APA Group will build a $259 million combined solar and battery plant in Queensland as it moves to further diversify the business beyond its core gas transportation activities in line with the broader transition away from fossil fuels.
The pipeline giant’s commitment to invest in the Sybella project in Mount Isa came as APA posted an 8.3 per cent increase in full-year underlying earnings to $2.18 billion and gave guidance for further growth in the 2027 financial year.
The Sydney-based energy infrastructure owner also flagged another increase in the dividend payout to shareholders this coming year, up 1¢ per security to 59¢.
Managing director Adam Watson said APA’s strong balance sheet supported the funding of APA’s expanded $3.5 billion pipeline of organic growth projects while continuing to increase dividends.
The development pipeline has grown from $3 billion earlier in the year and is 150 per cent bigger than three years ago, demonstrating the scale of the total market opportunity in transition projects, which Watson said reached north of $100 billion long-term.
He said the Sybella project – involving a 72-megawatt solar farm and a two-hour, 52-megawatt battery – supported the long-term future of APA’s existing Diamantina gas power plant in Mount Isa, providing renewables output that would be firmed by the gas plant.
APA has been gradually expanding into renewable energy, often in projects that complement its gas business. The latest solar-storage project also grows its presence in remote power generation, in which it made a major acquisition in 2023, paying $1.8 billion for Alinta Energy’s power assets in Western Australia’s Pilbara region.
Construction of the Sybella project, which is underpinned by a long-term electricity sales deal with Evolution Mining, is due to start late this year and be completed by mid-2028, delivering returns in line with APA’s hurdle rates.
Watson said it also demonstrated APA’s credentials to do similar supply deals with data centres, with talks with developers under way.
“The inquiries and discussions around that continue to be strong,” he said.
“Whether you’re a mining customer or a data centre, the number one criteria is reliability of supply … and that’s where we think we have a real competitive advantage.”
Other projects in APA’s development portfolio for the next three years include the expansion of its east coast gas grid, to which it has been committing investment even amid uncertainty on the final design and impact of the federal government’s planned gas reservation scheme.
It is also planning to develop a pipeline to deliver gas from the Beetaloo Basin in the Northern Territory. That project is in the sights of an activist investor group that has put a resolution to APA’s upcoming annual shareholder meeting requesting disclosure on its compatibility with Paris Accord climate goals.
APA’s underlying earnings before interest, tax, depreciation and amortisation, a figure closely watched by the market, rose to $2.18 billion in the year ended June 30, from $2 billion the prior year. The figure was helped by $80 million in cost cuts in the year, beating a $50 million target.
Net profit jumped 81.4 per cent to $234 million, on revenue that edged up 1.9 per cent to $2.76 billion. Jarden energy analyst Nik Burns described the result as “strong” on free cash flow, which beat the consensus forecast.
APA had already declared a final distribution of 30.5¢, up from 30¢ at the same time last year. That took the full-year payout to 58¢, in line with guidance.
The company expects underlying EBITDA in the coming year to be between $2.26 billion and $2.34 billion, representing growth of about 5.4 per cent at the mid-point of the range. It said the distribution payout this year should be 59¢ per security, up 1¢.
Source: https://www.afr.com/companies/energy/apa-group-commits-to-qld-renewables-project-as-profit-climbs-20260817-p60oxb