The Clean Energy Finance Corporation is seeking to draw major institutional investors into the Australian clean energy market, partnering with Palisade Investment Partners to establish a new $500 million fund to drive new investment in large-scale clean energy projects.
The CEFC identified the lack of involvement of larger institutional investors as a barrier to Australia’s renewable energy sector. The CEFC has chipped in $75 million as a “cornerstone commitment” to the newly formed Palisade Renewable Energy Fund (PREF).
“To date there has been a distinct lack of investment product designed to attract Australian institutional investment into clean energy, leading to the sector being under-represented in this area“. CEFC Investment Funds lead Rory Lonergan said.
“In many cases mid-tier institutional investors lack the scale to invest directly in projects. Through our cornerstone investment in the PREF, we are looking to unlock this investment potential and tap into the growing investor appetite for renewable energy investment opportunities, with both mid-tier and large institutional investors.”
CEFC laments lack of institutional investors
Working with Palisade Investment Partners, the CEFC is hoping to attract institutional investors into the market, to ensure that sufficient capital is made available to the slew of renewable energy projects in the development pipeline.
The CEFC cited analysis by Green Energy Markets, that 5,600 Megawatts of new generation capacity will need to be commissioned to meet the 2020 renewable energy target. With over 100 potential projects at various stages of the development pipeline, it is the ability to access capital, rather than a lack of projects, that is one of the largest barriers to the 2020 RET being achieved.
“The CEFC’s existing and now extended commitment through the PREF will support Palisade’s renewable energy strategy. It will also attract further institutional capital to an existing diverse portfolio of renewable energy assets and match the tremendous pipeline of opportunities we are currently working on, including the Ross River Solar Farm.” Palisade Investment Partners CEO Roger Lloyd said.
New Solar Farm for Townsville
The CEFC also announced today a $20 million commitment to the Ross River Solar Farm in Queensland. The project will lead to the construction of a 142 Megawatt solar farm on a disused mango plantation near Townsville, with a total project value of $225 million. The project is expected to create 150 jobs in Townsville throughout the construction phase, ultimately providing power to meet the needs of 65,000 homes, approximately two-thirds of the households in Townsville.
The Ross River Solar Farm will be included within the Palisade Renewable Energy Fund as one of three seed investments. The CEFC $20 million equity contribution represents the first time the CEFC has taken an equity stake in a solar farm, as opposed to previous investments made through the provision of debt finance.
The project successfully secured a 13-year power purchase agreement with Energy Australia. The PPA would cover the contract through to the legislated end of the Renewable Energy Target and may be the longest PPA signed by a solar farm.
Construction of the solar farm is expected to commence in the first quarter of 2017, and will be completed over the course of 12 months.
Queensland is set for a significant boost in large-scale solar investment throughout 2017. The Ross River Solar Farm is likely to be joined by up to six projects shortlisted by the Australian Renewable Energy Agency (ARENA) under its recent large-scale solar round.
The ARENA shortlist includes just over 300 Megawatts of new solar generation capacity, with total proposed investments exceeding $600 million.