CEFC tips $10m into home solar and battery-focused green bond

A new green bond designed to support Australia’s nascent home battery storage market has received a cornerstone investment from the federal government’s Clean Energy Finance Corporation.

The CEFC said on Monday it had invested $10 million in a $90.9 million green bond issued by FlexiGroup, which included a large portion of rooftop solar, alongside a smaller portion of small- scale storage receivables.

CEFC Debt Markets Lead Richard Lovell said the inclusion of “energy storage receivables” was an important market development for Australia – which last year was one of the world’s biggest sources of green bond issuance in the Asia Pacific, second only to China.

“Investor confidence in solar receivables has deepened as consumers have capitalised on technology gains and rapid price declines to install rooftop solar,” Lovell said in a statement on Monday.

“We can expect to see a similar pattern with energy storage, as consumers take even more control over their energy use, extending the benefits of their solar systems with the capacity for energy storage.

“With this issuance, flexigroup is giving institutional investors ready access to this evolving energy storage market, while further expanding the universe of investable green assets through the introduction of a new ‘A’ rated green tranche to the transaction structure,” he said.

For FlexiGroup – a major financier of rooftop solar systems through its subsidiary Certegy Ezi Pay – the new green bond follows two earlier issuances in 2016 ($50 million) and 2017 ($50 million), both of which the CEFC invested $20 million.

In 2015-16, the company gained $200 million in revenues from solar financing and at a 2016 results presentation, it flagged domestic battery storage as the next big market focus.

“Appetite for these tranches has grown with each deal we’ve done, and we will continue to explore the development of new green investment products to satisfy this demand,” said FlexiGroup CEO Rebecca James this week.

“Australian householders are taking control of their energy bills by capitalising on flexible financing solutions and government incentives to install solar and storage.

“We expect interest in adding battery storage to solar panels to continue to grow, which presents an expanding asset base from which to offer future green investment opportunities to our investors.”