Australia’s third-largest pension fund expects to invest up to A$2 billion ($1.3 billion) in a venture specialising in smaller-scale solar and battery installations as the country overhauls its electricity network to produce clean energy.

Aware Super, which manages A$160 billion, announced on Wednesday a A$300 million partnership with Birdwood Energy to finance distributed renewable energy projects, and expects its investment to grow to up to A$2 billion as more projects become ready for financing.

The partnership’s planned investments in smaller-scale projects, often clusters of solar panels paired with batteries, will help diversify Aware Super’s existing A$2 billion portfolio of larger-scale wind and solar projects, Aware Super portfolio manager Jired Zhou said.

“We see tremendous opportunities in the renewable energy transition sector,” he said.

“The reason not many institutional investors have done distributed energy is scale. Single projects are quite small … The structure we’ve tried to set up is to create a platform at scale so we can more efficiently manage and invest.”

The deal comes as Australia is spending billions of dollars to prepare an electricity grid designed around a handful of giant coal or gas plants for a future in which small clusters of wind and solar generation will dot the vast countryside.

Birdwood Energy CEO Scott McGregor said filling the A$2 billion pipeline would also mean investing in some larger projects, although the focus would be smaller projects of between 30 to 100 megawatts.

“We believe we can roll out faster and cheaper to get the country to net zero,” McGregor said. “Others are doing this as well but we want to do this on a big scale.”

Early investments include two solar farms currently being fitted out with batteries. A further 10 solar and battery projects are ready for construction.

($1 = 1.5716 Australian dollars)

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