22 July 2014
Expanded opportunities across the economy
After its first full year in operation, the 2013-14 financial year, the Clean Energy Finance Corporation (CEFC) has contracted investments of over $900 million in projects over $3 billion in total value.
CEFC CEO Oliver Yates said the CEFC is demonstrating the potential that its activities offer to catalyse greater private sector investment into the sector, with its current portfolio achieving matched private sector funds of more than $2.20 for each $1 of CEFC investment.
"The CEFC invests for a positive return, with its investments presently expected to earn an average yield of approximately 7% which is more than 3.5% above the government's cost of funds prevailing when the investment were made," Mr Yates said.
"Through this portfolio of 40 direct investments and a further 25 projects co-financed under aggregation partnerships, the CEFC is delivering abatement estimated at more than 4.2 million tonnes of CO2e p.a., with a benefit to the taxpayer of around $2.40 per tonne of CO2e abated (net of government cost of borrowing).
The CEFC's investments span a diverse range of economic activity including agribusiness, waste coal mine gas-to-energy, wave energy, bioenergy, energy efficiency projects in local government and the community sector and efficiency upgrades across the full spectrum of the property sector.
The CEFC has partnered with all four major banks and more than 10 other domestic and international banks. The CEFC's strategy of developing financing programs through aggregation partners means that around half of the CEFC's investments are for innovative financing programs through existing financial institutions and energy service providers. This has made CEFC finance effectively available to a large number of businesses across Australia, for projects large and small.
The CEFC has also announced $227 million in new investment commitments. Over $133 million of this is for new solar programs and projects, which will bring its total commitment to solar to over $200 million. The new investments announced by the CEFC are:
- In an Australian first, the CEFC will provide up to $80 million as the initial cornerstone investor under an agreement with the infrastructure division of Colonial First State Global Asset Management (CFSGAM) to establish Australia's first unlisted clean energy direct infrastructure investment platform for institutional investors, the CFS Australian Clean Energy Infrastructure Fund. CFSGAM will seek to raise a further $300-$500 million to invest in green field developments ready for construction and mature operating assets using established technologies in renewable energy, energy efficiency or low emissions technologies.
- The CEFC will provide finance of up to $120 million for three new Solar PV financing programs offering long-term leasing and power purchase agreements (PPAs), tailored for specific market segments to help further expand and deepen the solar PV market in Australia:
- Up to $70 million for a program by SunEdison, a leading US vertically integrated solar company, offering customers solar leases or the option to purchase the power under a PPA. (Investment subsequently lapsed)
- Up to $20 million finance for a program offered by Tindo Solar - the only Australian manufacturer of solar PV panels, funded by the Solaire Income Fund (a Lighthouse Infrastructure and Impact Investment Group joint venture), offering PPA product to commercial and residential customers; and
- Up to $30 million for a program by Kudos Energy - which is backed by the US-based Angeleno Group - offering PPAs focused on commercial and multi-unit residential customers.
These new financing programs are being brought to market using established, experienced and accredited installation companies and suppliers to provide customers with high quality outcomes.
- The CEFC is providing $13 million under a structured project finance facility for construction of Uterne 2, a 3.1 MW expansion of Epuron's, 1.0 MW solar PV power plant in Alice Springs that utilises solar-tracking technology to provide power into the local grid.
- The CEFC will provide finance of up to $15 million, which together with additional bank finance, will allow one of Australia's largest meat processors, Bindaree Beef, to proceed to construct a major on-site energy project to generate energy from waste, halve its power bills, and deliver a significant boost to the competitiveness of its operations.
Interest in working with the CEFC continues to grow. The CEFC is currently examining proposals from over 70 project proponents seeking CEFC finance of over $1 billion (for total project costs of over $4 billion).
The CEFC expects to make further new investment announcements in the coming weeks.
CEFC QUICK FACTS
- As at the end of financial year 2013-14, the CEFC had a contracted portfolio of investments of over $900 million in projects totalling over $3 billion in value.
- The CEFC investment activities are catalysing other investment into the sector, with its portfolio achieving matched private sector funds of more than $2.20 for each $1 of CEFC investment.
- The CEFC invests for a positive return - CEFC contracted investments are presently expected to earn a portfolio average yield of about 7% which is more than 3.5% above the government's cost of funds prevailing at the point the investment was made.
- Annual abatement for investments currently contracted (including subsidiary transactions) is estimated at more than 4.2 million tonnes of CO2e p.a.
- The CEFC is delivering abatement at a benefit to the taxpayer of around $2.40 per tonne of CO2e abated (net of government cost of borrowing).
- The CEFC's portfolio consists of 40 direct investments and a further 25 projects co-financed under aggregation partnerships.
- 46% of the CEFC's investments are with aggregation partners for financing programs now available to business, property, government and not-for-profit sectors across multiple states and territories.
- Investments with local councils, manufacturing and agribusiness make up 20 percent of the portfolio.
- The weighted average loan term of the portfolio is around 7 years
- CEFC funded projects involve more than 700MW of clean electricity generation capacity installed or supported, covering renewables and low emissions technologies.
- The CEFC has financed projects for businesses that employ over 30,000 Australians.
- The CEFC has partnered with all four major banks and more than 10 other domestic and international banks and institutes.
- In projects the CEFC is financing:
- Agribusinesses typically would expect to halve their on-grid electricity or gas consumption by switching to on-site generation;
- Manufacturers upgrading equipment expect to lower their energy costs by up to 30 per cent; and
- Building retrofits expect to see base building energy costs reduced by up to 45 per cent.
- The CEFC is currently working on proposals from over 70 project proponents seeking CEFC finance of over $1 billion (for total project costs of over $4 billion).