Lane Crockett: Impact Investment Group’s Head of Renewable Infrastructure

Impact Investment Group’s 35MW Brigalow Solar Farm in southern Queensland is Australia’s newest clean energy generator. AltEnergy asked Impact Investment Group’s Head of Renewable Infrastructure, Lane Crockett, to tell us a bit about Brigalow, IIG’s business model and plans, and what the future holds for the renewable energy industry in Australia.

Tell us a bit about the Brigalow Solar Farm please Lane?

The Brigalow Solar Farm is a 34.5MW generator about 30 minutes’ drive southwest of Toowoomba in Queensland. It’ll produce about 60,000MWh annually; enough clean energy for about 10,500 homes, which is about the number of households in a town the size of Lismore. 

Groundworks started in early 2019, with Gildermeister Australia as the EPC contractor, and we’ve just passed the final milestone for practical completion, so the solar farm is now generating electricity at full capacity.  The overall project has run significantly longer than normal for a solar farm of this size, primarily because of a slower testing and grid connection, which has unfortunately been a challenge across the large-scale solar industry working in this part of Queensland. We expect that to get better, which is great news for the industry and for Australia’s transition to a clean energy system. 

We also model the positive environmental and social impacts of the project:

Expected Annual CO2-e Emissions Avoided: 56,000 Tonnes
Expected Annual Respiratory Illnesses Avoided: 578
Expected Annual Water Use Avoided: 68,300L/year
Jobs During Construction and Operations Over Project Life: 220

How does developing, building and operating large-scale renewable energy projects fit into IIG’s business model primarily as a funds manager?

We have a few different models, but for the Brigalow Solar Farm, we actually acquired the project in later stage development, but before the main building phase had started, so for this particular solar farm, we weren’t the early stage developer. We can oversee the building and operating of solar farms pretty efficiently, because we’ve got an experienced and talented team, working with good contractors and sub-contractors. For our investors, that’s an efficient way to get exposure to renewable energy infrastructure.

How many projects does IIG now own and operate in its Solar Asset Fund?

There are three solar farms in the Solar Asset Fund, one in Victoria and two in Queensland. We manage another three solar farms through our Solar Income Fund, and a wind farm through a separate fund. So six solar farms and a wind farm in total.

Are there any other Solar Asset Fund projects in the pipeline?

The Solar Asset Fund’s mandate allows us to raise capital and acquire more solar farms or solar farms in development, but we don’t have any in the pipeline.

Can you tell us more about IIG’s financing/debt investment options specially designed for clean energy infrastructure?

We’ve been working on our plans to contribute to the next round of clean energy projects in Australia, and we expect specialist loans will be a big part of that. We talk to developers and project owners a lot, and it’s become clear that quite a few of them are looking for finance to get over specific hurdles, and the existing, traditional and mainstream finance providers aren’t always the right fit. The CEFC has moved into a different part of the ecosystem, which is appropriate for a government-backed lender, but it does leave some gaps. 

Sometimes the big banks and lenders aren’t well set up to provide construction finance, or they’ll only offer senior debt to a certain LVR, leaving a requirement for mezzanine debt to fill the capital stack. Another developer might be looking for bridging finance so that they have the opportunity to sell an asset when its reached completion, thereby capturing the equity uplift. 

Our team has a pretty strong record, both at IIG and in previous companies, developing energy assets or overseeing construction, so we’re familiar with the processes. Over the years, we’ve seen and worked through a lot of challenges that developers can encounter, and we think that makes us a good financing partner for the industry. 

We also work with a community of investors who appreciate us bringing them opportunities, and when we put the right projects in front of them, they take notice. 

What do you see as the biggest issues/risks in the Australian large-scale renewable energy industry going forward?

This is the decade when Australia needs to accelerate our transition to a clean energy system. We don’t want to be naive, but we also don’t want to lose sight of the big picture, and the groundswell of support for the decarbonisation of our economy – which will ultimately create demand for renewable sources of power. We have a federal government that is moving slowly, and thereby creating a policy vacuum. As a result states are stepping up to fill that vacuum and support the transition to clean energy. The ACT has been making strong moves for a long time. Victoria joined them this year and Queensland is also making progress. We think the NSW mechanism for stimulating new generation could do with some adjustments to unlock private capital, but the minister has been absolutely resolute in defending the reality that de-carbonisation needs to happen and happen quickly, and deserves praise for that. 

The biggest issue we are concerned about is unintended market consequences that result from government interventions and policy mechanisms that don’t align with the way that markets are supposed to operate. In our view a broad carbon price remains the most effective and cost efficient policy for driving down emissions and transitioning the energy sector.

It is a reality that Australia has lost ground, but we haven’t lost all the advantages that come with a massive country that’s drenched with sun, has windy coast-lines and the opportunity to become a clean energy exporter.

What have you made of the federal government’s recent interventions in the energy sector?

Every new gas plant that’s built, subsidies that keep coal operational, and speculative investment in carbon capture from coal or gas-fired power plants are all steps in the wrong direction. But we also see the enormous international pressure building which the federal government will have to face: Trade policy looks like being integrated with carbon pricing, maybe with Europe leading the way, maybe with the US. International treaties and diplomatic relationships will bite. The biggest investment managers in the world are increasingly asking listed companies how they’re going to adjust to the new reality of decarbonisation, and those companies are turning around to governments and saying “give us a policy environment that’s conducive to the transition’’.

The government needs to set interim targets in line with our agreement to preferably limit global temperatures to 1.5 degrees. We already have the technology available at low cost, we just need to make the transition happen.