Brookfield flags $30 billion investment, ‘public benefits’ of Origin decarbonisation to ACCC

Canadian investment giant Brookfield, in a consortium with US investor EIG Partners, has told the Australian Competition and Consumer Commission (ACCC) its acquisition of Origin Energy, Australia’s second largest energy generator and retailer, would “contribute materially” to Australia’s decarbonisation and “does not raise any material competition concerns.”

Brookfield’s recent acquisitions in Australia, most notably its takeover of Victorian network AusNet Services in 2021, have been flagged as a potential roadblock to the Origin plan. The Canadian company also holds a stake in smart metering company Intellihub. 

Brookfield says its $18.7 billion Origin takeover will “provide substantial public benefits because we intend to invest between A$20 billion and A$30 billion in rapidly expanding and accelerating the renewables build out.”

Brookfield has previously pointed to investing “at least” $20 billion in Australia’s transition using Origin as a vehicle, but this submission to the ACCC appears to be the first time it has flagged a figure as high as $30 billion.

The Canadian company says it plans to develop up to 14 GW of new renewable generation and storage assets within the Origin Energy business by 2033, having previously given the date of 2030. These figures, Brookfield says, are 10 GW over and above what it estimates Origin is likely to develop in that timeframe in its current listed company ownership structure.

This extra capacity, Brookfield says in its submission, comes from the global fund’s access to capital, as well as its international supply chain and technology partnerships. Indeed, the Origin acquisition will be made via the Brookfield Global Transition Fund, which claims to be the world’s largest private fund focused on the net-zero transition, and is headed up by Mark Carney, one of the world’s most influential climate change power brokers.

On the other hand, the company’s ownership of AusNet Services falls under Brookfield Asset Management. This is of vital importance, the company claims, noting these two arms are separate and have different backers.

This separation is the backbone of Brookfield’s argument around why the Origin transaction doesn’t raise material competition concerns. “The Proposed Transaction to acquire Origin Energy will not be detrimental to competition in any market given the intensely regulated nature of the electricity generation sector, reinforced by the fact that AusNet and Origin will remain separate stand-alone companies with separate investor groups,” Brookfield Asia Pacific CEO Stewart Upson said.

The company also notes there is a “lack of any ability or incentive for AusNet to foreclose Origin’s generation competitors” due to the high degree of regulation of both transmission and distribution in Australia.

Brookfield goes on to note: “Origin, AusNet and Intellihub will remain separate companies, with separate investor groups. Different Brookfield funds hold majority stakes and the unaffiliated co-investors in each business are different.”

The ACCC is expected to advise on its decision after 90 days following a process of industry and stakeholder feedback. It is possible the watchdog could require Brookfield to enter “undertakings” which would place strict controls around its business behaviour, or require it to sell some assets.

Under the brokered deal, Brookfield, GIC and Temasek will take over Origin’s retail and generation business, which currently has a 24% market share in Australia’s national electricity market. Meanwhile, partner MidOcean Energy, managed by US investment giant EIG Partners, will take control of Origin’s gas assets and business.

In 2023, Brookfield also acquired the remaining 50% stake in Spain-based renewables developer X-Elio from its joint venture partner, investment firm KKR. X-Elio owns a number of renewable assets in Australia.

It also recently announced a partnership with little-known developer Greenleaf Renewables. The partnership, Brookfield says, will help enable its decarbonisation plan for Origin.