Waves of Renewable Energy Investment

Carnegie Wave Energy has pushed the button to build the first commercial wave energy project in Australia, while BP has signed a deal with Carbon Conscious to plant 10 million trees in Australia’s wheat belt. And industry superannuation funds have launched a A$1 billion-plus Clean Energy Fund to take a big stake in Pacific Hydro for renewable energy developments.

Rachel Donkin, in The West Australian (15 October 2009):

Carnegie Wave Energy has pushed the button to build the first commercial wave energy project in Australia.

The renewable energy hopeful, which has been working to commercialise its CETO renewable wave energy technology developed by Fremantle inventor Alan Burns, confirmed it would use a A$12.5 million grant from the State Government’s Low Emissions Energy Development Fund to help finance the 5MW project off Garden Island.

The project will produce enough power for 3500 homes, and Carnegie said yesterday it would create 30 jobs and save more than 500,000 tonnes of greenhouse gas emissions over its lifetime.

In January, Carnegie announced a memorandum of understanding with the Defence Department to assess the feasibility of powering the department’s Garden Island operations. It has also conducted feasibility studies at other sites off WA as well as off the Victorian and South Australian coast over the past 12 months.

The group, which has also been shortlisted for a grant from the Federal Government’s $435 million Renewable Energy Demonstration Program, hopes to build a second, 50MW project which would produce enough electricity for 30,000 homes.

Carnegie shareholders last week signed off on a deal to buy the global rights to the CETO technology from AIM-listed shareholder Renewable Energy Holdings, of which Mr Burns is a director.

Shares in the West Perth-based group gained 1¢ to 23¢ at 12.33pm.

Source: www.au.news.yahoo.com and www.carnegie.com.au

Mathew Murphy in The Age (14 October 2009):

Petroleum giant BP has signed a deal to plant 10 million trees as part of a large scale bio sequestration project in Australia’s wheat belt.

The deal, struck with Perth-based Carbon Conscious, will see BP pay the Australian Securities Exchange-listed company $2.5 million plus licensing fees to plant Mallee Eucalypt trees across Australia over a 15-year period starting next year.

BP and Carbon Conscious will share in the value of the carbon offsets. BP has the added option of investing further for plantings in 2011 and 2012 once the Federal Governments Carbon Pollution Reduction Scheme is finalised.

It comes three months after Carbon Conscious signed a deal worth up to $170 million with Origin Energy to plant millions of trees on less viable agricultural land in return for carbon permits.

Rajeev Suri, BPs regional director of emissions offsets, said the deal with Carbon Conscious was in a bid to secure capacity in the Australian carbon forest sink industry.

“We see this contract as potentially the initial stage or pilot of what could be a very significant part of BPs carbon management in Australia”, he said. This deal offers BP an investment structure and additional environmental benefits and it provides the foundation for an ongoing and mutually beneficial relationship with Carbon Conscious.

Source: www.theage.com.au

Rod Myer in Sydney Morning Herald (14 October 2009):

AUSTRALIA’S industry superannuation funds have launched a $1 billion-plus Clean Energy Fund that plans to take a big stake in Pacific Hydro and support future renewable energy developments.

Garry Weaven, chairman of Industry Funds Management, an umbrella management group for 36 industry super funds, said investors were being offered a substantial stake in Pacific Hydro through the new Clean Energy Fund. Industry Funds Management put up to 49 per cent of Pacific Hydro up for sale last month, managed by investment bank Lazard.

Initially it was expected the Pacific Hydro stake, valued at about $1 billion, would be taken up by foreign investors or those from the Australian power industry such as AGL and Origin Energy.

However, the move to launch the Clean Energy Fund means the asset could stay wholly or largely in the hands of the industry funds sector.

Mr Weaven said international investors would be influential in the Pacific Hydro sale regardless of the ultimate outcome. ”The global players will tend to set the price I think.” However, a range of Australian industry and public sector super funds which ”don’t have size to be large-scale direct equity investors but have a desire to be investors in renewable energy” would be able to buy in through the new fund, he said. The sale is scheduled to be completed by the end of the year.

Industry Funds Management put the Pacific Hydro stake on the market to help fund the renewable energy producer’s rapid growth plans. ”The company has got bigger and the project pipeline has got bigger and our capacity to keeping the funding up to it has been severely tested,” Mr Weaven said.

In 2005, after a bidding war with the Spanish infrastructure group Acciona, Industry Funds Management bought the 68 per cent of Pacific Hydro it did not own. Its final bid valued the company at about $950 million. At the time, Mr Weaven said IFM ownership would allow much faster growth because of the super fund’s massive and guaranteed annual inflows and its lack of a need to pay dividends to investors.

Pacific Hydro has invested $1.5 billion in Chile in recent years, including raising $200 million from the debt markets at the height of the global financial crisis.

That reflected the attractiveness of renewable energy investments to world markets, driven by the limited supply of good projects and regulatory support for the sector, Mr Weaven said.

The adoption of a 20 per cent renewable energy target in Australia and growth in the Chilean economy is expected to double Pacific Hydro’s generation capacity in both countries in the next few years.

Source: www.smh.com.au