July 2, 2013
Australia

Public cash flows for wind farm

MARCUS PRIEST | Stock & Land | 02 July 2013 | www.stockandland.com.au

The government’s Clean Energy Finance Corporation has provided $50 million in finance to one of the country’s largest wind projects as one of its first investments.

But the participation of the CEFC in a banking consortium refinancing Victoria’s $1 billion Macarthur Wind Farm has raised questions about whether the green bank is genuinely filling market gaps.

The move has surprised major players in the finance sector given Macarthur has been fully operational for more than six months and managed initially to attract finance without the support of the CEFC, which explained the move as leveraging for the private sector. It is understood more wind projects will be announced by the CEFC in coming days.

The federal opposition has questioned the deal that sees the New Zealand state-owned generation company Meridian Energy exit its joint venture with Macarthur Wind Farm, a wholly owned subsidiary of AGL.

“This CEFC was established to provide finance for new clean energy projects that could not secure finance through conventional means, not to prop up existing projects owned by other governments,” Coalition finance spokesman Andrew Robb said.

“Clearly this refinancing would have occurred on commercial terms without the involvement of the CEFC. It is an entirely inappropriate use of borrowed taxpayers’ money.”

It is understood the CEFC was asked to assist in the refinancing after Macarthur was unable to raise the funds from the private sector due to the amount being sought – $200 million – and the exposure of big banks in the energy sector. Private-sector concern about uncertainty around the future of carbon pricing and the Labor government’s renewable energy target (RET) also made it difficult to raise finance.

The involvement of the CEFC led to other smaller investors becoming involved in refinancing and allowed the body to reduce its loan.

CEFC chief executive Oliver Yates said that by providing senior secured debt financing to Meridian, the body was playing a valuable commercial role in supporting other syndicate members – Australia and New Zealand Banking Group, National Australia Bank, ING, Shinsei, Industrial and Commercial Bank of China and Danish bank EKF – to provide market liquidity.

Mr Yates said the corporation was providing finance on the same terms as other syndicate members, demonstrating the role it can play in operating commercially to help leverage private-sector financing into renewable energy.

“Successful refinancing deals help send a strong message to future large-scale renewable energy projects in Australia that it is possible for developers to successfully complete a development-finance-exit cycle,” Mr Yates said.

The 420-megawatt Macarthur Wind Farm is the largest in the southern hemisphere and has been fully operational since January 2013. Investec project and infrastructure investment head Mark Schneider said there was no shortage of capital in the market but there were only a small number of bankable projects.

URL to article:  https://www.wind-watch.org/news/2013/07/02/public-cash-flows-for-wind-farm/