AGL Energy has signed up QIC and Future Fund as investors for its recently announced up to $3 billion fund to develop renewables projects.
The energy producer and retailer said the QIC Global Infrastructure Fund and Australian sovereign wealth manager the Future Fund will together contribute up to $800 million in equity funding for its recently announced Powering Australia Renewables Fund (PARF).
AGL has already committed an initial $200 million for the fund.
The partnership is a first in the Australian renewable energy space.
PARF is a landmark partnership created by AGL to develop, own and manage approximately 1000MW of large-scale renewable energy infrastructure assets and projects. These projects will help meet Federal Government targets and spur investment and development in support of Australia’s transition to a low-carbon economy.
It is estimated approximately 5000MW of new renewable generation capacity will be required by 2020 to meet the Federal Government’s Renewable Energy Target (RET). PARF, which will build large-scale projects as rapidly as energy market conditions permit, has the potential to deliver 20 per cent of this target.
AGL managing director and CEO Andy Vesey said support for the PARF demonstrates the strong appetite among Australia’s foremost infrastructure investors for the development of large-scale renewable energy projects.
“PARF is a major step forward in helping to unlock growth in renewable generation – but other challenges remain, first and foremost addressing Australia’s over-supplied energy generation market,” he said.
“An orderly exit of aged, high carbon emitting plant is integral to creating sustainable conditions for further investment in new renewables and Australia’s pathway to decarbonisation. We look forward to working with energy industry participants, the government and the community to address this.”
It is anticipated that AGL’s proposed wind farms in Silverton (up to 200MW) in New South Wales and Coopers Gap (up to 350MW) in Queensland will be the first two projects offered to the Fund.
The PARF expects to acquire AGL’s existing 102MW Nyngan and 53MW Broken Hill solar plants as seed assets and to commit to its first new build project by March 2017.
By bringing together institutional capital with AGL, QIC CEO Damien Frawley said the platform can help to unlock the level of investment required to meet the RET.
“PARF enables QIC to provide its investor clients with strong risk-adjusted returns by developing a pipeline of large scale renewable energy generation in Australia,” he said.