An innovative finance structure set up in 2002 to enable Victorian businesses to invest in sustainable upgrades of their infrastructure is going national. Sustainable Melbourne Fund in partnership with Bank Australia has expand its reach, with a new $200 million loan facility that offers commercial-industrial and agricultural businesses throughout the country the opportunity to cost-effectively upgrade their operations for environmental benefit. Call it the Sustainable Australia Fund.
“About 80% of our projects by number are rooftop-mounted solar projects, and they range in scale from 15 kW to 1.5 MW rooftop-mounted arrays,” says Scott Bocskay, who was until last week, CEO of Sustainable Melbourne Fund (SMF), and is now advising businesses and councils beyond Victoria on how enterprises can easily invest in their sustainable future.
The scaling up of the fund’s operations has been driven by an increase in interest, Bocskay told pv magazine: “We’re seeing a phenomenal growth in businesses looking to install solar, and much bigger businesses are now interested.” Such businesses, he says, have “traditionally used bulk purchasing to achieve a lower cost of energy per unit”.
The rapidly decreasing cost of solar generation, combined with increased energy prices and the highly favourable terms of the Sustainable Australia Fund’s Environmental Upgrade Finance packages are driving commercial decisions by bigger businesses to install rooftop PV systems that reduce their electricity bills and boost their social license to operate.
Recent loan recipients include transportation firm Booth Transport, food manufacturers such as Tibaldi Smallgoods, and agri-businesses such as Integrity Fruit.
Through Sustainable Australia Fund fixed-interest loans for terms of up to 20 years are available to businesses occupying land rated for non-residential use, in council areas that offer Environmental Upgrade Agreements (EUAs).
These agreements, are enabled by state-based legislative adjustments to the Local Government Act which have so far been taken up by Victoria, New South Wales and South Australia.
Under an EUA a business or commercial property owner can apply for a discounted loan for building upgrades that include solar power, energy and water efficiency measures and other environmental improvements. Any council in these three states can adopt the amendments that enable repayments on the loans to then be made as a component of the rates paid by the business or landholder.
Currently 32 councils in Victoria, six councils in NSW and four councils in South Australia have taken up the legislative changes, and Bocskay says the Sustainable Australia Fund is keen to work with other state governments to unlock the increased opportunities offered by the fund.
In a statement last week, Darren Dawson, Head of Impact Finance at Bank Australia said, “We’re proud to support the launch of the Sustainable Australia Fund, to enable it to expand its impact across Australia, which aligns with our purpose of creating positive impact for people and the planet.”
Last week also saw the announcement that Bank Australia had achieved 100% renewable energy use in its own operations, a year ahead of its commitment to reach that goal by 2020.
“Bank Australia is very progressive and keen on the work that we’re doing,” says Bocskay of the new partnership. Previously, the SMF had sourced finance through the Clean Energy Finance Corporation and the City of Melbourne.
On announcing the expansion of the fund and its recapitalisation through Bank Australia, Arron Wood, Deputy Lord Mayor with the City of Melbourne, said, the fund had been established 17 years ago with the aims of driving innovation in sustainable infrastructure and to reduce emissions by the private sector.
“Our seed funding and support for the fund has unlocked more than $30 million in environmental infrastructure upgrades for Victorian businesses. This has enabled the abatement of more than 300,000 tonnes of greenhouse gas emissions,” said Wood.
Commercial and environmental decisions
In November 2018, the family-owned Tibaldi Smallgoods company received loan support from SMF for the installation of a $1.4 million, 1 MW rooftop solar system at its premises in Clayton in Victoria, which is expected to result in annual electricity savings of $339,000.
Tibaldi CEO, Greg Ridder, said the company’s investment would also “provide environmental benefits by reducing our reliance on the grid, and make Tibaldi more competitive”. An employer of some 350 people, Ridder said the initiative had given the company confidence to expand and create more jobs in the future.
Peter Houghton, owner of Rye Hotel on the Mornington Peninsula, says that the long-term EUA he signed through SMF for an 88 kW rooftop solar system has reduced the hotel’s electricity bills by 25%. Houghton tracks his energy use through an online platform and says he derives great satisfaction from receiving monthly reports that show his positive contribution to the environment: a carbon offset of 1.3 tonnes, for example, which is calculated as the equivalent of planting 33 trees, he says.
Houghton adds that renewable energy “is a resource we can all use”, but that access, particularly to finance, can be a barrier for businesses. “We could never have come up with that kind of money to fund solar panels on our own,” he says.
The tenant-landlord dilemma
EUAs have also become a transformative factor in helping tenants with high energy needs and large rooftop areas to resolve with their landlords the issue of “Who pays?”.
Says Bocskay, “Because an Environmental Upgrade Agreement is repaid through council rates, it overcomes that split incentive. The landlord owns the solar installation, but tenants can make the repayments through their normal lease with the savings still greater than the repayments.” On the landlord’s side, if a tenant leaves, having a rooftop solar system in place has proven to be a magnet for new lessees.
Bocskay says that he’s recently seen an increase in applications for loans that integrate battery storage with solar systems, particularly among agricultural enterprises where margins are low and power outages can seriously impact productivity.
Kevin Minogue, owner of Minogue Dairy Farm near Katandra West in Victoria, was prompted to invest in a combined solar-plus-battery system when his local area experienced a 30-hour outage during peak milking season. To secure energy reliability, he approached SMF, and he says, “The process for applying was really simple.”
Bocskay muses that the Sustainable Melbourne Fund was established “before solar was economical, before sustainability became seen as an investment opportunity for business”. He looks forward to rolling out the new fund’s environmental impact beyond Victoria’s borders.
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