It appears that in spite of the federal government’s bluff and bluster, the Clean Energy Finance Corporation very much remains open for business and keen to finance projects in the areas of wind, solar and energy efficiency.
Of particular interest is that it is keen to facilitate the growth of a market in solar PV on commercial business rooftops, and remains willing to invest in wind projects in spite of the Renewable Energy Target being under review.
Back in February last year the Coalition’s Andrew Robb took the extraordinary step of ordering from the Opposition benches that the CEFC not enter into any financing contracts. In an act that typified the chutzpah of the Coalition while in opposition, Robb warned:
This warning was repeated by Tony Abbott in August.
To threaten to tear up contracts is an extremely serious matter. The security of a contract is the very basis of commerce in this country. In addition such a move, even by the government, has not been looked upon kindly by the High Court.
Yet in spite of the Senate having blocked the Abbott government’s legislation to abolish the CEFC, in the mid-year budget update released on December 17 the government continued to maintain that the CEFC’s funding would be withdrawn.
Nonetheless, Climate Spectator has heard from a range of businesses over the last few weeks that are in active discussions with the CEFC about financing their projects. A call to the chief executive of the CEFC, Oliver Yates, confirmed that it was business as usual for the organisation.
I asked whether the election of the Abbott government had led them to alter the mix of technologies and project types they were looking to invest in. Yates explained this was not the case. As set out in its annual report, the CEFC remains focused on building a “commercially sensible” portfolio of investments with a rough balance of 50 per cent in renewables and the other 50 per cent in energy efficiency and low emission technology. While the government has strongly criticised the CEFC, repeatedly, it appears it can do little to stop the green bank from allocating financing, provided it is consistent with the CEFC’s legislative mandate.
While Yates was unwilling to go into details of specific projects, he expects that it'll conclude financing deals with a number of projects in the near future.
This may seem like an extraordinary act of defiance for a statutory body to ignore direction from the government of the day. However, Yates points out, the alternative would be for the organisation to defy the parliament and break the law.
Contrary to what you might expect, Yates told Climate Spectator that the government has been good to deal with. Yates explained, “Everyone is being sensible and mature. They [the government] understand that we’ve got obligations under the law and that until such time as the law is changed, we’ll be financing clean energy projects which make commercial sense.”
I asked whether the forthcoming review of the RET and consequent uncertainty about its future shape affected its willingness to finance renewable energy projects, particularly in wind power.
Yates noted that while the RET is up for review, both ministers Hunt and Macfarlane had repeatedly stated that the government’s policy is for 20 per cent renewables by 2020. “I’m not about to second-guess them,” he said, and took them on their word that this meant that, at a minimum, 20 per cent of Australia’s electricity would come from renewables by 2020. He acknowledged this might mean a reduction in the target as specified in the level of gigawatt-hours of energy because of a drop in electricity demand growth. Nonetheless, to achieve 20 per cent more projects would be required and so Yates felt it was safe to commit finance to new projects in spite of the review underway.
Yates also said that he saw an important role for the CEFC in supporting the growth of solar PV among commercial business customers via leasing. He pointed at California where there is a huge pool of finance which supports installation of solar systems which are then leased to customers under long term, fixed price electricity contracts. According to Yates, “This model will inevitably flow through to Australia and we’re keen to facilitate it”.
It seems that, like in many other areas of policy, sometimes politicians do things just for the camera.