Sustainable Melbourne Fund takes mission – and rooftop PV – across Australia


From pv magazine Australia.

An innovative finance structure set up in 2002 to enable businesses in the state of Victoria to invest in sustainable infrastructure upgrades is going national.

The Sustainable Melbourne Fund, in partnership with Bank Australia, has expand its reach with a new $200 million (US$140 million) loan facility that offers commercial-industrial and agricultural businesses across Australia the opportunity to cost-effectively upgrade operations with environmental benefits. Call it ‘the Sustainable Australia Fund’.

“About 80% of our projects by number are rooftop mounted solar projects, and they range in scale from 15 kW to 1.5 MW rooftop mounted arrays,” said Scott Bocskay, until last week CEO of the Sustainable Melbourne Fund (SMF). Bocskay is now advising businesses and councils beyond Victoria on how to invest in a sustainable future.

Scaling up of the fund’s operations was driven by rising interest, Bocskay told pv magazine. “We’re seeing a phenomenal growth in businesses looking to install solar and much bigger businesses are now interested,” he said. Such businesses, he added, have “traditionally used bulk purchasing to achieve a lower cost of energy per unit”.

The rapidly decreasing cost of solar generation, combined with increased energy prices and the highly favorable terms of the Sustainable Australia Fund’s Environmental Upgrade Finance packages, are driving commercial decisions by bigger businesses to install rooftop PV to reduce electricity bills and boost their environmental credentials.

Recent loan recipients include transportation firm Booth Transport, food manufacturers such as Tibaldi Smallgoods, and agribusinesses including Integrity Fruit.

Through the Sustainable Australia Fund, fixed-interest loans for terms of up to 20 years are available to businesses occupying land rated for non-residential use in council areas that offer environmental upgrade agreements (EUAs). Such agreements are enabled by state-based legislative adjustments to the Local Government Act and they have so far been taken up by Victoria, New South Wales (NSW) and South Australia.

Under an EUA, a business or commercial property owner can apply for a discounted loan for building upgrades including solar power, energy and water efficiency measures and other environmental improvements. Any council in the three states mentioned can adopt the amendments that enable repayments on the loans to be made as a component of the rates paid by the business or landholder.

Currently, 32 councils in Victoria, six in NSW and four in South Australia have taken up the legislative changes, and Bocskay says the Sustainable Australia Fund is keen to work with other state governments to unlock the increased opportunities available.

Darren Dawson, head of impact finance at Bank Australia said last week: “We’re proud to support the launch of the Sustainable Australia Fund to enable it to expand its impact across Australia which aligns with our purpose of creating positive impact for people and the planet.”

Walking the walk

Last week also saw the announcement Bank Australia had achieved 100% renewable energy use in its operations a year ahead of its 2020 commitment.

“Bank Australia is very progressive and keen on the work that we’re doing,” said Bocskay of the new partnership. Previously, the fund had sourced finance through federal government-owned green bank the Clean Energy Finance Corporation and the City of Melbourne.

On announcing the expansion of the fund and its recapitalization through Bank Australia, Arron Wood, the deputy lord mayor of the City of Melbourne, said the facility had been established 17 years ago with the aim of driving innovation in sustainable infrastructure and to reduce emissions by the private sector.

“Our seed funding and support for the fund has unlocked more than $30 million in environmental infrastructure upgrades for Victorian businesses,” said Wood. “This has enabled the abatement of more than 300,000 tons of greenhouse gas emissions.”

Commercial and environmental decisions

In November, family-owned Tibaldi Smallgoods received loan support from the SMF to install a $1.4 million, 1 MW rooftop PV system at its premises in Clayton, Victoria. The system is expected to result in annual electricity savings of $339,000.

CEO Greg Ridder said the company’s investment would also “provide environmental benefits by reducing our reliance on the grid, and make Tibaldi more competitive”. An employer of 350 people, Ridder said the initiative had given the company confidence to expand and create more jobs in future.

Peter Houghton, owner of the Rye Hotel on the Mornington Peninsula, said the long-term EUA he signed through the SMF for an 88 kW rooftop solar system reduced the hotel’s electricity bills by 25%. Houghton tracks his energy use through an online platform and said he derives great satisfaction from receiving monthly reports that show his positive contribution to the environment: a carbon offset of 1.3 tons, for example, calculated as the equivalent of planting 33 trees.

Houghton added, renewable energy “is a resource we can all use” but access, particularly to finance, can be a barrier for businesses. “We could never have come up with that kind of money to fund solar panels on our own,” he said.

Tenant-landlord dilemma

EUAs have also become a transformative factor in helping tenants with high energy needs and large rooftop areas, to resolve with landlords the question: Who pays?

“Because an environmental upgrade agreement is repaid through council rates, it overcomes that split incentive,” said Bocskay. “The landlord owns the solar installation but tenants can make the repayments through their normal lease with the savings still greater than the repayments.” On the landlord’s side, if a tenant leaves, having a rooftop solar system in place has proven to be a magnet for new lessees.   

Bocskay said he’s recently seen an increase in applications for loans that integrate battery storage with solar, particularly among agricultural enterprises where margins are low and power outages can seriously impact productivity.

Kevin Minogue, owner of the Minogue Dairy Farm near Katandra West in Victoria, was prompted to invest in a combined solar-plus-battery system after experiencing a 30-hour outage during the peak milking season. To secure energy reliability he approached the SMF. “The process for applying was really simple,” he said.

Bocskay added, the Sustainable Melbourne Fund was established “before solar was economical, before sustainability became seen as an investment opportunity for business” and said he looks forward to rolling out the new fund’s environmental impact beyond Victoria’s borders.

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