Australia’s Impact Investment Group has kicked off 2019 by re-opening its highly successful Solar Asset Fund to new investment, to coincide with the commencement of construction on one of its assets – the 35MW Brigalow Solar Farm in southeast Queensland.
It’s third time around for the IIG Solar Asset Fund, which was set up by industry luminaries including Chloe Munroe (chair) and Lane Crockett to offer investors a portfolio of large-scale solar farms that sell clean electricity into Australia’s spot markets.
The previous round, which reached “first close” last July after notching up $55 million in commitments, attracted some impressive names, including tech investor and co-founder of Atlassian, Mike Cannon-Brookes – he of the Tesla Big Battery tweet that started it all – via his company Grok Ventures.
The Fund’s first open, in May 2017, raised more than enough to fund its first two assets; The Swan Hill Solar Farm and the Chinchilla Solar farm, in a short six-week fundraising period.
The 19MW Swan Hill Solar farm reached practical completion in July 2018, and the 20MW Chinchilla Solar Farm started sending electricity into the market during December 2018.
IIG has also snared Future Super as a key investor, with the fossil-fuel free superannuation company taking “a sizeable position” in the fund.
In this round, the fund is targeting a an internal rate of return of 10 per cent and a distribution yield averaging 8 per cent per annum over its first five years.
IIG says the progress on the first two solar farms – from development to production – has substantially de-risked the fund, as has the fund’s lower debt profile.
The brand plan is to grow the fund to a total of $180 million, including $120 million of equity, as prospective and eligible solar farms become available for investment.
“The forward-thinking businesses and investors of Australia know that there’s a long-term transition underway from aging fossil fuel generators towards cleaner energy,” said Crockett, the former head of Pacific Hydro, who now heads up Renewable Infrastructure at IIG.
“This fund is a great opportunity for investors to gain exposure to this structural change in Australia’s economy.
“It’s fantastic to get Brigalow Solar Farm started; it’s another solar asset into the Fund so we can open it up to a new community of investors.”
On top of the financial returns, IIG expects its solar assets to avoid 4.1 million tonnes of CO2-e emissions over their operational life, and save 15 gigalitres of water in comparison to fossil fuel-based electricity generation.
The first three solar farms are also expected to avoid 78 deaths and 42,000 illnesses, by reducing demand from fossil fuel-based electricity generators that release harmful pollutants.
IIG says the solar farms will create more than double the number of jobs than oil, natural gas and coal facilities (per $1 million in output), “based on widely accepted sources.”
The seed assets, over their lifetime, are expected to create 470 direct and indirect jobs, predominantly in regional areas, the Group says.