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Acceleration in investment as CEFC commitments exceed $2 billion in 2016-2017

18 July 2017

HIGHLIGHTS:

  • New CEFC investment commitments of almost $2.1 billion, across 35 transactions in 2016-2017, with the increased value and scale of CEFC activity eclipsing prior year commitments.
  • The breadth and depth of the CEFC investment commitments signals strong growth in business and investor appetite for clean energy assets.
  • In its first four years, the CEFC has made investment commitments of $4.3 billion, in projects with a total value of $11 billion.

Investment commitments by the Clean Energy Finance Corporation (CEFC) have contributed to $11 billion in clean energy projects in Australia in its first four years. The result comes on the back of a substantial increase in CEFC investment commitments in the 12 months to 30 June 2017, reflecting the increasing breadth and scale of the organisation's activities.

The 2016-2017 year saw the CEFC commit almost $2.1 billion to 35 individual transactions, compared with $837 million in commitments to 15 transactions in 2015-2016.

CEFC 2016-2017 commitments included an additional $300 million towards asset finance facilities for business, manufacturing and agribusiness. These facilities have now delivered more than 2,000 investments in energy efficiency equipment and low emissions vehicles Australia-wide.

Each dollar of CEFC investment commitments in 2016-2017 was matched by more than $2 from the private sector, with the investment portfolio expected to generate a return above the Government's costs of funds.

Reflecting the CEFC's focus on reducing carbon emissions, CEFC commitments focused on industry sectors with the strongest potential for decarbonisation, including electricity generation, transport, property, infrastructure and manufacturing. By transforming investment in these sectors, the CEFC is supporting decarbonisation pathways, through low carbon electricity, ambitious energy efficiency, electrification and fuel switching, as the Australian economy moves to net zero emissions by the second half of the century.

See our infographic.

Announcing the CEFC's 2016-2017 commitments, CEO Ian Learmonth said:

"Australia's clean energy sector is coming of age, with investment activity increasingly stretching across the economy. Working alongside co-investors and developers, CEFC finance is helping tackle some of Australia's toughest emissions challenges, while delivering business benefits through lower energy consumption.

"The accelerated pace of CEFC commitments in the past financial year reflects an improved policy environment and increased investor confidence. As a specialist investor in clean energy in Australia we welcome the increasing investor recognition of the diverse uses and considerable positive benefits of clean energy, from renewables to energy efficiency and low emissions technologies."

IMPACT OF CEFC 2016-2017 COMMITMENTS

Reflecting its leadership role in the clean energy sector, new CEFC investment commitments in 2016-2017 included:

1. Delivering clean energy benefits to where we live and work

  • Additional finance for SGCH (St George Community Housing), which is building 500 new energy efficient homes for low income families, locking in lower energy costs for the long term.
  • Commitments to market leading projects with Investa and AMP, demonstrating how proven and readily-available technologies can help contribute towards zero net emissions in property.
  • The CEFC's first infrastructure investment, in Qube's Moorebank intermodal project, which will substantially reduce freight transport emissions.
  • These transactions form part of the CEFC Sustainable Cities Investment Program.


2. Delivering benefits to businesses around the country

  • Additional asset finance for more than 2,000 smaller-scale energy efficiency projects, substantially extending the CEFC's customer reach so our finance gets to more businesses, faster, via other financiers.
  • Agribusiness accounted for more than 75 per cent of finance accessed through these programs, including those operating in the Great Barrier Reef Catchment Area, as part of the CEFC Reef Funding Program.


3. Supporting regional economies

  • Investing in 10 large-scale solar projects in regional Queensland, NSW and Victoria, including alongside ARENA, as well as additional CEFC investments in solar and wind.
  • Investing in Australia's world-leading lithium resources, to capitalise on the booming energy storage market for grid-scale batteries and electric vehicles.


4. Backing innovation for the 21st century and beyond

  • Supporting Australian businesses at the forefront of a new clean energy economy, with the Clean Energy Innovation Fund committing $30 million across four investments in its first year of operation.
  • This included finance for Geelong-based Carbon Revolution, to increase production of its unique carbon fibre wheels, which reduce vehicle weight, fuel consumption and, in turn, carbon emissions.
  • Backing for GreenSync, which is commercialising smart software controls to extend the benefits of clean energy and battery storage to more businesses and consumers.


5. Drawing new finance, and new investors, into clean energy

  • Accelerating the development of a more varied and flexible green bond market in Australia, which is now valued at more than $4 billion.
  • The CEFC was a cornerstone investor in eight of Australia's 14 climate bond issuances to date, including a $20 million commitment to the world's first university climate bond, with Monash University.

Mr Learmonth added: "Australia's energy transition is undergoing considerable scrutiny, reflecting the scale of the challenge and the scope of the opportunity. As discussed in the recent Finkel report, Australia needs a resilient, balanced and secure electricity system, which includes large-scale renewable energy, energy storage and other initiatives. 

"We continue to take seriously our public policy purpose to increase the flow of finance into the clean energy sector. Decarbonisation requires targeted action to drive down emissions, while moving clean energy technologies down the cost curve to bring diversity to our energy mix.

"While we have seen a considerable increase in the level of clean energy investment, the reality is that we are at the beginning of this transition. A commitment to long-term investment remains essential to decarbonisation."

Mr Learmonth continued: "Australia has enormous potential in clean energy, including exciting new technologies to further emissions reduction. This includes grid-scale batteries and pumped hydro storage, as well as emerging behind the meter and demand management solutions.

"We expect these technologies to move centre stage in the clean energy ecosystem, alongside our increasingly established clean energy infrastructure."

Mr Learmonth, appointed CEFC CEO from May 2017, recognised the contribution of the CEFC Board, staff and former CEO Oliver Yates in delivering the CEFC's strong investment performance in 2016-2017.

"Since the CEFC began investing in 2013, we have operated with the rigour of a commercial financier, while delivering on our clean energy public policy purpose," Mr Learmonth said.

"We remain committed to extending the benefits of clean energy across the economy, while responsibly investing taxpayer funds. We continue to work with business, industry sectors, financiers and government to bring practical, competitive and targeted financial solutions to Australia's emissions reduction challenge. Investment through our defined decarbonisation pathways will help Australia achieve net zero emissions by the second half of the century."

CEFC INVESTMENT COMMITMENTS AT A GLANCE

 

2016-2017

2015-2016

SINCE INCEPTION

CEFC commitments

$2.1b

$837m

$4.3b

Transactions

35

15

79

Total project value

$6.5b

$2.5b

$11b

 


CEFC INVESTMENT COMMITMENTS BY INDUSTRY SECTOR

 

2016-2017

2015-2016

INDUSTRY SECTORS

DECARBONISATION PATHWAYS

CEFC $

TOTAL PROJECT $

CEFC $

TOTAL PROJECT $

Renewables generators, electricity retailers and network service providers

Low carbon electricity

$844m

$3.3b

$223m

$1.4b

Property, infrastructure, manufacturing and agriculture

Ambitious energy efficiency

$1.1b

$2.8b

$528m

$1.0b

Transport

Electrification and fuel switching

$102m

$382m

$86m

$88.5m

TOTAL

 

$2.1b

$6.5b

$837m

$2.5b