Edify and Sosteneo secure $400m Victorian energy partnership

Renewable energy and green technology firm Edify Energy is partnering with Italian infrastructure investor Sosteneo to build and operate a $400 million energy storage system in Victoria. 

Edify and Sosteneo have this week locked in the completion of project financing to develop the 185 megawatt (MW) / 370 Megawatt-hour (MWh) Koorangie Energy Storage System (KESS) in Kerang, near Murray River. 

While the exact terms of the financing arrangement were not disclosed by Edify or Sosteneo, the partners say Sosteneo will acquire “100% ownership on behalf of its clients”. 

Global sustainability-focused law firm DLA Piper acted for Sosteneo to facilitate the deal, led by Corporate and Projects Partner Chris Mitchell.

DLA Piper deployed a multi-disciplinary, cross-practice team of experts who assisted Sosteneo on all aspects of the acquisition of KESS, including transaction document negotiations, project and project contracting diligence and project financing review.

The deal is Sosteneo’s first in Australia and includes a 20-year system support agreement with the Australian Energy Market Operator (AEMO) for the provision of system strength. In fact, the Victorian Government is supporting the KESS project with $119 million in funds to AEMO as part of its program to strengthen the state’s grid.  

Further, the KESS is supported by a 15-year offtake agreement with Shell Energy for the full 185MW/370MWh. 

The move will facilitate a new terminal station between Wemen and Kerang, and Edify and Sosteneo predict that the project will be capable of powering 350,000 homes for 2 hours. 

Mitchell says the KESS Project is an ‘important’ electricity infrastructure asset for Victoria. 

[The project] is set to provide 20 years of system strength services to AEMO, which will underpin further renewable energy assets in the Murray River region of Victoria, together with a 15-year offtake agreement with Shell Energy to support the delivery of renewable energy to Victorian consumers. 

It is terrific to see the KESS Project form part of Sosteneo’s broader portfolio of clean energy assets.”

“It is terrific to see the KESS Project form part of Sosteneo’s broader portfolio of clean energy assets”

The KESS system, to be developed and structured by Edify, will make use of Tesla Megapacks equipped with ‘grid-forming inverters’ that operate in ‘Virtual Machine Mode’. 

For the layman, this essentially means the system can operate in a manner akin to a conventional generator and increase the renewable hosting capacity of the Murray River renewable energy zones (REZ). 

Edify Founder and CEO John Cole says the Sosteneo deal marks the company’s third and largest battery energy storage system to be brought to market. 

“Our ecosystem of trusted partners is maturing and deepening with KESS. 

We are delighted to be delivering a groundbreaking project with partners and stakeholders we have worked with on other assets including, Tesla, Shell Energy, Consolidated Power Projects, CBA, BNP Paribas, DNB, Gannawarra Shire Council, the Victorian Government and AEMO. 

Strong relationships are a cornerstone to the Edify team and are critical for an accelerated energy transition.”

“Strong relationships are a cornerstone to the Edify team and are critical for an accelerated energy transition”

Sosteneo Managing Partner and CIO Asia Pacific Ivor Frischknecht shares similar sentiments. 

“With revenues secured through long-term agreements with Shell Energy and AEMO, the KESS project is well-aligned with our objective of delivering stable commercial returns to clients whilst making an active contribution to the decarbonisation of the energy system. 

We are proud to help deliver renewable energy projects that support Australia’s energy transition and create opportunities in regional Victoria.”

The KESS project is expected to come online in 2025. 

Write to Joshua Smith at Mining.com.au

Images: Edify Energy
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Written By Joshua Smith
Joshua Smith has years of experience in the media sector, having worked as a markets reporter, features writer, and editor since completing a Communications and Journalism degree and a Creative Writing degree. Josh is an avid board game fan and a self-professed coffee snob.