01Performance

CEFC ANNUAL REPORT / 2015–16

Transforming clean energy investment

The CEFC committed a record $837 million to new investments in the Australian clean energy sector in 2015-16, contributing to projects with a total value of $2.5 billion.

We almost doubled the number of new investment commitments, from eight to 15, and achieved a 73 per cent increase in the value of new investments compared with the previous year.

At the same time, we mobilised an even greater amount of private sector capital into clean energy activities. Just as importantly, the CEFC continued to operate with commercial rigour, generating a positive return while delivering on our clean energy public policy purpose.  All investments are expected to generate a return above the Australian Government’s cost of funds, with the CEFC remaining profitable for the third consecutive year.  

The CEFC’s strong performance in 2015-16 reflects the CEFC’s increasing maturity as a clean energy investor, our deepening experience in this market and our closer engagement with project proponents, investors and co-financiers. 

The CEFC’s total commitments since we began investing in 2013 now stand at almost $2.3 billion, contributing to a diverse range of projects with a total value of $5.7 billion.

Investment commitments 2015-16

CEFC investment activities in 2015-16, viewed through the organisation’s strategic priority areas, point to the CEFC’s continued strong focus on supporting the development and delivery of clean energy solutions across the economy.  As detailed in Figure 3, in 2015-16 the CEFC:

  1. Maintained a strong focus on large-scale renewable energy projects to deliver cleaner power solutions for the national economy. The slight decline in total CEFC commitments to cleaner power solutions in 2015-16 reflects earlier hesitancy in this market segment, which we expect to improve on the back of enhanced investor confidence
  2. Is working with an increasingly diverse range of organisations to support investments that deliver energy efficiency gains, lower emissions technologies and support the growth of small-scale solar PV, to create a better built environment
  3. Achieved a substantial increase in the value of investment commitments designed to unlock new sources of capital for clean energy investment. This includes support for climate bonds, equity funds and co-financing arrangements, where the CEFC is gaining increasing traction in catalysing additional finance to clean energy investments.

Figure 3: New investment commitments in 2015-16

     

Strategic priority areas

2015-16

2014-15

Solar

Cleaner power solutions, including large-scale and small-scale solar, wind and bioenergy

$110m

$115m

Building

A better built environment, with investments to drive more energy efficient community housing, commercial buildings, local government operations and universities

$217m

$125m

Handshake

New sources of capital, with investments in climate bonds, equity funds and with co-financiers to increase investment for small and large scale clean energy projects

$510m

$244m

 

Total

$837m

$484m

Australia’s emissions challenge

Australia’s emissions reduction target of 26-28 per cent by 2030 is a significant challenge:

Figure 4: Australia’s emissions reduction challenge 

Alignment with emissions sources

Energy, industrial processes and transport are among the most significant sources of emissions in the Australian economy. Accordingly, CEFC investment activities include a clear focus on delivering capital to these sectors, among others, with the aim of accelerating the delivery of projects that use renewable energy, energy efficient or low emissions technologies to reduce energy consumption and energy costs, while lowering emissions. See Figure 5.

Figure 5: Alignment of CEFC strategic priority areas with emissions sources

CEFC Strategic Framework

During the year we consolidated our investment teams around 12 business platforms, aligned to the strategic priority areas, and targeting key areas of the economy where clean energy investment can most effectively reduce carbon emissions, improve energy efficiency and lower operating costs.

This alignment of our business platforms under the strategic priority areas through the CEFC Strategic Framework reflects how our investment activities are focused on delivering on our mission and public policy purpose by supporting investment that contributes to the reduction in Australia’s emissions.

 Figure 6: CEFC Strategic Framework

A year of firsts

The CEFC business has matured substantially, achieving a number of milestones in our third full year of operation. Our depth of experience across the clean energy sector, and closer engagement with project proponents and co-financiers, reflects this increased maturity. The 15 transactions that closed in 2015-16 represented several “firsts” for the CEFC (see Figure 7). These are aligned with our strategic priority areas and described in further detail in the individual case studies contained within this Annual Report.

Project milestones

In addition to new investment commitments in 2015-16, the CEFC is pleased to report the achievement of several significant project milestones during the year.

Figure 7: Project milestones 2015-16  

CONSTRUCTION COMPLETED

CONSTRUCTION COMMENCED

10.6MW DeGrussa Solar Project with 6MW battery storage: construction completed June 2016

20MW Barcaldine Solar Farm

2MW Uterne II Solar Farm: construction completed November 2015

240MW Ararat Wind Farm

1.8MW Yulara solar installation: construction completed April 2016

SGCH construction of energy efficient community housing 

56MW Moree Solar Farm: electricity exported to the grid from February 2016

 

Landfill Gas Industries’ energy-from-waste facilities: first CEFC financed facility commissioned in February 2016

 

Figure 8: Investment commitments 2015-16

STRATEGIC
PRIORITY AREA

CEFC ACHIEVEMENT

PROJECTS AND PROGRAMS

LOCATION

CEFC
FINANCE

CLEANER
POWER
SOLUTIONS

Solar Wind
Oil Battery

First large-scale hybrid contracted and merchant wind farm

Ararat Wind Farm

Victoria

$67m

First business expansion debt transaction

Windlab

ACT

$8m

First fully merchant edge-of-grid solar farm

Barcaldine Solar Farm

Queensland

$20m

First (and southern hemisphere’s largest) solar+battery hybrid

DeGrussa Copper Mine

WA

$15m

STRATEGIC
PRIORITY AREA

CEFC ACHIEVEMENT

PROJECTS AND PROGRAMS

LOCATION

CEFC
FINANCE

BETTER
BUILT
ENVIRONMENT  

Building Government

First 7-star NatHERS community housing investment

St George Community Housing

NSW

$60m

Finance for construction of Victoria’s first 5.5-star NABERS building outside the Melbourne CBD 

Quintessential Equity

Victoria

$68m

Largest CEFC local government financing transaction 

City of Melbourne

Victoria

$30m

First CEFC university clean energy financing transaction

University of Melbourne

Victoria

$9.1m

STRATEGIC
PRIORITY AREA

CEFC ACHIEVEMENT

PROJECTS AND PROGRAMS

LOCATION

CEFC
FINANCE

NEW
SOURCES
OF CAPITAL 

Handshake

First Australian waste and bioenergy investment fund 

Australian Bioenergy Fund

National

$100m

Largest co-financing commitment

Westpac Energy Efficient Financing Program

National

$200m

Equity commitment to renewable energy investment strategy

Palisade Investment Partners

National

$50m

First green bond securitised to renewable energy assets

FlexiGroup

National

$20m

First financing package targeting lower emissions vehicles for large fleet buyers

Eclipx Group

National

$50m

Sustainability commitment from property equity fund

Transaction details to be disclosed when finalised

National

$50m

Largest CEFC Climate Bond investment

 Westpac

National

$90m