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Accelerating clean energy investment - CEFC Annual Report 2016-17

2 Nov 2017

The Clean Energy Finance Corporation Annual Report for 2016-17 has been tabled in the Australian Senate, fulfilling an important part of the CEFC's transparency, information sharing and regulatory obligations. 

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The CEFC achieved a substantial increase in activity in 2016-17, delivering more than $2 billion in new commitments to 35 individual transactions. The increased value and scale of this activity eclipsed prior year commitments, with the breadth and depth of CEFC investments signalling strong business and investor appetite for clean energy assets. 

In his Chair's Report, Chair Steven Skala AO commented: "The CEFC has delivered a strong performance in its fourth full year of operation, achieving new highs in the number, impact and value of commitments across the clean energy sector. 

"The CEFC was created with a clear charter to stimulate change in Australia's investment in clean energy, as a key pathway to the decarbonisation of the Australian economy. CEFC investments are delivering positive returns to taxpayers, while catalysing or leading to additional private sector finance in the sector and helping reduce Australia's emissions. 

"As a specialist and active financier in the clean energy sector, the CEFC is also well placed to work with expert review panels, policy makers, the industry and other investors in understanding the market, as well as the key drivers of carbon emissions and priority areas for investment. During the past year, this has seen the CEFC work closely with the Australian Government and other agencies, including AEMO, ARENA and the Clean Energy Regulator. Our hands-on experience as financiers in the energy market and a range of industry sectors provides the CEFC with an intimate view of market expectations and preferences, allowing us to bring an additional perspective to policy forums which continues to be well received." 

In his CEO report on the 2016-17 year, CEO Ian Learmonth said: "Within the year we finalised 35 individual transactions, exceeding the combined transactions of the previous three years. We committed more than $2 billion in CEFC capital, to projects valued at $6.5 billion. Cumulative leverage across the portfolio was more than $2.10 at 30 June 2017, with each $1.00 of CEFC investment since 2013 helping catalyse an additional $2.10 from the private sector. Equally important, our current investments, upon financial close will fund projects that are estimated to achieve annual abatement of almost 7.3 million tonnes CO2-e, or more than 121 million tonnes CO2-e over their lifetimes. 

"The CEFC Act makes clear that these investments are to deliver a positive return to the taxpayer. We are pleased to report that, at 30 June 2017, our $3.4 billion portfolio of investment commitments had a forecast lifetime investment yield of more than five per cent." 

CEFC commitments in 2016-17 focused on industry sectors with strong potential for decarbonisation, including low carbon electricity, such as solar, wind, battery storage and bioenergy; ambitious energy efficiency, such as property, infrastructure, manufacturing and agribusiness; and electrification and fuel switching, such as vehicles and biofuels. 

Changes to the Investment Mandate during the year also saw the CEFC direct investment activities to the following areas: 

  • Clean Energy Innovation Fund: $30 million invested across four transactions, with each dollar of CEFC finance attracting an additional $2.16 in private sector investment. The investments have an estimated lifetime abatement of 14,000 tCO2-e. 
  • Sustainable Cities Investment Program: $800 million investment in projects with a combined project value of $1.8 billion. The investments have an estimated lifetime abatement of 17 million tCO2-e. 
  • Reef Funding Program: $150 million investment in more than 240 large and small-scale projects in the Great Barrier Reef catchment area. The investments have an estimated lifetime abatement of 11 million tCO2-e.   

Mr Learmonth added: "The CEFC is now well established, with a clear investment focus and a substantial and growing portfolio. Our own days as a 'start up' organisation are behind us, as we deepen our exposure across the economy, and seek to apply CEFC capital to areas where we can have the greatest impact on decarbonisation - whether in supporting cleaner electricity, ambitious energy efficiency or electrification and fuel switching of our transport sector in particular. We continue to also seek the best financial return possible for the taxpayer whilst ensuring our portfolio risk is appropriate and continues to be well managed. 

"For the future, the organisation will continue to match commercial rigour with our public policy purpose. We anticipate working in even more diverse areas of the energy space. Distributed energy, energy storage, improved grid transmission, network security and demand response management are all areas that require greater investment. They also have a central role to play in reducing carbon emissions, by ensuring the benefits of cleaner generation are delivered across the economy, alongside a much stronger focus on reduced energy consumption." 

Mr Skala and Mr Learmonth recognised the contribution of founding board members, Chair Jillian Broadbent AO, Ian Moore, Anna Skarbek and Andrew Stock, whose terms concluded in August 2017.They also acknowledged founding CEO Oliver Yates who resigned from the organisation during the year.