Sphere Insights: Perspectives on Australia’s waste, water and energy sectors
Sphere Infrastructure Partners
Insights into net zero and circularity: perspectives on Australia’s waste, water and energy sectors with Partner and Co-founder, Kate Dryden
14 August 2024
Kate Dryden is a Co-Founder and Partner of Sphere Infrastructure Partners. Kate offers over 20 years of success providing strategic advice spanning environmental, transactional and corporate law matters as well as building best practice business functions that underpin growth, innovation and business transformation.
Ken Baumli: Hello and welcome to Sphere's Insight Series. Today I'm fortunate enough to be sitting with Kate Dryden, Co-founder and Partner of Sphere Infrastructure Partners. My name's Ken, an Associate at Sphere Infrastructure Partners.
Thank you for joining us today, Kate. It's fantastic to have you here. Could you please start by giving us a bit of an introduction of yourself and provide an overview of what Sphere Infrastructure Partners does and what drove you to launch the firm?
Kate Dryden: Thanks, Ken, good to chat.
We launched Sphere in 2018, and that was Ben, Chris and myself. We could see that there was a need for more environmental infrastructure in this country, in Australia in particular, and by that I mean water treatment facilities, renewable energy plants and resource recovery waste facilities. We saw that there was an opportunity to really help developers, councils, state governments, and financiers get the commercial aspects of these types of projects right.
We each bring a background of having worked in the environmental infrastructure space, and each of us has specific knowledge in areas of law, finance and engineering. So we saw that the sum of the parts would be a good offering to the market, and so we set up Sphere.
And here we are, six years later.
Ken Baumli: Fascinating. Thanks for that insight, Kate.
The journey that Sphere's been on has been pretty unique. It's clear that Sphere has a strong ethos in driving the mission and helping Australia transition towards net zero circularity. In relation to some of the points you have addressed about infrastructure, what are trends you're observing in the infrastructure development and environmental businesses?
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Kate Dryden: Yes, I mean, it is a big area. So if I look first at the waste and resource recovery sector, we've definitely seen a push for a circular economy from federal, state and local governments. That, in turn, is driving a need for more and better infrastructure.
We're moving away from a solution where waste just ends up in landfill and pushing more for recycling and true circularity, and so that means that there is a need for those sorts of facilities that can process organic material; facilities that can process plastics in a much more specific and granular way, as opposed to just sorting them to send overseas, and so all of that unique technology really gives a huge amount of opportunity in the waste space.
In the water sector, water scarcity is always an issue, and as climate change hits and there are more extreme weather events, there is a need for a diverse range of water, sourcing of water and water treatment. At the same time, we're also seeing infrastructure in this country ageing, and so, again, there's a real need for improvement in brownfield water infrastructure.
There is a huge pipeline of new investments in water infrastructure in this nation over the next decade. In relation to energy and, specifically, renewable energy projects, we've seen quite a significant growth in Australia over the last five years, with Australia increasing its share of energy on the grid from 15% to about 26%, and there's a huge increase obviously in households using rooftop solar, but also a pipeline of large scale energy projects onshore, offshore, wind, solar and there's huge opportunity and potential there.
So I would say that the summary of the trend is really new opportunities and that's a really exciting thing for this country.
Ken Baumli: Those trends certainly underscore the evolving landscape in the industry, Kate. Specifically concerning some of the things we work at Sphere, and primarily relating to procurement, are there opportunities, risks, or issues you've observed from the market and can you share some of those learnings or observations with us?
Kate Dryden: Yes, I mean, procurement is a big topic and it's certainly one that we focus a lot of our attention on, whether it's helping those who are procuring projects or those who are providing or bidding for those projects.
Obviously, there's nuances to the particularities of water, waste and energy, but there are also some very similar trends and one of them, I would say, is just that regulatory landscape and, in particular, approvals for these projects.
So we see the regulations around approvals being quite complex: approvals required from local councils, from state governments and from federal governments.
There's often not a marrying up of those approvals and so there's a consequential impact in terms of time. It takes an incredibly long time to get these sorts of projects up and running and approved.
On the flip side, in terms of the opportunity, obviously in this sector there is a huge interest from the investor market. There is a very large appetite for spending. This is also population growth in Australia.
There are policies in place to improve migration, all of which increase demand for these sorts of services. So there's no doubt that Australia requires ongoing and substantial investments across the water, waste and energy sectors, both to achieve their policy objectives but also support the demand from our population base. So it's an exciting time.
At the heart of Sphere's mission and vision is sustainability. The earth's natural resources are limited and under considerable pressure. Governments and corporations are recognising the need to adjust their business models to one which takes into account environmental performance and social impact.
Ken Baumli: Thanks, Kate. Another question that we've got here is how does Sphere support clients in navigating these procurement trends and achieving infrastructure delivery success?
Kate Dryden: Sphere works with its clients in the development and delivery of environmental investments and projects and businesses and we do that in quite a varied way depending on what the project is, who the client is, but always the theme is to take a very integrated partnership approach with our clients.
It's not a yep, we'll take it away from you and provide you with something at the end. You know, it's really working together. These are often projects that are over a period of time and it's really important that we develop those relationships and those good working relationships with our clients.
I guess, if we were to sort of really bullet point the services that we offer, we really do take an end-to-end approach when it comes to development of projects, but often we also get involved in specific parts of that chain. So it might be helping with due diligence for a client that's looking at possibly investing in, or having a part in a project, and they're wanting some assistance from a due diligence perspective. That includes really understanding the insights that they've got from specific stream advisors, like legal or technical or financial, and really bringing that together in a commercial advisory manner.
But then we also will go from beginning to end in terms of setting a strategy for a project, planning it, and project management. We will do stakeholder engagement, which is an ongoing exercise, help with the financial and commercial elements, and with operations and maintenance, really getting that structure correct, because often these projects are going to be operated over quite a long period of time, and so how you set it up at the beginning is critical to its success.
So we can get involved, as I say, for a snippet of time or for a long period of time or anything in between, and it's really about working with our clients to get the right combination of how we can assist.
Ken Baumli: Thank you for sharing your insights with us today, Kate. It's been an enlightening discussion and you've provided some really insightful observations.
Kate Dryden: No worries, Ken. Thank you.
