A word from the industry
In early 2016 AGL Energy (AGL) announced an innovative approach to renewable energy investment. The Powering Australian Renewables Fund is an investment vehicle for institutional capital to invest directly in renewable energy assets. It is structured to provide the necessary scale, diversification (by asset and location) and balance of risk to attract experienced infrastructure investors, while also meeting AGL's needs. QIC Global Infrastructure (QIC) is the preferred equity partner in the Powering Australian Renewables Fund.
Designed to support investment in approximately 1000 megawatts of renewable energy, the fund enables QIC and its clients to invest in a portfolio of greenfield and brownfield assets.
This represents approximately 20 per cent of the estimated additional capacity required to meet the 2020 target.
AGL and QIC have made equity commitments of $200 million and $800 million respectively, with the remaining capital to come from debt sourced on a project-by-project basis. Once fully invested, the total capital deployed is expected to be between $2–3 billion.
AGL will provide offtake agreements covering both energy and large-scale generation certificates for fund assets. These agreements will be for terms of either 5+5 years or 7+5 years—shorter than traditional offtake agreements.
In November 2016 the Powering Australian Renewables Fund made its first investment, acquiring two operational assets—the newly constructed 102 megawatt Nyngan solar plant and the 53 megawatt Broken Hill solar plant, both in western New South Wales.
In January 2017 the fund announced the acquisition and financial close of the 200 megawatt Silverton wind farm project in western New South Wales—the first greenfield project that AGL will develop and manage on behalf of the fund.
AGL has indicated the next likely development is the Coopers Gap wind farm project. At up to 460 megawatts, successful acquisition of Coopers Gap would see the Powering Australian Renewables Fund achieved financial close on 80 per cent of the planned 1000 megawatts in just over 12 months of operation.
AGL Energy provided this content.
Photo: Nyngan Solar Farm, supplied by AGL Energy.
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