Insights into raising private capital to Build $300M of Grid-Scale Solar in New Zealand

Great news today!?After 12 months of intensive work, we have filled the second tranche of equity needed to deliver our $300 million capital plan to build our first five solar farms.?This plan includes land acquisition for adding another three sites as the next phase of our long-term plan. ??

It was one year ago, almost to the day, that we assembled 25 top-tier New Zealand investors and gratefully accepted their $43 million to launch the vision, purchase the land and begin the process of negotiating the jigsaw puzzle of more than 30 contracts.?It meant wrangling over 20 companies: an array of law firms, contractors and service providers lobbing in minute-to-minute requests, ‘Q and A’ and drafting turns. ?About 65 experts across the expanse; nearly all of which were asked to do something they had not done before. ??

Our family of investors, led by Jarden Principal Investments, Sam Morgan, Purpose Capital Consortium, Guy Haddleton, Rod Drury, Alvarium, Avanti Finance, Sir Stephen Tindall and K1W1, David and Nicki Wilson, Matthew Strother, Grant Biggar, Peter Clarke, Paul Glass, Andy Scott and Fady Mishriki, to name a few, have been fantastic to work with and great reservoirs of knowledge and experience.?Including the aggregate of private wholesale investors in the consortiums and investment pools, there are over 150 New Zealanders scattered across the top 10 business communities backing Lodestone.?The shear strength of this network brings great responsibility – and the Lodestone team is already wearing this duty with enthusiasm and pride.? In the long run, a home-grown, home field advantage, should help the vision become reality; and with competent foreign competition coming this way, every advantage will count.

The challenge of simultaneously consenting sites, crunching out detailed engineering on five unique landscapes, negotiating with retail partners, arranging construction partners, lining up subcontractors and responding to intensive due diligence by investors, bankers and legal teams - was an around-the-clock endeavour.

Lodestone’s newly formed executive team, a combination of talent from Canada, US and New Zealand, could easily claim that this career challenge outweighed anything previous.?Chris Jewell, Daniel Cunningham, Peter Apperley, Tony Nagel and Jake Ighile, the core of the team, had to be at the top of their game.?We cannot forget the supporting cast of chief maven Patricia Holden, accounting firm led by John Phibbs, and Louisa Kraitzick and the team at Pead public relations who glued so much of it together. ??Not to mention our amazing Board of Directors: ?Chair Jack Matthews, Guy Haddleton, Sam Morgan, Susan Patterson and Joanna Perry, who have been constantly on-call and providing daily leadership.

Like a game of Donkey Kong, rolling barrels kept coming.?The covid monster, disrupted supply chains, evolving interconnection protocols, emerging competition and geotechnical challenges have been relentless.? Fortunately for us, the technical teams at Jacobs, Kilo, Aurecon and Infratec have been resilient, tireless and inspiring; ready to jump at all times and routinely hitting tough deadlines.

Added global inflation and the knock-on of rising interest rates made the economic model a weekly rehash.?Yoyo-ing exchange rates, steel prices and solar panel costs added to the challenge. On the other hand, rising carbon costs and increasing natural gas prices are also making solar more valuable in the half-hour electricity market.??For bankers, practiced at the art of project finance, new approaches are now being normalised.? Multiple sites, staged technical due diligence and milestone events that firm up capital costs have needed fresh approaches.? A market without government subsidised off-take contracts puts pressure on the inherent quality of the counter-party hedge market.? Thankfully, Andrew Kittle and the team at Westpac, have been up to the task and are able to iron out wrinkles, with innovative solutions, as required.

It is safe to say that New Zealand’s electricity market, now in its 27th year of operation, is fully deployed to allow Lodestone to emerge.? The advanced features of the retail market will connect our power output to end users by extracting all of the value from time-of-use metering and nodal pricing.? Retail geniuses will make a solar option attractive to the masses as thousands fall in love with the idea of a ‘virtual rooftop’ connected to their homes and businesses with ’#big data#IT#block-chain#peer-to-peer’ wizardry. ???Residential and commercial consumers will be challenged to think of electricity prices over longer-terms, maybe 10 years or more.? Cracking the code to satisfy lenders with secure revenues, while inventing a new proposition for consumers, will mark the history of how Lodestone kept its nose in front of the race to solarise New Zealand. ??????

We give thanks to the legal minds at Simpson Grierson, Chapman Tripp, Buddle Findlay, Russell McVeagh, Avid Legal, Tom Fail and Andrew Lewis and all of your support staff.?‘One million words’ is not an exaggeration and we thank you for all of them.

That being said, there are many more skittles to knock over. ?In fact, we have just begun.?Ahead of us is the immense challenge of working in the communities of Kaitaia, Dargaville, Edgecumbe, Waiotahe and Whitianga; all before adding the new sites to come. ?Employing a community-based workforce to build is not expected to be easy, as training for something new is always a challenge.?Finding ways to connect local residents and businesses to this new ‘local asset’ will be a fascinating journey. ?Ensuring neighbours and consenting authorities are happy through the construction process will be paramount. ?Our freshly formed friendships with Iwi in these regions will lift our game plan to new levels.?And last but not least, to strengthen our capability, we welcome new employees Linda Rorke and Stephen Zhao to the Lodestone team, and we look forward to adding more staff to ready ourselves for construction just after the winter rain season.?

In summary, turning high technology solar gear, made in China, Europe and North America, into a long-term power contract with a Kiwi family or a local small business, with literally a hundred steps in between, is the curvy road ahead and we can’t wait to get started.

As a final word, Director in the Jarden Principal Investments team, Will Thomson has said in recent press announcements: “Over the past three years, Lodestone Energy’s expert team has advanced the development of its solar generation pipeline at pace. We are very pleased to support them on the journey to build a world-class solar energy producer in New Zealand and are excited by the opportunity to invest in the country’s first mover in utility scale solar generation.”??Thank you Will, and the support you have personally given by joining the Board of Lodestone.

This past 12 months has gone by in a flash and the next 12 should be just as exciting.?On behalf of all of the Lodestone team, thanks to all who had a hand in the achievement so far, and we look forward to the next stretch of the journey.??And stay tuned for announcements in the coming weeks on who our retail partners will be and for news on our next sites.?