Unlocking capital for battery projects in the NEM with Niall Brady (Head of Solar & Battery Storage @ The CEFC)

Hi, everyone. Welcome back to the Transmission Podcast.

I'm Wendell. And in this episode, I'm joined by Niall Brady from the Clean Energy Finance Corporation or CEFC.

This is Australia's government owned green bank and a massively influential institution in the clean energy space. We're diving into how the CEFC has helped to unlock investment into grid scale battery energy storage and other clean technologies, and what it really takes to make these projects investable. We also talk about the role of policies such as the capacity investment scheme, where capital is missing from the market, and how the CFC sees the future of energy storage playing out. This was a really interesting conversation, especially if you're looking to understand how finance helps to shape the energy transition.

As always, hit like, subscribe, all that good stuff. Let's dive in.

Hi, Niall. Welcome to the Transmission Podcast.

Hey, Arnold. Thanks for having me.

No worries. Yeah. Really excited to have you on. I guess, can you start off with just giving a bit of an introduction to yourself and your role at the CEFC?

Yeah.

So, Noel Brady, Head of Solar and Storage at the CEFC, Clean Energy Finance Corporation.

The CEFC is the Australian government's green bank. We started about twelve years ago with ten billion dollars and now we've got about thirty two billion dollars we invest debt and equity for the Australian government. We have an independent board and an independent investment process. In the thirty two billion dollars we have nineteen billion dollars in the rewire donation fund, which is investing in Australia's poles and lawyers that we need for the the future. And we have thirty million dollars in the general fund we call it. So and that's investing in renewable energy, energy efficiency, and low emissions technology.

Our object is to facilitate flows of finance into the clean energy sector and to, facilitate the Australian government's greenhouse gas emissions reductions targets.

My job in solar and storage has changed a lot over the years. I've been there, ten years.

Like there was a time when solar was non commercial and, we were there. So we, we were one of the early investors in solar in Australia, really pushed through the early projects along with Arena and their, their, large scale solar round. And then that just took off. So we've been from pre commercial to, to a boom, to probably a bit of a lull to, and I feel it's coming back now at the moment. And yeah, a similar story in storage also feels given the progress we've made in the last few years, feels hard to imagine a time when storage didn't exist. But, yeah, look, we started we were the first investor in, in first dead investor in storage in Australia, way back into Hornsdale.

We've been very active in the market. We've taken a bit of risk. It's played out okay so far. And, I think we're, we're in that pre commercial to what I would consider boom at the moment.

And I also cover the longer end duration of storage, which, is in the difficult bucket, But, we're trying hard, and we will work alongside all the people to try and make that happen. I I don't think financing alone is the answer to that.

Yeah. Maybe we'll come into that later. I mean and, yeah, just to pick up on, what you were saying in terms of the CEFC's involvement in some of the kinda earlier battery energy storage projects. Yeah. Can you maybe talk through a few of those? Kind of what were they, when were they put together, and where are they?

Yeah. So look, we're we're there since the start. So back on Hornsdale. And, you look now and it looks like an easy investment.

You did it at the time and there was a lot of uncertainty. And it took a lot of courage from from our executive board saying, oh, yeah. We believe in this. We want to get the market moving.

And, we're happy to put our risk capital behind it. So, look, I would say that was really born out of a a great relationship we have with NaoN that we could sit down together and say, look, we're gonna figure this out. Nobody's invest I would say uninvestable at the time. The banks weren't there.

There was contracted revenue, but there was an element of merchant in there as well. Trying to get a forecast at the time was difficult.

We, yeah, Fcast was a bit of an unknown and Energy Arb was, who knows? So what we did at the time, we wanted to be a debt investor, but we realized that project finance would not suit NASA like that.

Scheduled principal interest against a revenue stream so volatile, was going to be difficult. We believed in the long term value of the revenue stream, but we couldn't pick the volatility. So what we did is we came in, we, we finance on a sweet basis. So we effectively profit shared.

We were debt, but we profit shared out. And we set a base case where we said we'd be out in say eight to ten years. And we thought that, oh yeah, if all goes to plan, we'll be out in eight to ten years. We enforced our security as debt by if it went a bit slower, we could have, we could allow it to go longer.

But if it went longer, we upped our sweep to pay us down quicker. Now, what actually happened, I would say we were paid out in less than half that time because, Hornsdale went amazingly and that really started us off. And we were the only dead investor in the market at that time. And then we, we came on and, we'd now end again and Victorian big battery still the market hadn't taken off.

Victorian big battery for given our policy objectives was a great asset for us.

It had, a SIPs contract to allow the So SIPs.

System. Oh, okay.

Yeah. I think a system integrity protection service. That's a text about.

That sounds old. I'll tell you what it does. I won't tell you what that answer. So, yeah, it had a contract that effectively, the redundancy on the New South Wales Victorian interconnector, it allowed that to be released for the summer months.

It allowed the flows from New South Wales to Victoria, which, look, virtual transmission, I think we'd call it. And that for all was great, but what it left was a project with a strange profile which had a was nearly fully contracted for five months and was merchant for seven months. So we again, did kind of a sweep arrangement to get that going. And then as we moved on from there, we were really keen to develop the market further and get more lenders involved.

So on our next project, which was the first virtual offtake in Australia, Capital Battery. And we, we really went out and went around to the banking market and tried to get people to, to call in beside us. We were happy to lend, but then we, we wanted people in beside us and we worked and eventually, Alexander Austin, Infra Tech came into beside us on that. And that was another, look, interesting.

You're just pushing the boundaries on on contracting structures, and I think that's gonna be the flexibility of batteries. That's gonna be an ever evolving space, I think.

Yeah. It's something here, I think, that is so you know, it's developed within the Australian market for battery storage. It's the on the contracting side. Yeah. The kind of array of different sort of long term, like, kind of agreements that are out there to support, you know, revenues for batteries is, at the moment, I'd say fairly unique to this market.

Yeah. And look, it's, it's a it's a unique market and there's plenty of value there at the moment. So I think it's really encouraging people to look hard, you know, like, they they can see the observable spreads and they're going, yep. I want to be involved in that.

And then look, as we move on further than that, oh, Warratus Super Battery was another one. And, another one of those ones you look at now and you think it's it's big, but it's fairly standard. But at the time, we were in the middle of a a COVID supply chain shock, and delivering on to the tight deadlines was a real, was a real risk at that. So, BlackRock and Acacia came to us and they were, they were keen to do it, on an on gear basis.

So we we came in as equity on that with a substantial ticket to to help support that in what is a new asset class and, a new risk profile for for a lot of the co investors. So we we were happy to sound like that. And, look, that's been another one. You look at it, and how it's went and it's a credit to to Acacia and the team, Nick and Richard Reynolds, have really pushed it through and and, like, it's making some really good progress.

But at the time, it was, there was some interesting conversation about, well, can you get sales out of China?

Where all Yeah.

I think it seems like, yeah, it got kind of turned around relatively on time for such a big system. Right?

Look. And at that time, there was people telling us, like, the some of the main providers were, like, couldn't provide a battery until twenty twenty six, couldn't provide a battery until twenty twenty seven. So it, required a lot of ingenuity in the how to how to source a battery like that and get it built on time.

Awesome. And so I guess yeah. If I was to kind of summarize that, maybe you can tell me if I'm wrong. Yeah.

So I guess the CEFC's involvement on the battery energy storage side in Australia has yeah. Like you said, projects which now maybe don't seem so big in the scheme of things, but at the time, they were, even globally, kind of like market leading projects in terms of the size of batteries being built. And so your role, well, CFC's role, was really to be the kind of vanguard of actually supporting the financing of those projects. Is that right?

Yeah. Look. And I think that, the the risk profile as well, taking merchant risk, you know, wasn't pro on batteries wasn't done at the time, you know, like, so coming in and taking that, a lot of the batteries that were built at the time were balance sheeted effectively. So we were probably one of the first to move on that. We were keen to get batteries moving. We saw their value and we've been amazed by how quickly this started moving and how how how it seems so mainstream now, but at the time it felt so niche and we really wanted to support it. So kind of what we do with our risk appetite is we we point it at places we think need help and we point it at batteries and, look, it's paid off.

Yeah. Given, like you said, I mean, there's now kind of, I guess, a lot more involvement from sort of banks in the sector who are willing to kind of fund these projects. Is there still a role for CFC in these big battery and storage energy storage projects, or are you looking at other ways to deploy that funding?

Yeah. Look. I think our roles definitely change. We're not the only person in town anymore, and and the development of the market has been so quick.

Solar probably took four or five years to get to what batteries did in twelve months. You know, just the the speed at which the banks came to it became comfortable with the risk, became comfortable with the element of merchant risk, has been key. And and also, look, we look at the the transition of Australia and, yeah, the those numbers between seventy and a billion dollars need to be invested between here and two thousand and thirty. And, like, we don't have the capital to be in every deal.

So, when a market is really rolling and going well, we're happy to let the private sector do it. We're not here to crowd anyone out. And I think on something like batteries at the moment, we're, we're probably, dealing with specific risks as they come up. You know, like we'll, we'll be involved on an ad hoc, we'll react to the market and be involved on an ad hoc basis as needed.

And where where we can do something that will get a project or make a project work that won't happen elsewhere. But we're seeing a lot of private sector interest at the moment, which is is keeping us quiet. Yeah.

And and look, I think our focus at the moment, if we had to point our risk folks somewhere, probably wind is probably behind where we need to be and struggling a bit in cost. So we probably our risk and return focus is probably focused on wind a bit more and are very interested in kind of solar storage hybridization coming through.

Yeah. Awesome. And I think just to, I guess, wrap up kind of the, battery storage, like, has yeah. Over the kind of length of those projects, I guess, Hornsdale came online in twenty seventeen.

How has, like, kind of investment case for battery storage changed over that time? You mentioned kind of now taking on more merchant risk. Yeah. How has that evolved?

The batteries have changed. You know, the technology has changed and the cost has changed. But, also, as we get more batteries into the market, I think that the fundamental business case, has moved away from frequency control to to energy arbitrage. And look, the falling prices allowed, allowed batteries to do that.

So I think our, our revenue stack looks far different, but then we look at the market coming in to invest in those, and then we've really seen a change in that. And we, we we're seeing a lot of inbound, Like, I do really like your graph that says, fourteen gigawatts are, committed because I've been telling everyone that with a fairly dodgy spreadsheet for a long time. And, it's great to have someone else's graph to point at. But, like so this is a market that that's evolving really quickly.

And what I think is probably most interesting is that the market we are looking at today, if you're investing today, that is not the market you get built into because, like, Oh, I think by the end of next year, you're going to have at least ten gigs of competition. And, I think that that's going to be really interesting. So we're really keen to see how that plays out. I see, I see a very interesting time next year or two.

And a lot of markets have struggled kind of after they've had the initial boom of batteries in the struggle for revenue, just as everyone started to cannibalize each other a bit. And I think that over the longterm it'll work out, but I can see some short term pain, just around, you know, if the system still looks the same basically as this year, but next year we have an extra ten gigawatts of batteries competing in the peak. I think it's going to it's, they're going to compete with each other. I think they'll they'll and seasonally, it'll look very different.

I think we'll we'll push gas out for long periods. And then when a battery competes with a battery, what's its marginal cost and where does it bid? I think it's going to be a really interesting one, you know, because it is gonna want to use its power outside solar hours because it knows the next day it can charge at zero or negative again.

So so just for context, like, so today in May, twenty twenty five, I mean, there's kind of just over two gigawatts, maybe two and a half gigawatts of actually commercial operational battery storage. But yeah. So within probably, yeah, by the end of twenty twenty six, that could have doubled twice to get to that ten gigawatt number. I mean, just quickly, actually, because, yeah, you mentioned earlier the kind of how the volatility of battery revenues can impact, things like financing.

Obviously, that's not unique to the NEM, but I would say some of the volatility that battery see is. Does that change, you know, what is required, in terms of, like, like, a financing package that you put together for a battery?

I think you have to look at the package on the whole. You know? So, like, you'll look there, and there's usually a portion of merchant revenue and a portion of con contractor revenue, you know, and and you'll run downsides. I do think you probably need a bit more flexibility in the way you structure around it.

Like, you know, the revenue may not turn up this quarter, but, like, and one, you could have won great quarter. Yeah. Yeah. And and I think years may like, as we, I think seasonally, batteries are gonna look very different and we may start seeing that that, like, you know, they're relying on one great quarter and a few quiet quarters.

And I think that as an equity sponsor, making sure that you can ride through that and you're not defaulting defaulting in any way to the banks is gonna be key. You know, you you want to I think anyone who invests in batteries that can buy some flexibility in the timing will be key.

In volatile commodities by time and you'll be okay, they'll come right at some stage, but there will be times when when it won't quite be there. And I think having higher principal and interest requirements around that will be difficult.

Yeah. Like you said, with the amount of storage coming online, it kind of does raise probably a bit of short term risk about what could happen in the market.

I think in the longer term, it'll be fine. And there will be there'll be periods we'll have the messy transition won't be a messy transition every year, but you will get years of messy transition. You know, that's that's kind of where we we will get get averages. We will get unplanned. We will get weather events, but you may well get periods where you don't get those for so there's a a volatility of volatility, I think, is what what you need to be able to ride through.

Yeah. It makes them, like, forecasting difficult as well.

It's an art, not a science.

So, yeah, you kinda mentioned at the start, your role encompasses, I guess, both, soda and storage. Is there a difference today in terms of the investment case of both those technologies?

Like, we know that there's a really strong pipeline for grid scale storage. Is that the same now for well, still for solar?

Yeah. So, look, I think development pipeline wise, solar has no no problem. The barriers to developing are relatively low. And I think there's a big development pipeline there and it can also it can respond relatively quickly.

You know, it doesn't have the lead time of wind. Look, and I think solar has probably been in the doldrums rooftop is is killing it largely, but I see a real future for solar. I think storage is going to be the key to unlocking all that solar. And I think, look, there's an opportunity happening at the moment, which I think is really going to push a lot more solar and storage into the system than we expected.

The ISP is running, out to two thousand and thirty about eighty percent wind, twenty percent solar.

If you look at the the CIS tender one, it was about fifty fifty. The makeup of the CWO RES, it was about fifty fifty. I think we're going to end up on kind of a fifty fifty. And I think that the opportunity is there both because the fall in so in storage prices, but the price of wind has gone so high. Like, you know, like, so we we've seen an almost doubling of the price of wind, and I think that that's the key factor. So solar and storage is going to become very competitive in displacing wind. And then look the knock on effects of that.

If your system is fifty, fifty solar and storage versus wind, do you build the same grid? Do you build the same reses? You know, like how does that work out? Because if we're following the ISP and we're we're building a system for eighty percent wind, but we actually end up with fifty, you know, are are we building the least cost system?

Yeah. That's a great question. And so, you know, yeah, yeah. What would you say is driving that? So yeah. Because if I'm, let's say, an investor looking to deploy some capital into the clean energy transition in Australia, and maybe in my head I had wind, but now I'm looking at the CapEx, which is significantly higher than it was previously, then I'm gonna look at alternatives.

Yeah. And, look, I I think there's there's two lenses you can look at, a custom value. And value is is valuing the swaps. You know, like, I'm saying, okay.

What what what kinda a wind what can I offer a a wind swap at, and what can I offer a a solar swap at, and what's what's the NPV of that? I think but it's also coming to a stage of just on on cost, you know, like, you're you're coming if you start to get storage down to three hundred k a megawatt, you know, you start getting very competitive with wind at three three and a half million, you know, like, it starts getting very, very competitive. Yeah. I think, ultimately, economics will drive it.

It always does. Yeah. And I think that you could look, on a, okay, what can I offer that PPA for my wind project at? And from what I'm hearing, they they may have three digits in them.

You know? That's that's kind of what's been said around the market, and and you look at, okay, what price does storage have to be at a duration that would be comparable wind that I could do a three digit PPA?

Yeah. I mean, really interesting to see what happens there because I think, yeah, we've got the first, like, kind of true hybrid projects coming online, well, maybe towards the end of this year, next year for sure.

Yeah. Yeah. So we've been involved in, with Octopus. We've been involved in Fulham and and, Blaine Creek, and they're both both through, five three four a DC coupled.

And we're seeing, I think Gentari have an asset, Maryville coming through DC coupled, and I've seen one come through in Queensland as well, five three four a. So, yeah, I think that that's probably a a frontier that's that's currently being tackled. What what we find is that people are getting the first of a kind asset up is difficult. It's very hard to get all your approvals and get your connection and get everyone across the line and get your EPC contracts across the line.

But once they've been in a market a while, people people really get comfortable. And we we've seen the same on batteries. You know? Like, there's there's one thing when you're when you're modeling how a battery works, you know, theoretically, but then when people can see them in the grid and see their capability, they feel differently about them.

And so so, yeah, I get is that, like, hybrid project of soda and storage, is that, you know, a big focus of yours now then?

Yeah. Look. We're really can see it come through. And, ultimately, look. We're we're an investor. We need like, you know, we invest very close to where the market is, and I think that, also loan wouldn't drive it through, but I think cost will drive it through, you know, like and, and economics, and we we're keen to support. I think it's a it's a I think it's a bit of a coming wave that that we will see, and I expect more solar to probably hybridize in some form coming forward.

So, yeah, we discussed kind of onshore wind. Would you say there's any other financing gaps, like, kind of in the, you know, electricity transition in the Yeah.

So, look, this comes to the the the the long end of storage in my in my book. Look, and I think we definitely have a gap there if we think about it and and just if look for a from a federal level.

What do we need for a reliable system? Well, we need to have enough megawatt hours and the CIS is driving in megawatt hours. We need to be able to move it around the day to match the load and the the CIS say driving in the storage and that we will have enough storage matter. But then we need effectively insurance. What happens when we when we don't have enough megawatt hours provided by renewables? And then you come to looking at, okay, I need non correlated generation. And the non correlated generation can be well, what's in the ISP is a big lump of flexible gas and some long duration storage, and and it's effectively a plug for the reliability, generation.

So, we don't currently have a federal policy which deals with that. The CIS doesn't go beyond four hours. It's difficult. It's, it's, it's going to be expensive given the current market construct. Long duration is not the longer durations are not rewarded by arbitrage, which is why you can, you can get the shorter durations up relatively easy on a commercial basis. You can't get the longer durations. And I think that we support, schemes like the eight hour Altezza.

We see Queensland through Queensland Hydro and the Goxhall promoting their pump storage, and we begin to support that. But, I really think that to address the energy transition in its entirety, We've got to have an answer to what happens when the wind doesn't blow and the sun doesn't shine, and that is that that piece of the ISP, which is the flexible gas or or long duration storage.

And so, obviously, yes, it's Snowy kinda two point o gets the the headlines, but there are other pumped hydro projects kind of in the works. If you look at kind of what's in the development pipeline there, is there enough, or do we need to find more?

Yeah. Look. I'm not I think there's enough in in the near term, I would say, but Snowflake two point o. I don't think it should be considered by the market. The investing market has pumped storage. It's not your poster child pump storage.

No, nobody digs that length of tunnel. It makes a lot of sense around the snowy scheme that you do that, but I think probably, more like Genesis Kidston plant is probably far more like a typical pump storage. But we're seeing projects come through. We see in Queensland, Queensland Hydro, and Barumba, all of the GOCs have their own smaller projects. So, like, there is a pipeline up there that's been developed.

New South Wales, they had the New South Wales recoupable grants process, which really kind of primed the pump. And you're seeing the fruits of that coming through. So we had a recent winter pump, Phoenix pump hydro in the eight hour Altezza. And I know there's a there's a few other viable projects around, like Oven Mountain.

We'll come on to, like, Altezza, in a second. But then other other technologies for hydrogen and energy storage, there's a few batteries in there.

Yeah. Look. We're we're seeing eight hour batteries, and it's it's funny to look over. Over the time we've been covering it, we used to have a map which had hour one and two was going to be lithium ion. Hour two to eight was antibodies, and then longer than eight was pumped hydro. And in that two to eight, we were seeing a mixture of technologies we were seeing, and there was all, they had this pathway and we've really just seen that the cost of the lithium ion has just driven it out into that, driven that middle ground away, you know, like, so we're now seeing it win eight hour tenders. And, then pumped hydro even becomes just the longest of the the deepest storage becomes pumped hydro, but lithium ion is making that that middle ground difficult for people.

Yeah. And I think so, yeah, like, all the kind of these long duration batch projects we've seen have come through the Altesa, which is, like I said, New South Wales focused kind of support scheme, which does have that, you know, long duration, target. So these schemes, so Altesa and the CIS, how do they play into the bankability of a project? Like, do they make it easier for you to go and finance these things?

Oh, look. We we are really supportive of these mechanisms. Right? We we we need to fundamentally transform our energy sector, and and what you get with just the market as this is incremental change, and we need fundamental change.

So the Altezza and the CIS standing there and taking risk is going to be key. Do they help bank ability? Yes. What I would say about an Altezza or CIS is you could bid it for fifteen years at cap and floor of two hundred dollars and an unlimited annual cap, and you would have a two hundred dollar government backed PPA.

That is the outside of what you could have, which is on the which is, yeah, unbelievably bankable. And then it gets watered down as people bid and get more aggressive and stack it with all the things, it gets less. And trying to get that balance between, okay, making it aggressive and a winning bid and getting it bankable is going to be the key.

Yeah. I think it's something that we there's not that much transparency, I guess, to date over sort of what's been awarded. So, I think that's something we're quite keen to to understand more of. I mean, so one other thing that's going on, I guess, is the Nelson review, which is aren't is asking these same questions, but much longer term. Has CFC made a sort of submission to to that review, or do you have any thoughts on it?

Look. We we've we've had various meetings with Tim and the crew, and, yeah, we we are fully supportive of what they're doing. Look. I think there's a recognition there that the the system is changing. We have rules set for an old system that was based around thermal generation, you know, and we we're going to have a different system going future going forward. And I think that, yeah, what that point we had about long duration and what what the Nelson Review is calling firming, I think, is going to be is going to be the key.

We don't have a capacity mechanism. How are we gonna make sure that we have those kind of insurance megawatt hours sitting in the system for when we need them?

Awesome. And so beyond power, obviously, there's a much wider kind of energy transition. Like, a lot of it is the electrification of things like, industry, transport. Is that something that the CFC plays a role in, and what could that look like?

So, yeah, the the CFC's remit has always been wider than just electricity. And despite the name, the Clean Energy Finance Corporation, we we have roughly fifty percent or we have a requirement for fifty percent of our, investment to be renewable, but then we we operate outside that. So we've got big platforms in anywhere we can get to carbonization in the Australian government to carbonization. Like even we look at two thousand and thirty, I think you look at electricity is probably the low hanging fruit.

You know, eighty two percent renewable will drive a lot of the decarbonization, but we also need input from transport and agriculture to drive that through. So we, we have a decoupled markets team which really tries to reach out to the customer and that's really driving electrification both of the home, we have the housing entry upgrade fund, and, in transport. So we have a lot of, kind of EV type products that that we try and drive and we we use our our concessionality there to drive it down to true to end consumers to make that that choice more attractive. But, we also operate kind of over the end over over the horizon a little bit.

So we have Powering Australia Technology Fund investing at kind of an earlier stage and, we have a hydrogen fund.

You know, we we we are very broad.

A lot of a lot of fingers in many parts. And so the one thing we've not really touched on, I guess, is the grid. And you mentioned the kind of the rewinding the nation fund at the start. So, yeah, what does the CFC's involvement in, yeah, a lot of the transmission infrastructure that needs to be built out look like?

Yeah. So the the government have trusted the CSC to run the nineteen billion dollar rewire donation fund. And look, that effectively is going to be, we are going to be in every res. We are we are there to build out the the grid we need for the future. What does that involvement look like? Look, we will work with state, federal government, TNSPs, and we will we will fill holes as we can. You know, we we will plug the gaps.

We, I think if we look at the objectives of that, it's to expedite it as quickly as possible and to at the least cost to consumer. So we are very active in that space, and I think, we're probably only starting to see the announcement of deals. I think we'll see a lot coming through in the next year or two.

Yeah. You kinda mentioned the size of some of these funds at the beginning. Actually, how does that grid fund compare to the other sort of investment pots that that you have?

Well, we we've got thirty two billion and nineteen of it is for rewiring the nation. I think that shows shows the commitment that's there from the federal government to get the the future grid build out.

Well, yeah, I mean, it's, yeah, really great to see the involvement there because I think there's so much that needs to be done on the transmission network to support the build out of all the renewable generation that that looks like it needs to come online. And so far, I need to wrap up. We always end with kind of two questions.

The first of which, Janelle, is is there anything you would like to plug?

Well, plugging, I don't have gaps in the financing market would be look. We we don't have products or projects that we we're wedded to, you know, like, we're there to react to the market. But what I would say we have been working with the market in the last while is, just how you consider a CIS or Altezza and the differences between what is your typical project. We're used to projects which had kind of a portion of merchant and a portion of, contracted.

And the merchant contract effectively operate independently, which are and what we are trying to tell people is that, look, each Altezza or assist should be looked at on its own merits because fundamentally the Altezza affects the merchant position. So I'll give you an example.

You have a fully merchant project, you make a dollar of revenue, you have a dollar of merchant revenue, you have a CIS with a floor of eighty, you need to make eighty one dollars to make a dollar of merchant revenue. So like, I feel that that extra dollar above eighty is far higher risk than the, than the dollar starting at zero. So you just got to look at each one on its own merits, annual caps come into it, and the specifics of the transaction. So we, we've been doing a lot of work with, kind of banks and advisers just to to try and work through that. We're we're we're financial modelers at heart at the CFC, so I we love this stuff.

And so we always finish with the same question, which is, what is your contrarian view?

Well, I've got I've got a few, but, I had to think about this one. And, I it's not that popular with my, my battery clients, but I have a defense of Snowy Hydro.

So Snowy two point zero, I look at it and I think that it's an ambitious nation building project.

And everyone says, oh, but the cost has gone crazy. Well, I look at say twelve to fourteen billion dollars costs, say, and, you look at two gigawatts of two point two gigawatts of generation, but what you've got to realize is on the loop. You also have TAMET one and TAMET two, so you free up another six hundred megawatts. So you get to nearly three gigs of, of, of pump storage capacity and and and available generation.

And, then you kinda go, okay. Well, twelve billion dollars and we're getting we're we're getting, three gigawatts. You know, that that's four, maybe four and a half billion of four four or four and a half million a megawatt is that's costing. I look at people building wind for three to three and a half to four million megawatt, and I think that's not bad value.

And I and I also think something like Snow White, you've you've got to appreciate that the lifespan of an asset like that. Like, that that's a that's a that's a gift to your kids. You know, that's gonna be around a long time. And as well, from a government balance sheet was the right place to build it.

But from a government perspective, it has been a boom to the regions. It is Australian made storage, you know, like, which we can't say about a lot of our technologies, but, like, it is a massive civils task. It has been a boom to the region's employment. So, yeah, I'm a big supporter.

Yeah. I would say so plug from my personal side is if anyone ends up in, yeah, in the Snow Mountains and because you're a school I don't know how to pronounce that, national park. Go have a look at the snowy scheme. It's actually kind of, immense, the scale of it and the technology that was done. And, I mean, a lot of the first projects were, you know, sixty, seventy years ago now. So it's very impressive what's there.

Well, I I can say I was lucky enough to go visit Snowy two point o, and I would say just getting there, you appreciate the sheer scale of the the system and, the the project that's ongoing and the number of people working there and the pride they have in what they're doing.

Awesome. Well, Niall, thanks so much for coming on the podcast. It's great to have you here. And, yeah. And thanks everyone who's listening.

Thank you very much.