2 July 2013 — The Clean Energy Finance Corporation is only in its second day of operation, but today (Tuesday) marks its third investment in a clean energy project.
CEFC’s rapid investment ignores a “formal request” from Opposition Leader Tony Abbott to desist from making any financing determinations until after the election, as the corporation will be terminated under an Abbott-led government.
The latest announcement will see the CEFC provide $37.5 million in finance for the construction and operation of the 100 megawatt Taralga Wind Farm in NSW, which CEFC chief executive Oliver Yates said will catalyse renewable energy investment in Australia, and have benefits for Australian manufacturing.
“The project will utilise Australian manufactured towers made in Portland [Victoria] from BlueScope steel,” said Yates. “The integrated Australian supply of inputs enabling this project – from materials, through to technology, know-how and finance – demonstrates Australia’s capability across the whole value chain for the clean energy sector.”
On Monday, the CEFC also invested $50 million in the refinancing of Victoria’s Macarthur Wind Farm.
The 420MW farm is the largest in the southern hemisphere. It has been operational since January 2013 and is able to power 220,000 households a year while reducing carbon emissions by 1.7 million tonnes a year.
Mr Yates said the CEFC was providing finance on the same terms as the other syndicate members, demonstrating the role the CEFC can play in operating commercially to help leverage private sector financing into renewable energy.
The first project from the CEFC was $50 million in loans to support businesses wanting to make energy efficiency upgrades and install small-scale renewable projects. Partnering with Commonwealth Bank, Mr Yates said, “The loans are designed to help businesses upgrade equipment for improved energy efficiency and can be used to finance up to 100 per cent of the project cost, enabling businesses to preserve their working capital.”
The loans can be used to fund equipment including energy efficient lighting, industrial refrigeration, methane capture, heat exchangers, energy efficient motors, pumps and fans, solar panels, compressed air and variable speed drives, as well as cogeneration and trigeneration plants.
“The CEFC and Commonwealth Bank agreement will provide finance that enables businesses to take immediate advantage of energy and operating cost savings from new equipment, positioning them to be more competitive,” Mr Yates said.
How does the CEFC work?
The CEFC is a $10 billion fund dedicated to investing in clean energy projects.
Chair Jillian Broadbent said that a key principle of the corporation’s operating framework is to take a commercial approach.
“The commercial approach requires investments to be developed beyond the research and development stage, have a positive expected rate of return and have the capacity to repay capital,” she said in a speech last year.
“This approach is critical to the financial self-sustainability of the CEFC and its intention to operate with minimal budgetary assistance.”
She said the focus of the CEFC would be on identifying financial barriers in clean energy financing that the corporation could impact upon, and it was expected to be cost neutral within two years.
Under an Abbott-led government, the CEFC would be immediately terminated.
“On day one, the finance minister will notify the Clean Energy Finance Corporation that it should suspend its operations and instruct the Department of Finance to prepare legislation to permanently shut-down the Corporation,” he said in a policy statement.
In a letter to former Prime Minister Julia Gillard, Mr Abbott said his government would neither allocate funds nor accept any agreements struck.
A spokesman for Ms Gillard responded, “It is irresponsible in the extreme to threaten to revoke legally enforceable contracts, which has implications for sovereign risk.”
The Australian recently reported the CEFC may try to execute $800 million of financing before the election, though a government mandate said there would be a limit of $300 million a year.
See our story Abbott wrong on Clean Energy Finance Corporation