CEFC 2019-20 Investment Update
A message from CEO Ian Learmonth
On behalf of the CEFC, I am pleased to provide this Investment Update on our activities in the 12 months to 30 June 2020.
The year was marked by important developments across the CEFC portfolio, including ground-breaking investments in new technologies and economic sectors.
We were pleased to make new investment commitments of just over $1 billion and continued to invest through the economic disruption of the COVID-19 pandemic. We also saw a significant uplift in the level of CEFC capital repaid in the year, reflecting a maturing portfolio and the commercial rigour of our investment approach. This will continue to strengthen our ability to reinvest our capital over coming years.
- New CEFC investment commitments of more than $1 billion, supporting 23 clean energy investments with a combined value of $4.2 billion in the year to 30 June 2020
- CEFC finance extended to new areas of the economy, delivering Australia’s first dedicated green bond fund, the CEFC’s first green home loan, and a material uplift in the capacity of Australia’s largest battery in South Australia
- New investment commitments of just over $13 million in three cleantech innovators, as well as increased investment of $3.4 million in a further two Innovation Fund portfolio companies to accelerate their growth
- More than $187 million in CEFC wholesale finance to support ~6,700 smaller-scale investments in clean energy projects, including in agribusiness, property and transport
- New investment commitments in 2019-20 targeting more than one million tonnes of carbon abatement annually
- Continued strong financial performance despite the challenging economic environment, with almost $942 million in CEFC finance recycled through repayments, sales and redemptions over the year, to be available for further investment by the CEFC.
Our investment impact
Over our lifetime, we have made almost 200 large-scale commitments, attracting an additional $2.30 in private sector finance for each $1 of CEFC finance committed.
In parallel, since inception we have seen more than $1.27 billion in CEFC finance invested in almost 18,000 smaller-scale projects, with our tailored low-cost asset finance programs delivered via our co-financiers.
Our portfolio of investment commitments was $6.4 billion at 30 June 2020, after allowing for repayments, amortisation and cancellations on total commitments made since inception.
Investing through the pandemic
CEFC capital has been critical to building the clean energy sector, and remains central to filling market gaps, whether driven by technology, development or commercial challenges. This was especially the case in 2019-20 as banks and other mainstream investors refocused their attention to address the challenges of the pandemic.
While our annual rate of new investments in 2019-20 slowed compared with previous years, we remained an active investor in the year. New CEFC investment commitments in 2019-20 attracted an additional $3 billion in additional investment, further magnifying the impact of our finance.
In the second half of 2019-20, as the economy tightened, the CEFC stepped up, committing more than $380 million in CEFC finance to seven transactions in the six month period, working closely with project proponents and co-investors to bring projects to financial close in a timely manner.
Having financed more than 3GW of solar and wind renewable energy since we began investing, we continued to work closely with the renewables sector in 2019-20 to address emerging market developments. This included a particular focus on how the CEFC can catalyse finance into Renewable Energy Zones, grid upgrades, the integration of significant storage and renewables and the potential for grid security services.
Reflecting our role as a specialist investor, we also sharpened our focus on capital deployment. Across 2019-20, we were pleased to deploy $937 million of CEFC capital, contributing to the delivery of a diverse range of projects Australia wide.
During 2019-20, almost $942 million in CEFC finance was repaid or recouped through sale or redemption, markedly higher than the record $321 million recycled in 2018-19.
Total repayments since we began investing reached $1.66 billion to 30 June 2020. As our investment portfolio matures, this is an increasingly important demonstration of our commitment to earn a positive return on our investments and reinvest our capital on behalf of the Australian community.
Leading the way with ground-breaking investments
As catalysts for innovation and change, the CEFC invests to lead the market. In 2019-20 we continued to pioneer investment across agriculture, cleantech, clean energy generation and storage, infrastructure, property, transport and waste. Investment highlights included:
- Australia’s first dedicated green bond fund – Up to $70 million as a cornerstone investment alongside Australian Unity and Crestone Wealth Management. The fund will invest in a combination of green, social and sustainable fixed interest securities with the primary purpose of helping to lower carbon emissions.
- Australia’s first green home loan based on energy efficiency – Up to $60 million in a new green home loan to spearhead the construction of market leading, energy efficient housing, with Bank Australia to deliver discounted interest rates to qualifying home buyers.
- Australia’s second large-scale energy from waste plant – Up to $57.5 million in the East Rockingham Waste-to-Energy plant in Western Australia. The $511 million plant will process about 300,000 tonnes of residual waste a year and generate baseload energy to support WA’s electricity network.
- The world’s biggest battery – Up to $50 million in project finance for South Australia’s landmark ‘big battery’, working alongside Neoen, ARENA and the SA Government to improve grid security and maximise the benefits of renewable energy. The CEFC finance is part of a 50 per cent expansion of the Hornsdale Power Reserve, the world’s largest grid-scale battery.
- Australia’s largest cleantech investor – Up to $16.6 million in new and extended investment commitments in cleantech innovators, via the Clean Energy Innovation Fund. New investee companies included JET Charge, to deploy smart charging hardware for electric vehicle charging stations; Tenacious Ventures, to create a specialist agrifood tech investment fund, and the Soil Carbon Company, to develop a microbial treatment to increase organic carbon in soil.
Leading investment in the future
With the backing of the Australian Government, the CEFC brings a unique combination of financial expertise, technical knowledge and industry experience to the challenge of lowering Australia’s emissions.
As Australia embarks on the post-pandemic economic recovery, we have much to offer this endeavour: through our mandate to stimulate investment in clean energy and related grid infrastructure, our knowledge of energy challenges and solutions, and the financial expertise and investment insights that have helped build Australia’s clean energy sector.
Our commitment to this transition has never been stronger.
We recognise that the scale and breadth of our portfolio represents just the start of the decarbonisation effort, with much more to be done – whether in delivering a cleaner, stronger electricity grid, decarbonising all areas of economic activity or supporting the growth of a clean and competitive Australian hydrogen industry.
On behalf of everyone at the CEFC, I extend our thanks and appreciation to our co-investors for their shared commitment to lowering our emissions and capturing the many benefits of clean energy. We look forward to continuing to invest in this growing, important and exciting sector.
CEFC Investment impact: the numbers
|Smaller-scale transactions: financed||~6,700||~18,000|
|Smaller-scale transactions: total value||$187m||$1.27b|
*Lifetime commitments since the CEFC began investing in 2012
About the CEFC
The CEFC has a unique role to increase investment in Australia’s transition to lower emissions. With the backing of the Australian Government, we invest to lead the market, operating with commercial rigour to address some of Australia’s toughest emissions challenges – in agriculture, energy generation and storage, infrastructure, property, transport and waste. We’re also proud to back Australia’s cleantech entrepreneurs through the Clean Energy Innovation Fund, and invest in the development of Australia’s hydrogen potential through the Advancing Hydrogen Fund. With $10 billion to invest on behalf of the Australian Government, we work to deliver a positive return for taxpayers across our portfolio.
Media release, 2020