QIC has announced, on behalf of its managed clients the Future Fund and those invested in the QIC Global Infrastructure Fund (QGIF), its US$800 million investment alongside AGL Energy Limited (AGL) in the Powering Australian Renewables Fund (PARF).
This strategic partnership is the first of its kind in the development of large scale renewable energy infrastructure in Australia.
PARF will be a AUD2-3 billion (US$1.5-2.2 billion) owner of more than 1,000MW of large-scale renewable energy projects to support Australia's renewable energy capacity and transition to a low-carbon economy. Once fully invested, PARF expects to own approximately 10% of Australia's renewable energy capacity.
The Federal Government's Renewable Energy Target (RET) requires Australia to have approximately 20% of its power sourced from large-scale renewable energy by 2020. Today, total renewable energy capacity in Australia installed or under construction is approximately 50% of this target (5,000 MW). This has taken 14 years to build since the first target was set in 2002.
The renewable energy capacity from PARF will be approximately 3,000 GWh. This will mean enough energy to power 530,000 homes or to remove circa 800,000 cars from the road.
In addition to the AUD800 million commitment from QIC's managed clients, AGL has provided AUD200 million of cornerstone equity.
QIC CEO Damien Frawley said the partnership was a positive and important national step in the global trend towards destabilization:
"QIC is proud to create this 'first of a kind' partnership between institutional capital and a key energy industry participant such as AGL. PARF is the most significant step to date towards meeting the Australian Federal Government's Renewable Energy Target (RET), and should contribute up to 10% towards the overall target. We have a track record of strong ESG practices within the assets we acquire and then actively managing them. This partnership is a significant and more strategic step to develop the Australian renewables sector as a whole, while delivering target investment returns for our clients."
Ross Israel, QIC's Head of Global Infrastructure, said:
"We expect renewables, in combination with energy storage and smart grid technologies, to disrupt the existing electricity value chain in the future. This partnership paves the way for future investment that supports Australia's transition to a low-carbon economy. Development of renewables infrastructure has previously been risky for institutional capital. Barriers to investment included policy uncertainty, the resulting pricing fluctuations and the difficulty for industry participants and institutional investors alike to finding partners with both the expertise and the capital to work across the whole renewables value chain.
"In partnership, QIC and AGL are able to develop, own and manage both existing (brownfield) and new (greenfield) renewable assets, while establishing a governance framework to derisk the investment. The relationship leverages AGL's development expertise, and their scale as one of Australia's largest energy retailers, to provide long term off take (retail sale) agreements. QIC brings active asset management expertise and deep sector capability."