British Energy Storage Firm Zenobe to Grow in US, Australia with $1 Billion Funding

Investors including KKR & Co. are providing more than $1 billion of fresh capital to Zenobe Energy Ltd. as the British battery storage and vehicle electrification company looks to expand in North America and Australia.

(Bloomberg) — Investors including KKR & Co. are providing more than $1 billion of fresh capital to Zenobe Energy Ltd. as the British battery storage and vehicle electrification company looks to expand in North America and Australia.

London-based Zenobe landed $750 million from KKR and an additional $340 million from M&G Plc’s Infracapital arm, which is an existing investor, the firm said in a statement Thursday. It plans to use the money on projects from electrifying yellow school buses in the US to building batteries in Scotland to ensure wind power doesn’t go to waste.

“We’re looking at fleet electrification opportunities and opportunities for grid-scale batteries across the world,” Zenobe co-founder Nicholas Beatty said in an interview. “KKR is very well linked into all sorts of people in North America that we could only dream of assisting us to expand our business there.”

Alberto Signori, an infrastructure partner at KKR, said the firm is looking to support regional champions like Zenobe as they scale up globally. The investment is the first from KKR’s new strategy focused on the energy transition. 

“Our role as investors in our climate-related strategy is to be an active player who can help corporates and governments in the transition of our economies from brown to green,” Signori said. “It could be a broad range from renewables to decarbonization of transport and other climate-related themes.”

As part of its climate strategy, KKR will look to invest in renewable power, energy storage and waste-to-energy, while also committing capital to new areas like transport solutions as well as energy efficiency and management systems, Signori said. It also plans to help accelerate the transition of higher-emitting assets, like traditional utilities and industrial infrastructure, he said. 

Pantheon Infrastructure Plc, a listed global infrastructure fund, also committed £35 million ($44 million) in the new investment round.

Bus Electrification

The investment is a sign of long-term confidence in electrification of the economy and a boost to the sector at a time when some countries are slowing their adoption of electric vehicles. Germany’s government has scaled back its target for 1 million charge points by 2030 and orders for new electric vehicles have undershot expectations.

Zenobe currently employs more than 200 people in the UK, Australasia, continental Europe and North America. It’s worked on the electrification of about 70 electric bus depots and supports the operations of about 1,000 buses, including for Mobico Group Plc’s National Express in the UK and private bus operator Ventura in Australia.

The company also is studying network infrastructure opportunities in Texas, where there’s a more insular and manageable grid system, Beatty said. It’s also looking at the northeastern US, where UK-based National Grid Plc runs some of the transmission system. 

Zenobe has separately been working with advisers to make the most of new tax credits made available by the Inflation Reduction Act, he said, and may later look at expansion in Canada and Mexico.

KKR’s investment comes at a time some of the world’s largest asset managers are bolstering investments in climate and renewable energy to facilitate the global transition away from fossil fuels. Brookfield Asset Management Ltd. aims to raise about $20 billion for its second fund dedicated to such investments, Bloomberg News reported in February. 

Read More: UK Battery Firm Zenobe in Talks for $1 Billion Investment

Infracapital is plowing more money into Zenobe because it’s confident the company has long-term predictable revenue streams through its fleet business that make it a typical infrastructure play, according to Ed Clarke, a co-founder at the London-based investor.

“The way they’ve approached the combination of the batteries for electric vehicle fleets with the grid-scale batteries has been very intelligent, very targeted,” Clarke said in an interview. “That gives us a lot more comfort on long-term sustainable returns, compared to other battery companies we’ve seen.”

(Updates with Pantheon investment in seventh paragraph.)

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