LGI Limited (ASX: LGI), the Australian renewable-energy company built around landfill biogas, carbon abatement and electricity generation, has entered a binding agreement to acquire the operating Chinchilla and Brigalow solar farms in Queensland for A$22 million on a debt-free basis. The assets provide approximately 54MW of installed capacity and 42MW of network export capacity, while LGI estimates they could generate annual EBITDA of between A$2.1 million and A$4 million at current electricity prices once revenue synergies and its Dynamic Asset Control System are progressively implemented.
Completion is anticipated on October 9, with no shareholder approval or outstanding material conditions identified by the company. The transaction therefore represents more than a development pipeline announcement: LGI is buying already operating generation assets that produced a combined 54,210MWh during 2025, giving the company immediate exposure to solar output alongside its established landfill-gas generation portfolio.
How large is the A$22 million solar acquisition compared with LGI’s existing earnings?
LGI reported FY26 net revenue of A$39.8 million and statutory and underlying EBITDA of A$21.8 million, up 17% and 26% respectively. The A$22 million acquisition price is consequently almost equivalent to one year of recent group EBITDA and represents roughly 55% of FY26 net revenue, although those comparisons are intended only to illustrate transaction scale rather than imply that purchase price and financial-statement measures are directly interchangeable.
Management’s annual EBITDA estimate for the acquired farms ranges from A$2.1 million to A$4 million at current electricity prices. A simple comparison of the A$22 million headline purchase price with that forecast range produces approximately 5.5 times EBITDA at the upper end and around 10.5 times at the lower end, before allowing for transaction costs, future capital expenditure, taxes, financing or any differences between forecast and realised performance.
That range is wide enough to matter. If LGI reaches the upper end through stronger electricity prices, internal operations and maintenance savings and successful deployment of its Dynamic Asset Control System, the economics could look highly attractive. If merchant electricity prices weaken or optimisation benefits take longer to arrive, the effective acquisition multiple could be materially higher.
For FY27 specifically, LGI estimates approximately A$1.6 million of EBITDA contribution from the assets assuming nine months of ownership. That is management guidance rather than a guaranteed outcome and should not be confused with the A$2.1 million to A$4 million estimate for a full year under current electricity-price assumptions.
Why is LGI moving from landfill biogas into solar generation?
LGI’s core business captures landfill gas, converts methane into electricity and creates environmental products including Australian Carbon Credit Units. FY26 biogas flow increased 33% to 170.2 million cubic metres while renewable electricity generation rose 29% to 140.8GWh, demonstrating that the existing business is still expanding rather than being abandoned.
Solar broadens the generation profile because its output occurs during daylight hours and is driven by a different resource from landfill gas. LGI argues that solar can sit alongside dispatchable landfill-biogas generation and batteries inside a broader energy platform managed through its Dynamic Asset Control System.
The strategic logic becomes more interesting when batteries are added. Both Queensland solar farms have installed capacity above their export limits, meaning some generation potential can be constrained by the network even when panels are available. Preliminary studies have considered adding battery energy storage systems, which could potentially capture energy when export is constrained or prices are unattractive and release it later when market conditions improve.
Those battery projects are not yet committed additions to the transaction economics. Their eventual value would depend on capital cost, grid approvals, operating strategy and electricity-market spreads, so they represent optionality rather than present capacity.
How attractive is LGI’s acquisition price compared with building new solar assets?
LGI has described the transaction as costing approximately A$0.5 million per megawatt of export capacity, materially below what management considers comparable greenfield development cost. Using the stated A$22 million purchase price and 42MW export capacity produces approximately A$0.52 million per MW, broadly supporting the company’s description.
The comparison is attractive because the acquired assets are already constructed and operating. Chinchilla commenced commercial operations in 2019 and has 19.9MW of installed capacity with 14.7MW of export capacity, while Brigalow began operating in 2021 and provides 34.5MW installed with 27.3MW export capacity.
Existing operations remove many of the permitting, construction and commissioning risks associated with a new development. They do not eliminate asset-performance or merchant-price risk, however, and older operating assets can eventually require maintenance and equipment replacement that greenfield cost comparisons do not fully capture.
Long lease terms reduce another source of uncertainty. Chinchilla has approximately 31 years remaining on its land lease and Brigalow around 33 years, giving LGI substantial time to optimise generation and potentially add storage if the economics remain attractive.
Why does 100% spot-market exposure make the deal both interesting and risky?
Both solar farms are currently fully exposed to spot electricity prices rather than protected by long-term fixed-price power purchase agreements. That can create considerable upside when Queensland wholesale prices are strong during periods when the assets are generating, but it also makes cash flow less predictable than contracted renewable generation.
Management’s A$2.1 million to A$4 million EBITDA estimate explicitly depends on current electricity prices and the timing of optimisation benefits. It should therefore be understood as a forecast range under stated assumptions rather than a guaranteed earnings stream.
LGI’s Dynamic Asset Control System is designed to improve dispatch and price outcomes across its portfolio. Solar generation cannot be switched on when the sun is not shining, but control systems can influence how export, curtailment and eventually battery charging are managed within physical and market constraints.
This merchant exposure could become more valuable if LGI succeeds in combining solar, landfill-biogas generation and battery storage across a coordinated portfolio. It could also increase earnings volatility if electricity prices decline faster than operational improvements can compensate.
Does LGI have enough balance-sheet capacity to fund the acquisition comfortably?
The company intends to fund the A$22 million purchase using cash on hand together with undrawn capacity under its existing debt facility. LGI increased that debt facility to a total limit of A$82.5 million during FY26 and has stated an intention to keep net debt below two times EBITDA through the remaining portfolio build-out.
That target is important because the solar purchase sits alongside an already substantial development programme. LGI completed construction of its Canberra 12MW/24MWh battery during FY26, began work on another 12MW/24MWh battery at Belrose and has continued expanding carbon-abatement and generation projects.
The acquisition lifts LGI’s medium-term strategic pipeline to more than 120MW of distributed, renewable and dispatchable capacity while management says it remains committed to its previously announced 80MW high-conviction pipeline. The number describes the company’s targeted strategic pipeline rather than currently operating capacity and should not be treated as though all projects are already built.
That distinction becomes increasingly important as LGI grows. The financial opportunity is becoming larger, but so are capital-allocation demands across batteries, biogas, carbon-abatement projects and now solar.
What could determine whether the solar acquisition creates meaningful shareholder value?
Electricity prices will be one of the clearest variables because both farms begin under merchant exposure. The realised spread between generation periods and wholesale prices will affect actual earnings, while future battery additions could potentially change that exposure by giving LGI greater control over when electricity is exported.
Execution of DACS and internal operations and maintenance is another test. LGI expects to bring operations and maintenance in-house without adding resources because the farms are close to existing assets around Toowoomba and Warwick. If those efficiencies are realised, more of the acquisition’s revenue can translate into incremental EBITDA.
Balance-sheet discipline completes the equation. An acquisition at an attractive headline price can still destroy value if subsequent optimisation requires significantly more capital than anticipated or if rapid portfolio growth pushes leverage beyond management’s target.
LGI is therefore becoming a more diversified renewable-energy platform rather than remaining primarily a landfill-biogas operator. The A$22 million acquisition is financially manageable at current group scale, but its ultimate return will depend on electricity prices and operating optimisation rather than simply the 42MW headline capacity.
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