QEM has agreed to sell the Julia Creek Renewables Project in Queensland, a hybrid development with the potential to generate about 1 GW, to Enel Green Power Australia. The upfront payment is $2 million. For a project of that potential size, it is a very small cheque. The rest of the deal explains why QEM accepted it.
Key takeaways
- QEM announced on 15 January 2024 that it had agreed to sell the Julia Creek Renewables Project, a hybrid project in Queensland with the potential to generate about 1 GW, to Enel Green Power Australia, with the deal value undisclosed.
- Enel Green Power Australia will pay QEM $2 million upfront on completion for the Julia Creek Renewables Project, plus two contingent milestone payments totalling $2.7 million and a further contingent payment when the project reaches final investment decision.
- Enel Green Power Australia has agreed to pay QEM a revenue-based royalty of between 1% and 2% of the revenue generated by the Julia Creek Renewables Project's operations.
- QEM will benefit from a 10-year offtake agreement for up to 25 MW of firm capacity from the Julia Creek Renewables Project to supply its mine operations.
- Enel Green Power Australia is jointly owned by Enel Green Power and INPEX Renewable Energy Australia.
What is QEM selling, and to whom?
QEM is selling an early-stage hybrid renewable project, not an operating asset. Leap classes Julia Creek as early-stage and under development, combining more than one generation technology. Under the sale agreement, Enel Green Power Australia also takes the wind and solar monitoring equipment, 18 months of data and the intellectual property from various project studies.
That list describes what an early-stage project mostly is: a site, a measured resource and a body of study work. The 18 months of wind and solar data matter because resource measurement takes time. A buyer that acquires it does not have to start that clock again.
The buyer is a joint venture. Enel Green Power Australia is owned by Enel Green Power, part of the Enel Group, and INPEX Renewable Energy Australia. The transaction remains subject to the buyer's approval, pending satisfactory equipment functionality and adherence to good operating practices.
How does QEM get paid?
In layers, most of them deferred. The structure has four parts, and only the first is certain.
- $2 million paid upfront on completion.
- Two contingent milestone payments totalling $2.7 million.
- A further contingent payment when the project reaches final investment decision, the point at which an owner formally commits the money to build.
- A royalty of between 1% and 2% of revenue from the project's operations.
A revenue-based royalty is a payment calculated as a percentage of what a project earns, paid for as long as the agreement runs. It ties the seller's return to the project's success rather than to a negotiated price.
For QEM, this shifts value from today to later. The fixed and milestone payments together total $4.7 million. The FID payment and the royalty could be worth far more, but only if Julia Creek is built and operates. For Enel Green Power Australia, the structure keeps the upfront cost low while the project's future is still uncertain, and pays the seller mainly out of revenue that only exists if the project works.
Why does a 25 MW offtake matter to QEM?
The offtake agreement is the reason QEM's interest goes beyond cash. QEM's flagship business is the Julia Creek Vanadium project, and the renewable project sits immediately next to it.
QEM will benefit from a 10-year offtake agreement for up to 25 MW of firm capacity to supply its mine operations, alongside future green power for its flagship project. Leap's linked PPA record shows Enel and INPEX as suppliers and QEM as offtaker. Firm capacity means power available on demand, rather than only when the wind blows or the sun shines, which is what a mining operation needs.
Against a project with the potential to generate about 1 GW, 25 MW is about 2.5% of the total. The rest is for Enel Green Power Australia to sell elsewhere. QEM is therefore not simply exiting the project. It hands development to a larger buyer in exchange for a contracted power supply for its own operations and a share of the revenue from the rest.
The project also links to state policy. Enel Green Power Australia aims to contribute to Queensland's renewable energy targets of 70% by 2032 and 80% by 2035, and the project is described as one of Queensland's largest proposed renewable energy projects. Construction was anticipated to start by the second quarter of 2025, according to Leap's PPA record.
Enerdatics records 79 Australian M&A transactions for assets under development announced in 2023 and 2024. Only 5 of them yield a developer premium, with a median of $0.08 million per MW. Of the 30 tagged as early-stage, just one carries a price per MW, at $0.02 million. Julia Creek's fixed and milestone payments of $4.7 million, spread across about 1,000 MW, come to under $0.005 million per MW, roughly a quarter of that single early-stage print. The comparison is incomplete by design, because Julia Creek's FID payment is undisclosed and its royalty only starts once the project earns revenue.
What does the Julia Creek deal signal for Australian development-stage M&A?
It signals that an upfront price can badly understate what an Australian early-stage project is worth to its seller. When most of the consideration sits in milestones, FID payments and royalties, the cash on signing tells only a small part of the story.
It also shows a model for project owners that need power more than capital. A miner with a site, a resource and a power need can hand development to a well-funded buyer, keep a contracted supply and share in the revenue. The buyer gains a large pipeline asset with an anchor customer already attached.
The wider Australian market has seen how far early-stage deals can travel before they close, or fail to. Beijing Energy International's planned purchase of five Australian solar projects from Lightsource bp was cancelled after it failed to obtain Foreign Investment Review Board approval, as covered in Beijing Energy's cancelled Lightsource bp deal. Julia Creek carries its own conditions, tied to equipment functionality and operating practice.
The question for QEM is how much of the deferred value arrives. The answer depends on whether Julia Creek reaches final investment decision, and how large the project is when it does.
Frequently asked questions
Who is buying the Julia Creek Renewables Project? Enel Green Power Australia, a joint venture of Enel Green Power and INPEX Renewable Energy Australia.
How much is Enel Green Power Australia paying for Julia Creek? The total deal value is undisclosed. The buyer pays $2 million upfront, up to $2.7 million in milestone payments, a payment at final investment decision and a 1% to 2% revenue royalty.
Does QEM buy power from the Julia Creek project? Yes. QEM benefits from a 10-year offtake agreement for up to 25 MW of firm capacity to supply its mine operations.
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