AGRIBUSINESS and regional Australia will be a key focus in a new $120 million finance initiative to incentivise Australian businesses to cut their energy and operating costs and lift business performance.
The Clean Energy Finance Corporation is providing access to $120 million through the National Australia Bank for the new program, designed to help businesses upgrade industrial and agricultural equipment and increase their uptake of solar technology.
The project will see the bank offer businesses of all sizes discounted equipment finance for assets that cut energy use or generate renewable energy. The agreement will allow NAB to offer a rate 70 basis points below its standard equipment finance rate.
NAB will make the CEFC-supported program available across a broad commercial base, but carrying a particular emphasis on agribusiness and regional Australia, a CEFC statement said.
“Cutting energy costs has never been more important for Australian businesses,” CEFC chief executive Oliver Yates said.
“Australia spends $120 billion a year on energy – representing a 67pc increase over 10 years. With the right equipment, businesses can lower energy and operating costs, cut heating, cooling and lighting bills and even create energy from waste,” he said.
The investment program was available to provide an incentive for businesses to act now, undertaking both small and large scale projects, up to $5 million in value. It has been designed so the benefits in new CEFC funding will flow through to the businesses who invest in high efficiency and clean energy equipment.
The program will finance a broad range of activities, including equipment such as variable speed pumps in the irrigation sector and upgrades to industrial and commercial refrigeration which significantly cut energy use. Investments in biogas, bio-digesters and micro turbines, and fuel switching equipment and processes, will also be eligible for finance.
Recognising the increasing role of solar energy in cutting power bills, the new program is also supporting the installation of rooftop solar PV, solar thermal for hot water and heat pumps and solar PV to displace diesel generation. The project will also focus on higher fuel efficiency vehicles, hybrid and electric vehicles and related infrastructure.
NAB Agribusiness general manager Khan Horne said many agriculture businesses are transitioning to more sustainable business models and, particularly for intensive agriculture, a big part of that is lowering energy and water bills.
“This program is unique to NAB and offers a real point-of-difference,” Mr Horne said.
“It is an opportunity to consider upgrading irrigation, improving plant and equipment, increasing solar use, overhauling processing lines or even looking at biogas generation options.”
“We know that farmers and businesses that understand and invest in their natural capital assets reap benefits including improved profitability and increased business resilience.”
CEFP’s Oliver Yates said energy use was a major cost for Australia’s agricultural sector and, unless addressed, it would adversely affect Australia’s economic competitiveness.
The program is also designed to support financing for a range of eligible projects under the government’s Emissions Reduction Fund, demonstrating the potential of the CEFC to help Australian business towards a more competitive economy in a carbon-constrained world.
NAB is Australia’s largest debt financier of renewable energy projects, having arranged more than $1.8 billion in wind-farm transactions alone over the last eight years.
Late last year it became the first Australian bank to issue a climate bond, raising $300 million, while in March, NAB raised $205 million in US markets to finance an Australian wind farm.
About the CEFC
The Clean Energy Finance Corporation (CEFC) invests using a commercial approach to overcome market barriers and mobilise investment in renewable energy, energy efficiency and low emissions technologies. As at 30 June 2014, the CEFC had contracted investments worth $900 million in projects with a total value of more than $3 billion.
The CEFC invests for a positive financial return, with its more than 40 direct investments and 25 projects co-financed under aggregation programs expected to achieve a positive net benefit for the taxpayer. These projects help to improve energy productivity for businesses across Australia, develop local industries and generate new employment opportunities.
More information about the package is available here.