The energy transition has been named a priority area for investment, specificially with Melbourne-based developer Tilt Renewables, in a new investment mandate and statement of expectation for the country’s sovereign Future Fund.
Future Fund Chair Greg Combet said it is continuing to assess opportunities to invest in businesses that will play a vital role in the energy transition.
“We are pleased to announce that we will be appointing an Executive Director Energy Transition to assist us with this effort,” Combet said.
Specifically, through its shareholdings the Future Fund is supporting long-term investment in new capacity at Melbourne-headquartered developer Tilt Renewables, which has 1.8 GW of solar, a battery energy storage system (BESS) and wind projects in various stages of operation, development or under construction.
It has two operational solar farms in New South Wales (NSW), the 53 MW Broken Hill solar farm and 102 MW Nyngan solar farm and is currently constructing the 100 MW / 200 MWh (Stage 1) Latrobe Valley BESS at Morwell, Victoria, 150 kilometres southeast of Melbourne.
Tilt also has eight operational wind farms in South Australia (SA), NSW and Queensland and four in development in SA, NSW and Western Australia (WA).
The Future Fund is also supporting a 400 MW development pipeline at the Melbourne-headquartered CDC, a significant operator and developer of data centres in Australia and New Zealand.
June 2024 analysis by the Australian Energy Council says finance company Morgan Stanley expects data centre energy demand to go from 5% of total national electricity generation in Australia to 8% by 2030 and could reach as high as 15%.
“In its base case, it expects data centre uninterruptible power supply requirements to increase from 1,050 MW in 2024 to nearly 2,500 MW in 2030, which is a 13% increase,” the analysis says.
Combet said the investment mandate of CPI+ 4-5% a year over the long term remains in tact regardless of the new mandates.
“The Board of Guardians will continue to make investment decisions independent of government with the priority of generating commercial returns,” Combet said.
“The government’s decision to defer withdrawals from the Future Fund until at least 2032-33 provides the Future Fund with the confidence to provide more focus and resources to the areas of national priority identified in the new investment mandate that align with our risk and return hurdle,” Combet said.
The Future Fund is Australia’s sovereign wealth fund, established to invest for the benefit of future generations of Australians. Its investment mandate requires the Future Fund to deliver returns of CPI + 4-5% over the long term with acceptable but not excessive levels of risk.
In 2006 it was seeded with $60.5 billion (USD 39 billion) from federal budget surpluses and the government’s remaining shares in Telstra. Investment returns of $169.2 billion have increased the value of the Future Fund to $229.7 billion as of 30 September 2024.
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