rss
5

Oliver Yates teams with Simon Corbell in Clean Energy Derivates Corp

Print Friendly

windfarm

The former head of Australia’s Clean Energy Finance Corporation, Oliver Yates, is teaming up with the former ACT climate and energy minister Simon Corbell in a new venture called the Clean Energy Derivatives Corporation, which is set to emerge as a major new player in renewable energy markets.

Yates, Corbell and John Smith were announced as directors of the CEDC on Monday as the new company prepares for a capital raising ahead of its entry into Australia’s energy markets, which will tap into Australia’s huge pipeline of wind, solar, and storage projects by offering to remove market risk.

The idea is to provide revenue certainty for renewable energy developers by effectively writing its own “contracts for difference” – a mechanism used by the ACT government in its pursuit of 100 per cent renewables and since adopted by the Victoria and Queensland government.

The CEDC is looking to raise around $250 million from local and international investors in its first fund, which CEO Ashleigh Antflick says would be enough to underwrite around 450MW of new renewable and storage projects.

Effectively, the company will provide contracts over and above those offered by the energy retailers under the soon-to-end national renewable energy target and the various state-based targets, and the emerging corporate market.

“The CEDC will provide price stability to clean energy generators by entering into cash backed long term contracts for difference,” said Yates, who will chair the company.

“This will facilitate the much needed new generation infrastructure that will be essential if we are to stay below 2 degrees of warming, and meet our Paris climate commitments.

“With an energy market still lacking clear policy direction, the CEDC can provide the economic certainty investors need to invest in new clean energy generators now.”

Corbell, who pioneered the use of contracts for difference while running the ACT’s renewable energy and climate policy, said the structures had gained wide industry acceptance since the first ACT renewable energy auctions.

“The CEDC will provide additional impetus to the reverse auctions being held by State governments. The CEDC can compliment these programs with private sector capital across more projects.”

He says the CEDC will fill a significant gap in the market by writing its own CfDs, and will be loosely based on the UK-based low carbon fund.  He noted many projects are still struggling to sign contracts with big retailers.

“State-based policies are providing very important role in providing an alternative way to market for renewable energy projects,” Corbell told Reneweconomy. “But the state based targets on their own aren’t meeting all of that demand”.

Antflick said the CEDC’s mission is to “accelerate the introduction of additional clean energy in the National Electricity Market by providing long-term price certainty to clean energy generators.” He said the fund raising would start this week and be completed by Christmas.

The CEDC describes itself as a clean energy “fund manager” providing “sculpted risk management products” to large (multi megawatt hour) clean energy generators and their project financiers.

It will use structured derivatives contracts to provide the revenue certainty that is often important in allowing new clean energy generators to enter service.

 

   

Share this:

  • Chris Drongers

    Can someone explain how investors in CFD’s make money? And how do I buy some or invest in the new CEDC?

  • Tom

    Not sure I understand. Are they just purchasing the output from solar farms? How do they make money?

    • David Osmond

      Just speculating on my part, but if it’s like the ACT’s CfD scheme, then they guarantee the renewable projects will receive a certain $/MWh (let’s say $60/MWh). The renewable project sells their output on the wholesale market. If they sell their generation for more than $60/MWh, then they will have to refund the excess revenue to the CEDC, but if they sell it for less than $60/MWh, then CEDC will have to top up their revenue.

      Under this scenario, the CEDC will lose a lot of money if wholesale prices drop in coming years to below the CfD price, or will make lots of money if it stays high. But no doubt the CEDC will hedge that risk by also signing contracts with electricity consumers who would like to hedge their future electricity costs.

      You can see the quarterly results of the ACT’s CfD scheme at the bottom of the following link. It shows that the ACT saved $1.3m from their CfDs with wind farms in the most recent quarter (Apr-Jun), though they lost $1.4m with their CfDs with solar farms, resulting a net loss of $123,827.

      http://www.environment.act.gov.au/energy/cleaner-energy/renewable-energy-target,-legislation-and-reporting

      • Jonathan Prendergast

        Hard to say if it will be sell derivatives to large electricity customers, or just let the equity investors in the CEDC take the risk via their equity investment. It doesn’t say it will do that in the article. But judging on their name, they will sell such derivatives.

  • edgare kerkwijk

    Didnt the guy just joined UPC Australia three months ago?

    UPC Renewables enters the Australian market with the signing of an agreement to develop one of the southern hemisphere’s largest wind farms at Robbins Island and Jims Plain
    Published at June 8, 2017 Country : Australia Press Release
    MEDIA RELEASE

    International renewable energy developer, UPC Renewables today formally announced the entry into Australia with the creation of UPC Renewables Australia Pty Ltd.

    UPC Renewables has been a developer for more than 20 years, with UPC-formed companies having developed more than 3,500 MWs of renewable energy and more than USD5 billion of capital deployed across three continents.

    UPC Renewables Australia Pty Ltd, and the Hammond Family, owners of Robbins Island and other lands near Smithton on the north west coast of Tasmania, have signed an agreement to develop a Renewable Energy project on Robbins Island and at nearby Jims Plain.

    UPC Renewables Australia Pty Ltd CEO Anton Rohner said the projects would have an aggregated output potential of between 600MW and 1,000MW of wind energy potential.

    “The Robbins Island project itself is a very large isolated site and, together with Jims Plain, have some of the best proven wind resources in the world,” he said.

    “Once built, it will complement the Prime Minister’s recently announced strategy for Tasmanian Wind and Hydro systems to act as south-east Australia’s renewable energy battery and is close to the Australian Energy Market Operator’s proposed entry point for a second interconnector between Tasmania and Victoria.”

    “The Robbins Island and Jims Plain projects, together with Tasmania’s hydro assets and other new renewable energy projects, will assist in making a second interconnector a dispatchable and significant renewable energy generator into the National Electricity Market.”

    A study into the feasibility of connecting directly to the Victorian grid from Robbins Island has also been initiated..

    Almost 16-years-ago investigations commenced into the feasibility of a large wind farm on the west side of Robbins Island (total 10,184 hectares) and Jims Plain (total 380 hectares). More than 12 years of wind data, environmental studies and financial modelling were completed in preparation for lodgement of a Development Proposal and Environmental Management Plan for both sites.

    Due to the lack of a viable transmission solution and volatility in government policy at the time, the project was placed in abeyance until early 2017.

    Mr Rohner said: “With the changes in the energy market and potential viable transmission solutions available this projects is set to proceed; Robbins Island and Jims Plain could accommodate approximately 600MW to 1,000MW of wind energy generation capacity between them.”

    “The technology to be deployed at the site will be mostly wind energy but the option of additional solar and other non-hydro based energy storage technologies is also contemplated,” he said.

    The total Robbins Island and Jims Plains projects, once built, would cost between $1.2 billion and $1.6 billion.

    The Robbins Island projects is targeted to be ready for investment by early 2019 and the project will create approximately 250 jobs during construction and 50+ jobs when operational. The smaller Jims Plan project is expected to be investment ready by mid-2018 with a smaller number of additional jobs.

    “From here, we have further resource and environmental monitoring work to undertake with the development application processes and transmission studies commencing,” Mr Rohner said.

    Mr Rohner also announced that Oliver Yates had joined the company as an Executive Director.

    Mr Yates was the inaugural CEO for the Clean Energy Finance Corporation (CEFC), a $10 billion fund set up by the Australian government to reduce emissions in Australia.