Owning Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), or Soul Patts, shares means having a lot of diversification because its portfolio is invested in a number of different sectors. The portfolio has reportedly just been expanded.
The company already has exposure to energy, such as its major investment in coal business New Hope Corporation Ltd (ASX: NHC), which it has held for decades, and it has reportedly expanded its investment in the sector.
The investment team is always looking for opportunities to improve the portfolio, and the Australian Financial Review has reported that Soul Patts has invested in the energy sector.
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Soul Patts' NSW battery investment
According to the AFR, Soul Patts is providing $40 million of capital to take North Harbour Clean Energy to financial close on two battery projects. It was reported that Soul Patts will buy about a third of the business, joining superannuation funds, including Australian Retirement Trust and Grant King, in ownership of the business.
The idea is to build a portfolio of long-lasting storage capacity that could become increasingly important as renewable energy becomes a bigger part of the energy mix.
Soul Patts is also reportedly going to have one or two board seats. The founder and leader of North Harbour, Tony Schultz, said:
This is not just capital – the team there is going to be a great partner for us. They just have the right approach to what is a complex and long-term sector.
Soul Patts boss Todd Barlow said the business had considered various investments in this sector over the long term, but "have remained disciplined in seeking the right risk-return profile in a complex and changing sector."
Grant King, the chair of North Harbour, suggested that the energy business team has the development skills, as well as marketing insights and commercial instincts that are "critical to adding value".
What are the energy storage projects?
The AFR reported that North Harbour is starting with two large-scale lithium batteries in NSW, at a cost of $800 million.
The first project, a 400MW battery located in Aberdeen in the Upper Hunter Valley, is targeting financial close in mid-2026. About six months later, a similar project is targeted for the south of Tamworth.
The Soul Patts funding will take North Harbour to a final investment decision on both of those projects. This will unlock both debt and equity financing. Schultz then said:
At that point in time, we think there's a much deeper market for the kind of capital that would invest…for example, the large superannuation funds who have appetite for more infrastructure risk
We need to package things up in a way that looks like that for them, but maintain the value in the underlying assets, which is really…an option on the volatile electricity market. There's a balance to be had between those two things.
After those two batteries, North Harbour plans to work on medium-scale pumped hydro projects, which would help meet a growing need for longer-lasting storage to cover prolonged low wind and solar generation periods.
One hydro site is inside the Newcastle-Sydney-Wollongong transmission loop, with a slightly larger second site in South Australia. It's focused on smaller hydro projects on 'disturbed land' close to the grid, reducing cost and execution risk.
Acquisitions may also be considered by North Harbour in the future.
Soul Patts share price snapshot
In the last year, the Soul Patts share price has gone up 15%, as the chart below shows, following the announced acquisition of Brickworks Ltd (ASX: BKW).
