CEFC accelerating clean technology investment and innovation in Australia

With AU$10 billion to invest on behalf of the Australian Government, including via the Clean Energy Innovation Fund, and the Advancing Hydrogen Fund, the CEFC has a unique role to increase investment in Australia’s transition to lower emissions.

The CEFC Annual Report for 2019-20, tabled in the Australian Parliament, confirms the strength, breadth, and depth of the CEFC investment portfolio after eight years of investment.

Bolstered by a strong performance in the 2019-20 financial year, CEFC investment commitments since inception reached AU$8.2 billion to 30 June 2020, helping spur AU$27.8 billion in clean energy initiatives across the economy.

The Annual Report also details the financial strength of the CEFC, with AU$1.66 billion in CEFC capital “recycled” through repayments, sales, and redemptions, to be available for reinvestment by the CEFC.

Low emissions economy potential for Australia

According to CEO Ian Learmonth, the CEFC Annual Report provided “compelling evidence” of the potential for Australia to achieve a low emissions economy, capitalising on innovative technology and investment solutions. With the backing of the Australian Government, CEFC investments were delivering benefits across the economy, in agriculture, infrastructure, property, transport, and waste.

They were also extending the benefits of reliable and affordable clean energy to an increasing number of Australians while lifting local investment.

For the year ahead, we are focused on investing in a secure, affordable, and sustainable energy system, to increase the share of renewable energy in a modernized electricity grid.  We are also committed to backing opportunities in energy storage in batteries, virtual power plants, and pumped hydro. The excitement around hydrogen and recycling signals the very strong potential of these technologies to deliver a step-change in emissions reduction. We will also accelerate efforts to drive down emissions from buildings, agribusiness, and infrastructure, and continue to back the cleantech sector, where innovative startups are transforming the way we farm, drive and even receive our home deliveries, Ian Learmonth said.

In his letter accompanying the Annual Report, CEFC Chair Steven Skala AO remarked that sound financial management has been a “hallmark of CEFC operations” since its inception, driven by the acknowledgement that it invests on behalf of Australian taxpayers, with a responsibility to meet agreed policy objectives and deliver a positive financial return.

In 2019–20, challenging economic conditions highlighted the importance of this commitment to prudent investment.

In line with its role in leading the market, the CEFC is often creating the market for investment, pursuing opportunities that are economic but not yet easily bankable. As such, it assumes risks that others may not yet be familiar with, and in doing this has developed robust systems for investing and carefully managing its portfolio, Steven Skala noted.

Investment highlights: 2019-20

• Continued strong financial performance despite the challenging economic environment, with almost AU$942 million in CEFC finance repaid or recouped, alongside revenue of AU$205 million and a normalised surplus from operations of AU$100.5 million;
• CEFC investment commitments of more than AU$1 billion, supporting investments with a combined value of AU$4.2 billion in the year to 30 June 2020 and targeting more than one million tonnes of carbon abatement annually;
• CEFC finance extended to new areas of the economy, delivering Australia’s first dedicated green bond fund, the first CEFC green home loan, and a 50 percent uplift in the capacity of Australia’s largest battery in Hornsdale, South Australia (SA);
• New investment commitments of just over AU$13 million in three cleantech innovators, as well as an increased investment of AU$3.4 million in two other portfolio companies to accelerate their growth;
• More than AU$187 million in CEFC wholesale finance to support some 6 700 smaller scale investments in clean energy projects, including in agribusiness, manufacturing, property, and transport.

Portfolio highlights: 2019-20

• CEFC financed renewable energy projects delivering a combined 2.9 GW of renewable energy capacity to the grid, across 24 solar farms and nine wind farms;
• Successful delivery of the FarmPrint pilot, a unique tool to enable Australian farmers to monitor, benchmark, and evaluate their on-farm carbon footprint, drawing on a unique collaboration between the CSIRO, MIRA, and the CEFC;
• First ASX-listing of an Innovation Fund portfolio company, with Geelong-based Carbon Revolution raising AU$90.1 million in its initial public offering, (including AU$30 million as a primary raise and AU$60.1 million as a secondary selldown);
• Major progress in two landmark energy from waste projects, with Avertas Energy achieving significant development milestones in its Perth, Western Australia (WA) facility and South Eastern Organics Processing Facility in Melbourne, Victoria (VIC) becoming fully operational, diverting household garden and food waste from landfill by converting into high-grade compost;
• Independent recognition for the outstanding sustainability achievements of six CEFC investee companies, including in energy from waste, energy storage, commercial and residential property, and infrastructure.