25 June 2015
The passage of amendments revising the Renewable Energy Target (RET) to 33,000GWh by 2020 opens the way for continued development of renewable energy in Australia. The Clean Energy Finance Corporation (CEFC) will continue its work supporting the flow of finance necessary to fund cleaner energy deployment in Australia, in partnership with project developers, co-financiers and other stakeholders.
“Increased certainty around the future of the RET should provide investors with greater confidence in the further development and diversification of Australia’s clean energy sector,” CEFC CEO Oliver Yates said.
“The Clean Energy Council (CEC) has highlighted that between 30 to 50 major renewable energy projects and many more mid-sized projects will need to be built over the next five years. The market should now benefit from lower risk premiums for financiers, which in turn can lower the overall cost of developing new projects. This will help ensure Australia can continue to expand and deploy a diverse range of innovative technologies to help meet its future energy supply needs in a low-carbon economy,” Mr Yates added.
The requirement for 33,000GWh of Australia’s electricity to come from large-scale renewables by 2020 should see a further 8GW of large-scale renewable energy capacity developed between now and 2020, according to analysis by Bloomberg New Energy Finance (BNEF). BNEF estimates that this new capacity will require up to $AU15 billion in new investment.
The CEFC invests using a commercial approach to catalyse investment in renewable energy, energy efficiency and low emissions technologies as well as manufacturing businesses and services that produce the required inputs. The CEFC’s 2015 Investment Mandate Direction specifies that the Corporation is to “invest at the demonstration, commercialisation and deployment stages of innovation” and to “apply commercial rigour when making its investment decisions”.
“The CEFC plays a complementary role supporting the RET, investing alongside private sector co-financiers to facilitate increased flows of finance into the clean energy sector. The CEFC will continue to fulfil its purpose by investing in technologies that have not yet been widely deployed at the utility scale in Australia, supporting new financing structures which catalyse private sector investment in renewable energy technologies, and by working to bridge the financing gap for projects using proven technologies that are unable to secure long-term power-purchase agreements,” Mr Yates said.
The CEFC welcomes the Australian Government’s commitment of enhanced support for innovative renewable technologies, large-scale solar and energy efficiency.
Large-scale solar photovoltaic (PV) is expected to play an important role in the future renewable energy mix for Australia, with BNEF forecasting large-scale PV to make up 2.6GW, or around one third new capacity required by 2020 under a 33,000GWh target.
The CEFC has already invested in a number of innovative renewables projects and energy efficiency programs. By value, the Corporation’s portfolio of committed and close to conclusion transactions comprise around 30 per cent solar, 30 per cent energy efficiency, 20 per cent wind and 15 per cent other technologies.
“By 30 June 2015, the CEFC expects to have committed around $1.4 billion of investments supporting projects worth over $3.5 billion in total since its inception. The CEFC’s investments in energy efficiency are helping Australian businesses and councils make smarter energy decisions, save money and improve productivity,” Mr Yates said.