The Clean Energy Finance Corporation has a new chief, appointed at a time when investment activity in the renewable energy sector is forecast to get busier and bigger.
Ian Learmonth, an independent member of the CEFC Executive Investment Committee, will join the CEFC as chief executive officer on May 15.
Learmonth comes from Social Ventures Australia, and organisation in its fifteenth year that seeks to address disadvantage through investment in housing and issuance of social impact bonds. “I’ve been driving a small social investment bank, if you like,” he says.
No matter the virtuous objective when money’s involved it all comes down to application of a rational strategy, and Learmonth has plenty of experience to draw on: 20 years at Macquarie Group in Sydney, Hong Kong and London, including involvement in wind and solar transactions in Europe, board placements on Australian wind farms and his tenure as a non-executive director of the CEFC.
“Many of the same principles are applicable [across clean energy and social impact investing],” he says. “You’re trying to achieve an appropriate financial return based on the risks of an underlying transaction and you’re also trying to add something else on. In the case of the CEFC you’re trying to identify carbon emission reductions; in social ventures you’re looking for social outcomes like improvements in employment, education and housing.”
Hit the switch
No matter whose house you walk into, however, be it a mansion or council flat, it’s taken for granted that the lights will come on when a switch is flicked – such is the universal reliance on electricity. As Australia slowly transforms towards a clean energy future a wave of projects will need to be built, and financed, and the CEFC will be competing with other institutions and lenders as renewable generation becomes more affordable and the risk-return profiles of projects more attractive.
“The scale of investments across the Australian clean energy market today is incredibly broad and diverse, and in many instances very substantial,” Learmonth says. “The CEFC has been looking at everything from relatively early stage clean-tech investment through the Innovation Fund right through to wind, solar and battery-driven opportunities to very large infrastructure projects. It is a very big marketplace, whereas the social impact investing world is still developing.”
Learmonth describes part of the CEFC’s role as being to “crowd in” other investors and capital, and to assume risks associated with a developing market so as to encourage others to be comfortable with those risk levels. As to whether social impact is a perpetual investment market and renewable energy investment limited to the lifetime of fossil fuels on Earth, he sees “no end” to the broader clean energy market, including energy efficiency and low-emissions technologies. “There’s plenty of life in it yet – and that’s a very exciting part of the opportunity and the organisation itself.”
Many things get in the way of good ideas, however, and in the world of renewables that includes networks and regulators. As Oliver Yates prepares to relinquish his role as CEO of the CEFC, it’s a good time to look back over some of the past frustrations and forecast the way forward.
“The issue we’ve struggled with is a lack of movement by networks and regulators,” says Yates. “But I think the momentum of both is going to significantly increase in the near term. I don’t think people have fully appreciated the speed with which this transition is occurring and the depth of technological solutions which are available.”
Not to mention the problems that new technologies can present. The volume of investment the CEFC will trigger in the next year and a step up from its activity a year previously. “Clearly there is a different momentum within the market at the moment,” he says. “My hope is that will accelerate, and it needs to accelerate if Australia is to meet its 28% [below 2005 levels] emissions target [by 2030] – and the question is whether the emissions target should be higher.
“I’m very confident Ian is stepping onto a pitch on which there is a lot of batting to be done.”
Yates says he will miss the job, especially as he describes himself as a kid who was raised on challenges. “I’m the youngest in the family and I think I was probably belted around so much by my three elder brothers that the most motivating words for me are ‘You can’t do it’ or ‘You shouldn’t do it’ or ‘Don’t do it’, and this transaction threw up that opportunity straight from day one.”
The grind of interpreting what politicians actually mean, the strain of starting an organisation from scratch and building a new business – the risks that may seem unsurmountable to some to Yates are “what gets me up in the morning”.
“I am passionate about the need to reduce emissions and [the CEFC head role] ticked all the boxes for me and I loved it.”
He leaves the job after 4.5 years and is vague about he’ll do next, other than to say “there is a lot around”, such as water projects, the transmission conundrum and the vast amount of latent energy lying around in dispatchable renewables such as biofuels of all descriptions.
“There is a lot we can do in this sector.”