Australia’s green bank to sharpen focus on storage following record investment in renewables

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From pv magazine Australia.

Australian green bank the Clean Energy Finance Corporation (CEFC) is looking to increase focus on grid stability and large scale storage on the back of record investment commitments in the last 12 months. The federal government lender’s key priorities for 2019-20 and beyond will aim to take advantage of Australia’s robust renewable energy resources and support the transition to a distributed energy model.

The CEFC invested almost $1.5 billion (US$1.03 billion) across 30 projects with a total value of $6.3 billion in the last fiscal year. Of that, $1.3 billion was invested in clean energy, an unprecedented amount since the bank began operations in 2012. In addition, a record $320 million of CEFC finance was repaid during the year for reinvestment in new projects.

New commitments in 2018-19 included $940 million for renewable energy and $524 million across a range of energy efficiency and low emission projects. Each dollar of the taxpayer-funded body’s finance committed in the last year was matched by more than $3 from the private sector.

“Following strong progress in the development of the large scale solar and wind sectors, our investments will also increasingly target new technologies where there is less appetite from mainstream investors – including pumped storage and large scale batteries, behind-the-meter generation and grid solutions,” said CEFC chief executive Ian Learmonth in a statement.

Another 2018-19 record came from investments for smaller scale projects in co-finance partnerships, with $400 million allocated for 5,800 projects with values from $10,000 to $5 million. Through the Clean Energy Innovation Fund the CEFC also strengthened its position as Australia’s largest investor in the early stage cleantech sector, with investment commitments of $69 million at the end of June.

Overall commitments and new frontiers

As expected, the scale of new investment commitments in 2018-19 was lower than the record $2.3 billion achieved in the previous year, with 39 direct clean energy investments across renewable energy ($1.1 billion), energy efficiency ($939 million), transport ($100 million) and waste-related projects ($127 million).

This reflects broader market conditions including the build out of the Renewable Energy Target,” Learmonth said. Grid and transmission constraints also contributed to a lower rate of new investments in large scale renewables.”

With Australia expected to have one of the most decentralized electricity systems in the world by 2050, the CEFC has a big task in backing new technologies and industries so they can benefit from the green bank’s finance as they gain commercial traction with private investors.

We see a critical need for coordinated investment in generation, storage and transmission infrastructure as part of a stable and reliable grid,” Learmonth said. In particular, pumped hydro and other forms of dispatchable renewable energy are under consideration and, from our perspective, can play a vital role in Australia’s sustainable transition to net zero emissions.”

Maturity

According to the CEFC, large scale solar and wind projects are increasingly standing on their own feet and showing maturity with an ability to tap a strong market for equity and debt. However, the market segment could still use support beyond the national Renewable Energy Target scheme for large scale renewables generation, which is due to expire next year.

The investor appetite for merchant risk remains constrained, placing a potential brake on continued market growth in the face of an ageing, constrained transmission network,” Learmonth added. Early progress in large scale storage investments is welcome but this market is also still evolving, with fully commercial models yet to develop. We also see an important role for CEFC finance in this exciting market.”

Since inception, the CEFC has played a role in driving $24 billion in commitments to new investments in clean energy projects and has supported significant growth in large scale renewables in particular.