Positive developments are arising out of Australia in regard to green finance, as a new renewable energy fund is getting the go-ahead.
The Clean Energy Finance Corporation (CEFC), an Australian government-owned green bank, has been looking to invest in key strategic plans that can influence development and action on climate change. It is now backing the Australian Renewables Income Fund (ARIF) with A$100m. Infrastructure Capital Group (ICG) will manage the fund.
Tom Laidlaw, Managing Director at ICG, said that institutional investors have already gotten in touch to register their support and confirmed that the fund will be concentrating as much on asset management as project development. This move likely indicates that the fund is aiming to not only create positive outlets for renewable energy but also make them consistently profitable and stable for investors.
While there will be plenty of scope to push forward large-scale projects in both wind and solar, a focus on more emerging technologies will also occur. These are set to include producing energy from waste, working on the already burgeoning battery storage sector and further developing pumped-storage hydroelectricity.
Laidlaw said that ‘ICG has invested in renewable energy assets on behalf of investors since 2007’ and noted that demand has only gone up since then. He maintained his belief that the creation of a stable system to incorporate investor wishes would deliver a growing renewable energy sector backed by private finance.
Australia is in a strong position as a nation to capitalize on the renewable energy sector due to the land that it sits on, where both wind and solar can operate to high efficiencies. There has also been a great deal of excitement placed on battery storage potential, which should propagate heavily in Australia in the next decade or so. The country’s off-grid and rural locations are perfect testing grounds.
According to Laidlaw: ‘ARIF offers investors access to a high-quality portfolio of operating renewable energy assets and a platform for future growth in the sector.’
Ian Learmonth, CEO of CEFC, said that the new fund will ensure that investors have ‘exposure to a broad range of renewable energy technologies’ that offer ‘attractive options to deepen their exposure to clean energy opportunities.’ This should result in more investment in the long term, especially if this development can produce positive returns.
The funding for ARIF means that CEFC has upped its financing in renewable energy by 40%, and it now stands at A$355m.
Rory Lonergan, Equity Lead at CEFC, said that this move is significant for investors because it provides ‘heightened scrutiny on the climate risk issues within their portfolios.’ This reflects investors needing to feel secure with renewable energy and not worry that all funding has to be high-risk.
Lonergan added that because investor demand is increasing, ‘we expect this investment class to continue to grow in the future as renewables deliver a larger share of our energy generation.’ While progress will not happen overnight, the new fund indicates that similar investments are set to take place in the future. CEFC has already provided debt finance worth more than $A2bn to boost renewable energy development.