Danish developer secures Deutsche Bank financing for Australian solar-battery project

A Danish renewable energy developer has reached financial close on a hybrid solar and battery project in Australia, with Deutsche Bank backing the deal through a non-recourse financing package that covers both an operating solar farm and a new battery storage system. The arrangement marks another step by European renewable companies seeking growth outside their home continent.

European Energy, based in Copenhagen, announced the financial close on the Mokoan Hybrid Solar Farm and Battery Project in Victoria. The financing from Deutsche Bank refinances existing debt on the operational Mokoan Solar Farm and funds construction of a co-located 40 MW/80 MWh battery storage system. It is the kind of dual-purpose deal that has become more common as developers look to squeeze greater value from existing generation assets rather than starting every project from bare ground.

The Mokoan site and what it produces

The Mokoan Solar Farm sits on 94 hectares of land approximately 25 kilometres south-west of Wangaratta in northern Victoria. The 58 MW installation has been operational since June 2025 and generates an estimated 113 GWh of electricity per year, enough to supply more than 18,000 homes. The site was selected under the Australian Government's Capacity Investment Scheme, which provides long-term revenue support for renewable energy projects, reducing the revenue risk that makes lenders cautious.

The battery component, a 40 MW/80 MWh system, will be AC-coupled to the solar farm. AC coupling means the battery connects to the same grid connection point as the solar panels through an inverter, rather than sitting on the direct-current side of the system. This approach typically allows the battery to charge from the grid as well as from the solar panels, giving the operator more flexibility to respond to price signals and grid requirements. Construction of the battery system is now getting under way.

Why pair generation with storage

Co-locating battery storage with solar generation is a pattern that has accelerated across several electricity markets over the past three years. The logic is straightforward: solar farms produce at their highest output during the middle of the day, when wholesale prices are often at their lowest because supply exceeds demand. A battery allows the developer to store some of that midday output and dispatch it during evening peaks, when prices rise and grid stress increases.

There are also technical reasons. Grid operators increasingly require new renewable projects to demonstrate they can help stabilise voltage and frequency rather than simply injecting power whenever the sun shines. Batteries can provide these services, and a co-located system can share grid connection infrastructure, reducing capital costs compared with building a standalone battery on a separate site. The International Energy Agency has tracked a sharp rise in such hybrid projects globally, noting that the economics improve when the generation asset already exists and the battery can be added to an established connection point.

In the Mokoan case, the solar farm was already built and operating before the battery was conceived. That sequence is not unusual. Developers often secure planning permission and financing for generation first, then add storage once the revenue case for batteries becomes clearer or once grid rules change to reward storage services.

The financing structure

Deutsche Bank's package is non-recourse, meaning the bank's claim extends only to the project's assets and cash flows, not to European Energy's broader balance sheet. This is standard practice in project finance for renewable energy, where lenders rely on the contracted revenue stream, in this case supported by the Capacity Investment Scheme, rather than on the developer's corporate creditworthiness.

The fact that the package covers both refinancing of the existing solar farm and construction finance for the battery in a single deal is worth noting. It suggests the bank is comfortable treating the combined hybrid asset as a single risk, rather than requiring separate financing tranches for generation and storage. That willingness matters because it can lower transaction costs and simplify the capital structure, making hybrid projects marginally easier to bring to market.

For European Energy, the refinancing also serves a practical purpose. By replacing the original construction debt with longer-term debt on an operational asset, the company can recycle equity capital into new projects. This is how renewable developers grow: build, refinance, redeploy the capital, repeat.

A Danish company building in Australia

European Energy is not a household name outside the renewable industry, but it has built a substantial presence. Founded in Denmark, the company develops, constructs, finances and operates projects across wind, solar, Power-to-X and battery storage in more than 25 countries. It reports a global pipeline of approximately 65 GW as of 2026, spanning Europe, Australia, North America and other markets.

The expansion into Australia reflects a broader trend among European renewable developers. Southern Hemisphere markets, particularly Australia and parts of Latin America, offer strong solar resources, growing electricity demand and policy frameworks that reward new investment. Australia's National Electricity Market, which covers the eastern states including Victoria, has seen a rush of new renewable capacity as ageing coal plants retire and the federal government pushes toward its target of 82 per cent renewable electricity by 2030.

Catriona McLeod, Managing Director of European Energy Australia, described the financial close as a significant step. "Reaching financial close on Mokoan is an important milestone for our Australian portfolio," she said. "Deutsche Bank's support spans both the refinancing of the operational solar farm and the construction financing for the battery storage system, giving us a strong foundation for the next phase of the project."

Australia's policy backdrop

The Capacity Investment Scheme under which Mokoan was selected is the Australian Government's primary mechanism for encouraging private investment in new clean energy capacity. It works by offering long-term revenue underwriting: if wholesale prices fall below a floor price, the government makes up the difference; if prices rise above a ceiling, the project shares some of the upside with the government. This structure gives developers and their lenders enough revenue certainty to secure project finance, while limiting the cost to taxpayers if wholesale prices remain strong.

Victoria, where the Mokoan project is located, has been one of the more active states in the transition away from coal. The state government has set its own renewable energy targets and has encouraged investment in both generation and storage, though grid connection delays and planning disputes have slowed some projects. Northern Victoria, where Wangaratta sits, has become a focal point for solar development because of its relatively high irradiation levels and proximity to existing transmission infrastructure.

What the deal signals

The Mokoan financial close illustrates several forces shaping the renewable energy sector. First, European developers are increasingly looking beyond Europe for growth. Regulatory complexity, permitting delays and grid connection queues in some European markets have pushed companies to seek faster-moving opportunities abroad. Australia, with its abundant resources and federal policy support, has become a logical destination.

Second, the hybrid model of combining generation and storage on a single site is moving from niche to mainstream. As solar penetration rises and daytime wholesale prices fall in markets with high solar output, batteries become not an optional add-on but a revenue necessity. Developers that can finance both components together gain an advantage over those treating storage as a separate proposition.

Third, the involvement of a major German bank in an Australian renewable deal points to the globalisation of project finance. Deutsche Bank is not lending in its home market here; it is deploying capital where the risk-adjusted returns look attractive, supported by a government revenue scheme that reduces uncertainty. That pattern is likely to continue as more countries adopt similar underwriting mechanisms to accelerate their energy transitions.