CEFC chief executive Oliver Yates

22 July 2014 — After Environment Minister Greg Hunt told last week’s Built Environment Meets Parliament Conference the Clean Energy Finance Corporation could have “a considerable future”, the organisation has backed it up, today (Tuesday) announcing $80 million in funding for a $500 million-plus Clean Energy Infrastructure Fund, as well as a $120 million program to fund solar leasing and power purchase agreements to add to its now $1 billion-plus investments.

The CEFC’s venture with the Direct Infrastructure division of Colonial First State Global Asset Management will see the establishment of Australia’s first unlisted clean energy direct infrastructure investment platform for institutional investors – the CFS Australian Clean Energy Infrastructure Fund.

The wholesale infrastructure investment platform will invest in renewable energy, energy efficiency and low emissions technologies, with CEFC providing up to $80 million as the initial cornerstone investor, and CFSGAM seeking to raise an addition $300-$500 million over the next three to five years.

The investments will include both green field developments and mature operating assets, with examples including:

  • commercial solar photovoltaic leasing for shopping centres and other commercial sites
  • large-scale utility renewable energy opportunities
  • major energy efficiency projects at commercial and industrial sites

Breaking down investment barriers

While in the UK, Europe and US, clean energy funds of this nature have been available for many years, this is a first for Australia, and it is hoped the fund will help to overcome market barriers in equity financing for clean energy projects and expand available financing options, as well as providing an example for others to follow.

CEFC chief executive Oliver Yates said institutional investors had an appetite for clean energy investment but needed a mechanism for doing so.

“Australian superannuation funds have been increasing their investment in infrastructure over the last decade and have an estimated $40 to $65 billion now invested in the sector,” Mr Yates said.

“At the same time, a growing number of these funds and their members want to invest in the clean energy and new energy efficient technology sectors to take advantage of their strong growth and future potential. The establishment of Australia’s first clean-energy focused wholesale infrastructure platform will meet this need and help develop this market for the benefit of existing investors and attract new institutions to the sector.”

Socially responsible investment is increasing in importance, with organisations like Australian Ethical and EthInvest seeing increased numbers of clients as people cotton on to the need to reduce carbon exposure, which Dr John Hewson of the Asset Owners Disclosure Project has described as a “calamitous systemic risk”.

However, finding clean energy investments, the CEFC said, has proved challenging, so the new fund will help meet the needs of direct investors and superannuation fund members interested in financially robust socially responsible investments.

“Australian superannuation funds and other institutional investors have expressed interest in finding an attractive way to invest directly into low carbon energy infrastructure,” CFSGAM head of Direct Infrastructure Perry Clausen said.

“The CEFC cornerstone investment is a first step in establishing a unique clean energy platform and working with those institutional investors in achieving their investment objectives.”

The CEFC today also announced that as of the end of the financial new year it had contracted investments of over $900 million in projects worth over $3 billion, with a yield of around seven per cent – double the government’s cost of funds at 3.5 per cent.

At the Clean Energy Week conference, though, media reported that parliamentary secretary for Industry Bob Baldwin said the government was still intent on abolishing the CEFC, contradicting Mr Hunt’s comments at last week’s BEMP conference indicating abolition may be unlikely due to the Senate.

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