The Australian Financial Review reports that Foresight’s Renewable Energy Income Fund was recently launched, seeking $50 million during its first tranche of the proposed $150-$200 fund from wholesale investors – specifically ultra-high-net-worth individuals, endowment funds and smaller superannuation funds – to provide debt financing to smaller-scale solar and wind farms.
Head of Australia at Foresight, Kim Nguyen told the AFR that there has been a trending movement towards ESG (environmental, social and governance) and sustainable investing where investors are “interested not only in financial return… but also meeting that sustainability investment objective without any discount on the financial return”.
While large scale solar and wind projects have slowed in Australia, Nguyen states that smaller projects could avoid similar situations as they can be “located closer to consumer load, minimising transmission losses, have faster registration processes with AEMO and quicker construction timelines”.
Nguyen further described the project pipeline as “really strong” with good interest both from smaller utility-scale solar and wind ventures, as well as from the distributed energy space, in portfolios of commercial or residential rooftop solar installations.
Despite the lack of federal support mechanisms for renewables, Nguyen commented that this will not be a problem as Large-scale Renewable Energy Certificates (LGC) prices were already so low, they no longer influenced investment decisions. "We're not relying on any current government subsidies so anything that comes in can only be upside as opposed to downside," she said, adding that potential reforms to the electricity market design were needed and didn't cloud the prospects for renewables investment. Fundamentally renewables are so cheap now compared to new-build coal that it will always form part of the mix going forward, but it's about what else will be the supply generation that sits alongside that to make it work."