CEFC triples climate investing budget to $20 billion

Australia has allocated another $13.5bn to CEFC for fund and direct investments – including $12.5bn for infrastructure projects and $300m in venture capital.

Australia’s Clean Energy Finance Corporation, a state-funded climate investor, has received a A$20.5 billion ($13.5 billion; €12.4 billion) capital injection from the Australian government for energy transition projects in the country. This is the first top-up the Australian government has provided CEFC since it established the institution with A$10 billion in 2012.

The majority of the fresh capital – A$19.5 billion – is allocated to CEFC’s newly created infrastructure pool, ‘Rewiring the Nation Fund’. This pool invests to improve the efficiency and stability of Australia’s energy grids, Rory Lonergan, CEFC chief investment officer for infrastructure and alternatives, told New Private Markets. Target sectors include transmission projects, energy infrastructure, long duration storage and distributed energy. The fund may also be deployed in energy generation such as hydrogen and offshore electricity projects.

CEFC invests directly into projects and companies, via funds and through co-investments alongside funds on deal-by-deal bases. Fund investments CEFC has made in the past year include A$80 million to Crescent Capital Partners’ mid-market private equity decarbonisation fund, A$80 million to Pacific Equity Partners’ infrastructure decarbonisation fund, A$75 million to Octopus Investments’ OASIS renewable energy fund, and A$35 million in Adamantem Capital’s Environmental Opportunities fund.

Generalist fund managers may also find a willing ear in CEFC: the institution occasionally co-invests on single climate-focused deals within a generalist fund. For example, CEFC committed A$100 million to BlackRock Private Markets for a battery storage project in New South Wales in the past year.

A further A$500 million of the government’s funding package for CEFC has been earmarked for venture and early-stage technologies through a newly created Powering Australia Technology Fund. This fund has the capacity to make venture, growth equity and fund investments and provide development capital. PATF is distinct from the Clean Energy Innovation Fund, CEFC’s longstanding venture allocation. CEIF, an A$200 million allocation, is managed by Virescent Ventures, a venture firm established by former CEFC executives last year to crowd in external private investors.

CEFC is also turning its attention to residential energy use reductions, with A$1 billion provided by the Australian government to create a Household Energy Upgrades Fund. This will provide consumer finance for resident-led endeavours such as “investment in energy efficiency upgrades, high performing appliances and battery-ready solar PV for existing housing stock”, a source familiar with the investor told NPM.