition as investment in the country’s alternatives to fossil fuels heated up. “We have formed Australia’s largest renewable energy group, but we don’t think that’s much to crow about,” he said, with the country exiting the “dark ages” of being one of the world’s fossil fuel centres due to its huge coal and gas exports.

Emma Aisbett, an associate professor at the Australian National University, said that Forrest’s investment was an example of the “smart money” betting on Australia’s ability to turn itself into a “renewables powerhouse” based on wind, solar and hydrogen. She said that the billionaire, who made his fortune mining iron ore, sees a first-mover advantage. “Miners see the frontier and want to stake a claim,” she said.

Arnon Musiker, head of Australian infrastructure at credit agency Moody’s, said that Forrest’s move showed an “inflection point” had been reached, with shareholders, boards, governments and consumers all now focusing on the transition after an energy crisis on the east coast this year triggered a market intervention by the regulator.

Musiker pointed to the Brookfield-led takeover offer for energy company Origin and billionaire Mike Cannon-Brookes’ activist campaign at its rival AGL as further examples of capital backing the transition to renewables. “Well-moneyed and sophisticated players seem to have a lot of confidence in the transition and that it will be a profitable one,” he said.

Forrest has been an advocate of developing “green” hydrogen, having invested in the fuel via his Fortescue Future Industries vehicle.

The Squadron deal for CWP has been completed by Tattarang, his private investment vehicle, which has invested in a range of industries including seafood, metals and boot maker RM Williams. The company declined to comment on the size of the takeover beyond saying that it represented its largest investment.

CWP, which supplies energy to Australian companies including Sydney Airport and retailer Woolworths, adds 1.1 gigawatts of wind power to Squadron’s base on Australia’s east coast. It also has approval for further wind, solar and battery assets as well as plants capable of using biofuels and hydrogen. The combined business will have 2.4GW of generating capacity and a development pipeline of 20GW.

Forrest said that Squadron would not be “capital constrained” as it developed its operations, given the amount of money held by funds looking to invest in renewable energy projects.