Australia has announced the launch of the AU$20 million ($15 million) Clean Energy Seed Fund (CESF), which will provide seed and angel funding to ventures developing clean energy solutions.
The fund will target investments in 30 to 50 startups over a 5 year period, reports said. State-owned Clean Energy Innovation Fund (CEIF) will provide AU$10 million ($7.5 million) of the new fund, said Federal Minister for Environment and Energy Josh Frydenberg.
The AU$1 billion ($750 million)-strong CEIF was established earlier in 2016. It is managed by the Clean Energy Finance Corporation (CEFC) and the Australian Renewable Energy Agency (ARENA). It aims to invest over 10 years into a variety of clean energy projects.
Artesian Venture Partners will be running the CESF. The venture firm had previously set up funds for the likes of BlueChilli, the Sydney Angels’ $10 million Sidecar fund, Newcastle-based accelerator Slingshot venture fund and the University of Queensland accelerator ILab. Artesian’s strategy consists of investing small amounts in many different firms.
It on the search for other corporate, institutional and high net worth investors to match the government’s contribution.The CESF has applied to be registered on the Early Stage Venture Capital Limited Partnership (ESVCLP) program which provides fund managers flow-through tax treatment and tax exemptions on share-returns for investors.
Reaching the RET
This investment comes in an effort from the Austalian government to reach the Renewable Energy Target (RET). The RET is a Federal Government policy made to ensure that at least 33,000 Gigawatt-hour (GWh) of Australia’s electricity comes from renewable sources by 2020. The RET has been operating since 2001 and is already about halfway to reaching the 33,000 GWh target, brought down in 2015 from a previous 41,000 GWh.
As of summer 2015 when the new target was agreed upon, an estimated 6000 MW of new renewable energy capacity was required to be built by 2020. The Australian Power Generation Technology Report (APGTR) forecasts that in the next 15 years to 2030, the capital costs for solar plants will reduce by 35-50%.
Most successfully funded large-scale projects by the government in 2015 in efforts to reach the RET were primarily onshore wind and solar PV projects.The current global trends for solar power remain nonetheless inconsistent, and have fallen in 2015. A CB Insights report indicates that worldwide funding to solar has been generally declining in the past years, dropping more than 50% from 2012 to 2013, before rising again in 2014 with $1.8B invested, only to fall again in 2015.
A futur for wind
Global funding to wind, however, has grown as of recently, despite tumbling oil prices. “A market smaller than solar in terms of deals and dollars to private companies — has grown tenfold from 2012 to 2015 and seen three straight years of growth. In 2015, funding to wind companies grew 6% over the previous year, while dollar investment in solar dropped 34%” reports CB Insights.
The APGT report concludes that wind power is the lowest cost renewable technology currently available – with a levelised costs of electricity (LCOE) of ~A$100/MWh ($US75).
Low wind prices are a direct consequence of the number of large scale wind projects conducted by the government in 2015. The solar market is still relatively more expensive. The wind power market is set to fuel the government’s aim to reach the RET, in both public and private funding.
In 2015, Australia’s wind farms produced 33.7 per cent of the country’s clean energy and supplied 4.9 per cent of Australia’s overall electricity during the year, the second highest contributing renewable energy source being hydroelectricity with 5.9 per cent contribution (40.3 per cent of renewable market).
“Wind power is the lowest cost renewable energy technology that can be rolled out on a large scale. The national RET provides an incentive to build the lowest cost renewable energy projects, meaning that wind power is likely to be the main technology supported by the target this decade” indicated the Clean Energy Council.