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CEFC leader: How our client mix will evolve

From Carbon + Environment Daily on 2 July, 2013

A breakdown of who is seeking Clean Energy Finance Corporation support shows the agriculture and waste sectors have been quick to recognise the opportunities, and other parts of industry are likely to rapidly follow suit, says CEFC chief executive officer Oliver Yates.

The CEFC - which does not offer grants and aims to become financially self-sustaining by 2016 - is in active discussions with more than 50 project proponents that are seeking about $2 billion in funds.

Of these, 54% are utilities, with 'agriculture, forestry and fishing', 'manufacturing/industry' and 'commercial buildings' each accounting for another 9%, followed by retail (8%), mining (5%), transport (4%) and local, state and federal government (2%).

However, Yates told CE Daily that he expected this mix would gradually change, with the dominance of utilities fading and other sectors coming more strongly to the fore.

"People have perceived the CEFC to be clean energy and have assumed … that [just] means renewables," Yates said.

"And it's taking them a while to realise that the mandate is vastly broader than renewables," extending to energy efficiency, low emissions technology and improved industrial processes, he said.

However, "people are getting used to us" and perceptions are changing, he said.

Strong showing for bioenergy projects

A technology breakdown of the proposals under active discussion shows that 17% are bioenergy projects, reflecting strong interest from the agriculture and waste industries in securing CEFC support.

"I was a bit surprised to see so many [bioenergy] projects," Yates said.

"But when you look at Germany and you look overseas to Europe you can see that the Australian practices in relation to methane management are really behind international best practice by a long shot," he said.

"This is a way that people are really starting to catch up."

Yates predicted that interest from manufacturers, building owners and local governments will also rapidly grow and noted that providing support for energy efficiency initiatives in the built environment will be a priority for the CEFC, just as it was for Low Carbon Australia.

Only 3% of projects involve cogeneration

The technology breakdown of projects under discussion shows only 3% involve cogeneration, but according to Chief Operating Officer Meg McDonald that figure to some extent masks how the CEFC will be supporting the technology.

"Quite a number" of the cogeneration and trigeneration projects slated for individual facilities are capable of being financed through measures such as a new energy efficiency loans product that the CEFC has co- developed with the Commonwealth Bank, McDonald said.

The CEFC has contributed $50 million to the loan scheme, with the Commonwealth Bank providing a matching amount, and it will offer loans ranging from $500,000 to about $5 million.

As for larger, district-level, cogeneration projects, these "take a long time to mature", McDonald said.

While there are only a few of those currently seeking CEFC support, "that will build as funds are developed specifically targeted around the characteristics of financing those sorts of projects", she said.

Three projects announced

In addition to its investment in energy efficiency loans, the CEFC has so far announced backing for two other projects:

  • $37.5 million in debt finance for the construction and operation of the 106.8MW Taralga wind farm near Goulburn, NSW; and
  • $50 million to help refinance the 420MW Macarthur wind farm in south-west Victoria.

Yates said the CEFC's support has provided "transaction certainty and transaction confidence" for participants in the wind farm projects, and made it clear that the organisation would continue to offer support for a variety of projects for as long as its legislation requires it to do so.

"There may be some negative nellies around, but we are not stopping business on the basis of whatever anybody may or may not be surmising will happen," he said.

"We will stop business when our legislation tells us to stop business," he said.

"Until such time as that occurs we will continue on trying to execute our mandate as appropriately as possible."

Conference presentation containing technology and industry sector breakdown of projects under discussion with the CEFC (Oliver Yates, June 2013)

From Carbon + Environment Daily