Australia’s first P2P green loan platform launched with CEFC backing

Australia’s first peer to peer green lending platform has been launched by local outfit RateSetter, and kick-started with a $20 million cornerstone investment by the Clean Energy Finance Corporation.

The ground-breaking green loan facility will offer individuals and businesses more affordable finance to buy technologies including solar and battery storage, electric and low-emissions vehicles and energy efficient appliances, while also tapping the growing mum-and-dad investor appetite for the clean tech market.

At launch, RateSetter said it expected the rate for its green loan marketplace would be around 7 per cent per annum, with the majority of loans spanning between three and seven years.

“For the first time, everyday investors have direct access – alongside the CEFC and other investors – to stable, attractive returns from a green asset-class, while green borrowers are rewarded with great rates,” said RateSetter CEO Daniel Foggo.

“This highlights the enormous opportunities that can result when innovative businesses and Government organsiations such as the CEFC work together,” he said.

The launch marks the first investment by an Australian government body with an Australian peer-to-peer lending platform, but is not RateSetter’s first time around.

Since launching three years ago, the company has facilitated over $100 million in loans from more than 6,000 investors registered to lend on the platform; 20 times the number of investors as the next largest platform.

“We operate a platform that connects investors to borrowers,” Foggo told RenewEconomy in an interview on Friday. “We’re trying to provide a really strong stable investment.”

From a consumer perspective, Foggo said the green loan offering was expected to tap a “significant” solar and battery storage market, partly through RateSetter’s pre-stablished relationship with key market players, including solar and battery storage installers.

He said there was “quite a lot of latent demand” among households and businesses wishing to invest in solar and storage and other energy efficiency technologies, but wavering over taking the final leap, due to both financial concerns, and confusion over product choice.

“The whole premise here is to take out a lot of the cost, take out the middle men, to have a relationship with the product, with the manufacturers, and take out the risk,” Foggo told RE.

“In this market place we’re actually letting people borrow to seven years because we know there’s a lot of demand here… we know that a home owner is better off financing it through a seven year loan with us than adding it to their mortgage.”

The company says it will be announcing further partnerships in the area, including with power distribution companies, in coming weeks.

For the CEFC, which has recently celebrated the success of Artesian Venture Partners’ Clean Energy Seed Fund, in which it was also a cornerstone investor, the P2P platform offers another “potentially important motivator” to further catalyse investment in clean energy technologies.

“Artesian’s ability to go and raise capital is indicative of quite strong demand out there,” said Richard Lovell, the CEFC’s debt markets lead.

“Both green loans and peer-to-peer lending are well established, but this is the first platform in Australia where the two have been combined.

“We anticipate there will be demand from both channels,” Lovell said, referring to both mum-and-dad investors and people seeking low-cost green loans.

“Once people see that there is this access, it is likely to get some reasonable momentum,” he said.