Jillian Broadbent

24 April 2013 — The Australian Government has issued its investment mandate for the Clean Energy Finance Corporation to invest at the “demonstration, commercialisation and deployment stages of innovation” to a limit of $300 million a year.

CEFC chair Jillian Broadbent: “We are now fully staffed and operational, ready to commence making investment decisions and to contract investments to be funded from July 1, 2013”.

The mandate says the corporation is a mechanism to help mobilise investment in renewable energy, low?emissions and energy efficiency projects and technologies in Australia, as well as manufacturing businesses and services that produce the required inputs.

“The corporation will invest at the demonstration, commercialisation and deployment stages of innovation. The corporation has been established to finance Australia’s clean energy sector using financial products and structures to address the barriers inhibiting investment.

“The intention of the corporation is to apply commercial rigour when making its investment decisions.

“The corporation will have regard to its potential effect on other market participants when considering investment proposals. In line with its policy intent, the corporation should have regard to positive externalities and public policy outcomes when making investment decisions and when determining the extent of any concessionality for an investment.”

“The board is to adopt a benchmark for the return of the portfolio based on a weighted average of the five-year Australian Government bond rate. Performance against this benchmark will be measured net of operating expenses.

“In targeting the benchmark return and operating with a commercial approach, the corporation will seek to develop a portfolio across the spectrum of clean energy technologies that in aggregate must have an acceptable but not excessive level of risk relative to the sector.

“The corporation must limit the amount of concessionality it provides in any one financial year to $300 million.

“Guarantees pose a particular risk to the Commonwealth’s balance sheet and, as such, restrictions on their use are appropriate and the Corporation should seek to avoid their use where possible. The corporation must ensure that all guarantees are limited and quantifiable.

“At no time may the total potential liability under outstanding guarantees exceed the amount of the uncommitted balance of the Clean Energy Finance Corporation special account. The corporation must also ensure the total value of guarantees at any time does not exceed 5 per cent of the total amount that has been credited to the special account under section 46 of the Act.

“Australian Industry Participation Plans must apply to projects that the Corporation invests in in accordance with the Government’s AIP Plan policy.”

See details here.