Australia's renewables financier big on bioenergy

The $151m Australian Bioenergy Fund, in which CEFC invested last year, is aiming for a first close in the coming months.

Australia's Clean Energy Finance Corporation has identified states with policies most supportive of energy-from-waste and bioenergy projects, paving the way for renewables investors to ramp up their exposure to such technologies.

New South Wales, Western Australia, South Australia, Victoria and the Australian Capital Territory have policy settings and levies that create an incentive for businesses to recycle waste and reduce operating costs, CEFC’s bioenergy sector lead Henry Anning said. 

“The states, which have imposed higher levies on landfill waste, are providing the right environment for investment in energy-from-waste projects.” 

In a report, the clean energy financier noted projects with a combined value of more than A$1.5 billion ($1.1 billion; €1.05 billion) have been announced in NSW and WA. By contrast, it said, SA and Victoria have yet to witness substantial deal activity. 

CEFC pointed out that energy from waste could play a big role in boosting Australian renewable energy generation, with around 23 million tonnes of urban waste sent to landfill annually. The CEFC is looking to accelerate the deployment of such technologies through debt and equity investments. 

Last November, the CEFC made a cornerstone investment of A$100 million in the Australian Bioenergy Fund, a vehicle managed by the UK’s Foresight Group. The fund targets projects of up to A$100 million spanning the small-scale anaerobic digestion and mid-scale energy from waste sectors, according to a CEFC document. The fund has a A$200 million target. 

An Australia-based spokesperson for Foresight Group told Infrastructure Investor that the fund was aiming to hold a first close in the next few months and that the firm was already working on the vehicle's maiden investment. The fund will look to build a portfolio of 10-15 projects over the next few years offering mid-to-low-teen returns, he added. 

This is the country’s first equity fund dedicated to supporting bioenergy projects, according to CEFC. 

“On the debt front, we work directly with projects valued at over A$10 million. For smaller projects, we work through co-financiers. Earlier stage projects may be eligible for finance through the Clean Energy Innovation Fund,” Anning said. 

The financier has identified up to 800MW of biogeneration projects, with a total investment value of A$3.5 million to A$5 billion, to be developed in Australia by 2020. 

The bioenergy sector contributed about 1 percent of Australia’s electricity output, which was below the OECD average of 2.4 percent, according to the 2015 report.