Macquarie starts $2 billion global battery business in electrification race

A power substation at the Vistra Corp. Moss Landing Energy Storage Facility in Moss Landing, California, U.S., on Tuesday, April 20, 2021. The facility is the world's largest battery energy storage system. Photographer: David Paul Morris/Bloomberg

Macquarie Group Ltd. has launched a battery storage business to take advantage of opportunities in electrification and grid investment around the world.

Eku Energy, created by the infrastructure giant’s Green Investment Group, has a three gigawatt-hour pipeline of capital expenditure worth $2 billion, and is set to complete its first project in Japan in the next few months.

Macquarie’s investment come at a time when the energy transition is pushing countries toward electrification and the intermittency of renewable generation means grids need flexible, on-demand power from cleaner assets like batteries.

Eku has over 30 employees with leadership from Chris Morrison as interim chief executive officer, and guidance from former Tesla Inc. director Greg Callman.

The new business has projects across the UK, Australia, Japan and Taiwan. It is also consolidating existing projects in those countries, including a 150-megawatt project at a decommissioned coal-fired power station in Australia and a 40-megawatt project in the UK.

Rising inflation has pushed up the costs of operations across the energy sector, even with renewables remaining cost-competitive compared to fossil-fuels. Much of this pressure for Macquarie has been absorbed by private corporate customers who remain intent on sourcing clean energy, according to Mark Dooley, global head of Macquarie Asset Management’s GIG.

“Customers are satisfied and this is a broad uniformly-experienced phenomenon that is just the new reality,” he said. “What we’ve seen is their imperative of driving their businesses on green electrons.”

Dooley is also sanguine over concerns that the demand for battery metals like lithium and copper could severely test the earth’s resource capabilities, as well as make clean-energy investors heavily dependent on China, the world’s largest producer of the metal.

“The volumes required of critical minerals across the energy transition are plausible deliverable volumes, and while China is a material player, it’s not the only player in them,” he said.