Australian assets prove pivotal for Neoen’s strong 2020 results


French company Neoen has been busy in Australia – its 2020 results, released on Thursday, are testament to that. Highlighting its November win for the Victorian Big Battery contract, the company also pointed to its completion of financing for Western Downs, Australia’s largest solar farm, as well as its PPA with CleanCo Queensland as high points from the previous year.

Not only is the company’s future looking promising after being awarded over 1 GW in new projects during 2020, so too is its present – Neoen’s consolidated revenue in 2020 reached €298.8 million (AU$465 million). At constant exchange rates, the sum amounts to a revenue increase of

20%. The company said the key factor driving growth was the contribution from assets commissioned in 2019 and 2020.

Solar’s contribution to Neoen’s consolidated revenue stood at 48% in 2020, versus 47% in 2019. Echoing the growth of the company as a whole, solar grew 20% compared to the previous year. Wind revenue rose 10% from 2019, while storage revenue grew the most, totalling €32.7 million (AU$50 million) in 2020, up from €20.5 million (AU$32 million) the year before.

This spike in storage was, as the company puts it, “a result of specific non-recurring conditions in Australia.” This “specific non-recurring condition” was a tornado that ripped through Australia in January 2020, downing the Heywood interconnector between South Australia and Victoria. It effectively isolated SA from the rest of the National Energy Market (NEM) for 18 days, leading the Australian Energy Market Operator (AEMO) to use Neoen’s Hornsdale Power Reserve, better known as SA’s big Tesla battery, and two other smaller batteries – Dalrymple ESCRI and Lake Bonney – to maintain grid reliability and keep electricity prices down. This created, in Neoen’s words, “specific conditions generating a high level of non-recurring revenue.”

Despite being buoyed by the one-off event, Neoen’s storage revenue was actually lower in the last three quarters of the year compared to 2019. This was because of weaker demand for electricity in Australia over that time – presumably due to COVID-19 shutdowns. This, in turn, created “less favourable” market conditions for grid service sales, or FCAS markets. All in all, storage revenue accounted for 11% of consolidated revenue in 2020, up from 8% one year earlier.

Lady luck proved herself fickle for the company in Australia elsewhere too, with the company saying its total revenue was “held back by less supportive irradiation conditions in Australia throughout the year.” Grid upgrades meant one of its Australian assets had reduced availability. This coupled with the downturn in market prices in Australia over the last three quarters of 2020 dampened the ascent.

Nonetheless, 2020 was kinder to the company than the world at large. “The end of the year was particularly dynamic with the win of the Victorian Big Battery project in Australia, one of the world’s largest batteries,” Xavier Barbaro, Neoen’s Chairman and Chief Executive Officer, said.

In November, Neoen announced it had been awarded a 250 MW grid services contract by the Australian Energy Market Operator (AEMO) laying the groundwork for its 300 MW / 450 MWh battery project. Again delivered together with Tesla, using its Megapack technology, as well as network partner AusNet Services, the battery is to be built next to Moorabool Terminal Station in Geelong.

Just a month earlier, in October, Neoen also announced it had signed a PPA with CleanCo Queensland for 110 MW of wind energy. It was the second agreement contracted in 2020 between the two companies, after the signature of 352 MWp power purchase agreement for Western Downs Green Power Hub. The contract will enable Neoen to build the 157 MW Kaban wind farm near the town of Ravenshoe, 80 km south west of Cairns, Australia, delivering clean energy into Powerlink Queensland’s transmission network.

The company also completed the financing for Western Downs, set to be Australia’s largest solar farm at 460 MWp near Chinchilla in South West Queensland.

Of the 1.4 GW Neoen has in assets under construction, the 214 MW Bulgana wind farm in Australia, which includes 20 MW in storage, is already generating electricity and should enter into operation in the first half of 2021. The Victorian Big Battery and the Western Downs solar facility are scheduled to enter into operation in the fourth quarters of 2021 and 2022, respectively.

The company’s capacity in operation or under construction stood at 4.1 GW at December 31, 2020, compared to 3.0 GW at the end of December 2019 – solidifying its position as a global player and an Australian powerhouse.

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