Squadron Energy refinances $2.7bn to fund battery push beyond gas peakers
Australia's Squadron Energy converts gas project debt into a $2.7 billion battery war chest as the country's storage market triples.
Squadron Energy has completed a $2.7 billion refinancing that converts debt tied to its gas pipeline and generation assets into a vehicle for a major battery buildout, people familiar with the matter said on Monday (2026-08-17). The deal, structured as a corporate facility, releases capital previously locked in the company's gas infrastructure portfolio to fund a pipeline of utility-scale storage projects across Australia's National Electricity Market.4
The refinancing matters because it signals how deeply the economics of Australian power have shifted. Batteries are no longer a niche play; Clean Energy Council data show the country added 2 GW of new big battery capacity in 2025, a 233 per cent increase on 2024, making Australia the third-largest utility-scale battery market globally behind only China and the US.3
That growth is already visible in the project pipeline. The AGL Energy-owned Liddell Battery, at 500 MW and 1,000 MWh, entered commissioning with its first 250 MW stage, while the 600 MW first stage of the Melbourne Renewable Energy Hub, jointly developed by Equis and Victoria's State Energy Corporation, helped drive the national fleet. Akaysha Energy's Ulinda Park battery near Millmerran in Queensland started trading on the NEM by December with a 55 MW first phase.3
The CEC report found another 4.3 GW and 13.5 GWh of big battery capacity was financially committed over the year, worth $4.8 billion of investment, a 67 per cent increase on 2024 levels. That is a striking acceleration, but the more telling detail is what the CEC says about competitive dynamics. Batteries are starting to compete more often with each other rather than with gas peakers.3
That last point is the crux for gas-focused players. If Squadron's refinancing is any guide, the economics of holding gas generation as a peaking asset are being re-evaluated across the continent. The company's move to pivot its balance sheet toward batteries suggests its own internal modelling sees storage out-competing gas peakers on a widening share of the dispatch curve.4
The trend is not confined to Australia. In the US, Fluence Energy reported record backlog disclosures in May and signed new master supply agreements with two major hyperscalers, expanding into the data centre energy storage market. Management reaffirmed its 2026 revenue target of approximately $3.2 billion to $3.6 billion, with 85 per cent of the midpoint already contracted.1
But the Fluence story also shows the limits of the battery boom narrative. The company continues to report net losses, with a Q2 loss that tempered investor enthusiasm. In mid-May it announced a secondary offering of 20 million Class A shares by existing holders, priced around $21.00, which increased the public float but triggered immediate price volatility and concerns about institutional exits.1
Analysts project a strong third quarter as deferred revenue from Q2 shipments is realised and delivery schedules return to normal, with roughly $80 million in supply chain disruptions now being resolved. But the persistent net losses and the share sale hang over the stock, and sentiment remains cautious despite the bullish backlog story.1
The financing backdrop for the sector is bifurcated. Base Power, the Texas home battery startup, raised another $1 billion in August after a similar round last October, upping its valuation from $4 billion to $13 billion. That is a dramatic mark-up for a company selling residential storage, and it suggests equity markets are still prepared to pay up for battery exposure.5
Yet the broader M&A picture in energy is more conventional. US upstream mergers hit $38 billion in Q1 2026, the highest quarterly total in two years, though March slowed sharply on volatility tied to the Middle East conflict. That is hydrocarbon money staying in hydrocarbons, and it stands in contrast to the capital rotating into storage.2
The divergence between equity valuations and operational reality in the battery sector is worth watching. Squadron's refinancing is a private-market bet that storage returns will justify the capital outlay; Fluence's public-market performance is a reminder that profitability has not yet followed the order book.1
For traders, the near-term signal is Australian wholesale prices. If batteries increasingly dispatch against each other rather than against gas, the marginal price-setting dynamic in the NEM shifts, compressing peak spreads that have historically rewarded gas peakers. Wallumbilla gas traded at A$11.05/GJ on Monday (2026-08-17), but forward curves will be watching whether that level holds as more storage comes online.3
The unresolved risk is timing. Squadron's refinancing assumes a construction and commissioning schedule that delivers its battery pipeline before the current gas fleet economics erode further. Construction delays in Australia's grid connection queue are well documented, and every quarter of slippage extends the period in which gas peakers remain the marginal unit. If those delays bite, the refinanced balance sheet becomes a drag rather than an advantage.4
The next signal is the CEC's quarterly report, due in coming weeks, which will show whether the 2025 commissioning record is repeatable in 2026. A slowdown would suggest the sector is hitting supply chain or grid connection constraints; another record would confirm that battery-on-battery competition is becoming the new normal.3