CEFC looks to energy storage, grid stability, after record spend on renewables

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Clean Energy Finance Corp tipped record $1.3bn into renewable energy in FY19, says focus in 2019-20 will be on “important new frontier” of storage and grid stability.

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The federal government’s green bank says it will sharpen its focus on energy storage and other technologies to support the stability of the national grid, as it caps off another 12 months of record investment in renewable energy.

The Clean Energy Finance Corporation said on Tuesday that it had made new investment commitments of almost $1.5 billion in the year to June 30, across 30 projects with a total value of $6.3 billion.

Of this amount, a total of $1.3 billion was invested into the clean energy sector – a record for the CEFC since it opened for business in 2013.

And not all these funds were directed to major projects. FY19 also saw a record $400 million in asset finance invested across some 5,800 smaller-scale projects, in partnership with banks, specialised lenders and funds.

A further record was achieved in finance repaid – a total of $320 million for the year, which the CEFC said underscored its ability to earn a positive return on investments, and reinvest, on behalf of the Australian community.

Meanwhile, each dollar of CEFC finance committed in FY19 was matched by $3.00 from the private sector.

Records aside, the FY19 total of new investment commitments was a good deal lower than the record $2.3 billion achieved in 2018 – an outcome the green bank says was to be expected, in light of the build out of the Renewable Energy Target and grid and transmission constraints.

But those same constraints will shape much of the CEFC’s investment strategy going forward, says CEO Ian Learmonth, as it works to make the most of existing renewables and to support the transition to a distributed energy model.

“The grid’s been the big challenge over the last 18 months or so, increasingly turning our attention to pumped storage, utility-scale batteries, household batteries, and other technologies that will help system strength and security,” Learmonth told RE in an interview on Monday.

This included behind-the-meter generation and other distributed grid solutions where there was less appetite from mainstream investors, he said.

“If we’re there to be a catalyst, then that’s the important new frontier, rather than just continuing to invest in big solar and wind.”

Learmonth said large-scale solar and wind energy projects were increasingly standing on their own two feet, in terms of securing finance.

But he added that with the end of the RET, there was still going to be a need for some support in that market, particularly for merchant projects that didn’t have off-take contracts.

“Good projects we’ll continue to support,” Learmonth said. “We’re very focused on supporting new generation where there might be something like a synchronous condenser included.”

But renewable energy and supporting technologies are not the only focus of the CEFC, whose guiding principle is to accelerate Australia’s transition to net zero emissions – even if that’s a notion the current holder of the purse strings scoffs at.

Other areas of interest include backing more green bonds – the CEFC was a cornerstone investor in the recent Woolworths green bond, the first certified Australian bond by a retailer which raised more than enough to finance installation of rooftop solar, energy efficient lighting and fridges.

As for the amount of money the CEFC expects to invest in the 2019-2020 financial year, Learmonth says he the green bank is likely to make commitments totalling a bit less, again, than the year before in 2019-2020.

“We expect there to be a slower trajectory for a while until we can get this investment in the grid resolved, then I expect things to take off a bit,” he said.

Once that happens, Learmonth added, the CEFC’s investment focus may well return to large-scale renewables.

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