Clean Energy Transfer Fund
Australia is undergoing an energy revolution. Fossil fuel generators are retiring while renewable energy projects are on the rise.
How do we realise the true potential of renewable penetration given current market constraints? The Clean Energy Transfer Fund offers the solution.
- There is a significant supply of high quality and uncommitted renewable energy projects (currently in excess of 5GW). Each one deserves special attention, without being subject to distracted utilities and corporates. We remove this hassle and focus on the quality and relevance of projects.
- Large scale decommissioning of thermal assets is set to continue over the near to medium term. At the same time, an increasing penetration of renewable energy and distributed energy resources with decreasing reliability of thermal creates a systemic volatility price risk for project owners.
- Supply of debt capital within the Australian market, while strong, remains conservative. Merchant risk exposure does not necessarily allow for long-term funding on a reasonable basis. This drives reliance on debt funding. A key requirement for this is revenue security underpinned by a power purchase agreement (PPA), which secure the highest quality debt on the best terms.
- However, the low rate of traditional PPAs executed by traditional off-takers coupled with highly variable or short-term PPAs by corporates or retailers, constrains bankability.
- Appropriate PPAs are therefore required for renewable projects to secure funding.
- The CETF will be providing long-term, fixed-price bundled PPAs to projects to meet this need.