01Performance

CEFC ANNUAL REPORT / 2015–16

Targeted investment approach

In 2015-16, the CEFC invested across targeted strategic priority areas where clean energy investment can improve energy efficiency, cut carbon emissions as well as lower operating costs.

Figure 9: Strategic priority areas 

CLEANER POWER SOLUTIONS

More than half Australia’s emissions come from energy and industrial processes. Reducing emissions from these sectors requires substantial investment in wind, large and small-scale solar, grid and storage solutions and waste and bioenergy, including agriculture.

The CEFC is working with the private sector to assist in meeting the capital requirements to achieve this level of investment at the lowest possible cost, including using tailored loan structures that better meet the needs of investors and the particular asset classes involved.

Investment in a diverse range of technologies is essential if Australia is to benefit from the lowest cost sources of clean energy in the future.

BETTER BUILT
ENVIRONMENT

The CEFC focussed on providing the finance required to improve the liveability of cities and the built environment in a way that ultimately reduces emissions. This may include the installation of onsite renewable generation, battery storage and investment in improved energy efficiency initiatives, among others.

Infrastructure and transport, property, manufacturing, local governments and not-for-profit organisations, including universities and social housing, all have scope for emissions reductions, with flow on benefits to the built environment.

NEW SOURCES OF CAPITAL

We continue to assist in the development of structured investments and new capital products, equity funds, climate bonds and securitisation vehicles, as well as co-financing arrangements with banks.

The CEFC has developed strong relationships with most of the major commercial banks in Australia. These investment channels allow the CEFC to efficiently deploy capital to emissions reduction activities that we would otherwise be unable to reach, such as those involving small businesses, agriculture, and manufacturing.

Through the new Clean Energy Innovation Fund, which became operational on 1 July 2016, the CEFC is seeking to create new sources of capital to support the expansion and deployment of innovative clean energy technologies and businesses.

The 2015-16 investment commitments in these strategic priority areas are explained further in the individual case studies within this Annual Report.

Driving market change

Through our work across the economy, the CEFC continues to identify opportunities to build financing capability and capacity to deliver replicable and scalable financing solutions to accelerate investment in clean energy solutions. During 2015-16, we introduced three major origination programs to drive market change through consistency and scale in our investment activities. See Figure 10.

Figure 10: Origination programs 2015-16

PROGRAM

MARKET IMPACT

                                                     

LARGE-SCALE SOLAR

Solar

Achieving Australia’s RET requires the construction of up to 6GW of large-scale renewable projects, with large-scale solar being an important part of the technology mix. The CEFC large-scale solar program provides project proponents with fixed-rate, long-dated senior debt, including projects which may receive ARENA grant funding. The CEFC is also working to catalyse other sources of finance to support potential large-scale developments, through co-investment in debt and equity, to encourage greater participation by banks and other institutions, as the sector develops a track record of credit and operational performance.

Solar 

COMMUNITY HOUSING

House

Australia has some 88,000 community housing dwellings, and the sector is expected to experience strong growth in the years ahead, to address long waiting lists from approved applicants. Community housing organisations have limited sources of revenue to fund new buildings and have generally faced challenges sourcing private finance. The CEFC program is targeting the construction of as many as 1,000 new energy efficient dwellings Australia-wide, via Australia’s growing network of community housing providers.

 Dwellings

LOCAL GOVERNMENT

Politicians

Australia’s 560 local councils spend more than $32 billion annually administering a vast network of street lights, community centres, libraries, sport and recreation facilities, and other public access buildings. Managing the associated energy use represents a significant economic and environmental benefit.  Through the CEFC, Australian councils have access to flexible and competitive fixed-rate, long-dated finance, targeting major investment projects with the potential to make a significant difference to a council’s energy consumption.

 Clean energy