Commitments by Technology
The CEFC Act requires the CEFC to invest in eligible clean energy technologies, including renewable energy, energy efficiency and low emissions technologies.
The CEFC Act also requires the CEFC to ensure that, at any time on or after 1 July 2018, at least half of the CEFC funds invested at that time for the purposes of its investment function are invested in renewable energy technologies.
Compliance with this requirement requires active management of the CEFC investment portfolio, particularly the investment strategy; the origination of new investments into the CEFC portfolio; and anticipating existing assets in the portfolio which may be capable of early repayment and/or redemption or sale.
There are many transactions and market events which can influence the make-up of the CEFC portfolio at any point in time. Some of these fall outside the control of the CEFC, such as:
- Early repayment due to a client deciding to refinance their debt or sell the underlying project that the CEFC has financed
- An impairment of a particular investment (debt or equity)
- Variability in the precise timing surrounding finalization of negotiations and contractual commitments
- Actual, versus projected, uptake of CEFC commitments of funds
- Illiquidity of many elements of the portfolio
- A change in International and Australian accounting standards to revalue certain assets.
Compliance with this requirement also needs to be balanced with protection of the portfolio value for the Commonwealth, including avoiding the wholesale liquidation of assets, the deferral of commitments, and interruptions to the continuity of the CEFC’s operations and client service.
* Subject to CEFC Board Guidelines