CEFC given the green light for green investment

The Commonwealth has recently announced a new investment mandate for the Clean Energy Finance Corporation (CEFC). The aim is to facilitate increased flows of finance into the clean energy sector and to facilitate the achievement of our greenhouse policy targets. This objective is achieved by directing the CEFC Board to deliver on this purpose across three broad funds.  Our main focus is on Rewiring the Nation. Read on to find out more.

The Clean Energy Finance Corporation (CEFC) Investment Mandate was updated on 20 July 2023 [1].  The updates reflect the Government’s resolve to step up the action on climate change by implementing new policies to drive the transformation to net zero.

Essentially the investment mandate tasks the Board who operate independent of government to deliver on the Clean Energy Finance Act through three approaches:

  • Rewiring the Nation Fund (RTN)
  • Specialised Investment Funds (Advancing Hydrogen Fund, Clean Energy Innovation Fund, Australian Technology Funds and Household Energy Upgrades Fund) and
  • General Portfolio Investments.

The policies aim to contribute to meeting our commitments to the Paris Agreement to cut emissions by 43 per cent by 2030 (compared to the 2005 levels), reach net zero by 2050 and achieve 82 per cent renewable electricity in Australia by 2030. Governments rightly understand that urgent action is needed to meet these targets on time. As we can see many states have taken on transmission planning and coordination of generation in an attempt to speed things up.

The focus of this article is the Rewiring the Nation Fund, what the fund will be used for and how much governments have committed so far and the regulatory implications.

Rewiring the Nation Fund

RTN will facilitate the acceleration and delivery of critical transmission and other infrastructure to support the transformation. This will allow more renewables to connect to the electricity grid, facilitate the movement of the cheapest energy to the market and increase employment opportunities in regional Australia.

RTN is a commitment of $20 billion in low-cost finance to rebuild, modernize and strengthen our grid. Locations with a high renewable sources are often not at the same location as the retiring fossil fuel generators and new or upgraded networks are needed. Transmission is a critical enabler of the transition to renewables.

The AEMO Integrated System Plan (ISP) considers the need for new and upgraded transmission and the development of new renewable energy zones both on shore and offshore. Around 2-3 MW of renewable capacity is needed for every MW of retiring fossil fuel generation as these new renewable generators are weather dependent. Every $1 invested in actionable transmission projects will deliver net benefits over $2.

The CEFC Board will make available $19 billion for investment in projects that support grid transformation, such as those listed in the ISP or in other state plans nationwide.

The intent of RTN funding via a debt, equity or hybrid approach is to lower the cost of new transmission projects, allow and accelerate their delivery, as well as reduce the risk and costs of delays.  Agreements on concessional funding allow some or all of the benefit to be passed to consumers. This allows CEFC to manage the balance of outcomes on behalf of government and the Australian taxpayers and electricity consumers.

Government considers RTN investments may increase the corporations overall risk exposure as the scale, concentration and nature of these risk investments have a higher risk profile. This is recognised as government support has been required for certain projects ahead of any AER final revenue decision to date.  The AEMC’s Transmission Planning and Investment reviewed recognizes that the risk was material where successive ISP projects result in large project compared to the TNSPs existing Regulatory Asset Base. From the rule change application, it is clear that the Commonwealth Government agrees with the AEMC that the existing revenue framework is not sufficiently flexible to address financeability challenges and should be fixed to provide investors certainty, regardless of whether concessional financing is available or not[2].  It is important that rule changes fix financeability within the regulatory framework, provide early certainty for investors that decisions will be made on a clear and consistent basis and enable the parameters of the regulatory framework to be maintained.  If this is not the case, the risks is that RTN Funds may be under significantly greater pressure and funding negotiations may lead to project delays and higher costs.

So what can the RTN invest in?

The Board must take into account the following when considering RTN investments[3]:

(a) whether the proposal supports the development or acceleration of an Integrated System Plan project or other electricity transmission project identified by the Board which satisfies or otherwise supports paragraphs (b) or (c);

(b) whether the proposal supports the development or acceleration of a project required to enhance long duration grid storage, enhance electricity distribution network infrastructure (including distributed energy resources), or enhance electricity grid infrastructure to support a hydrogen hub or offshore electricity project;

(c) whether the proposal otherwise serves to reduce the greenhouse gas emissions, or supports or strengthens the security, reliability and affordability, of Australia’s electricity grids (including demand management projects).

The Board may seek advice from the RTN Office, AEMO and/or the AEIC before making an investment.

It isn’t just about ISP projects but includes other projects that can modernize the grid and facilitate the transition to renewables, including those in non-NEM states.

The Board must consider opportunities to enhance benefits to electricity consumers from its RTN investments and the renewable energy generation facilitated by those investments. The Board makes the decision on the extent of funding, whether some funding is intended to reduce customer bills and the regulatory mechanism to used to facilitate this. The AEMC is currently considering rule changes to achieve this approach for transmission. However, given the breadth of the investment mandate may need to consider the same arrangements for distribution.

How much of the RTN Fund is left?

CEFC is independent of government and will need to assess the investments already announced against their mandate.

In October 2022, the Federal Albanese and Tasmanian Rockliff governments announced a partnership to jointly fund Marinus Link and associated works to halve the annual costs of Marinus Link to consumers [4]Victoria had a similar agreement with the Commonwealth. [5]

In December 2022, a land mark deal of $7.8 billion[6] was announced for NSW. RTN will enable $4.7 billion from the Commonwealth to join with $3.1 billion from the NSW Transmission Acceleration Facility, to help NSW realise its Electricity Infrastructure Roadmap.

State State agreements for RTN Funds
Tasmania ·        Access to a concessional loan from Rewiring the Nation, through the Clean Energy Finance Corporation for approximately 80 per cent of the project costs of Marinus Link, with the additional 20 per cent to be an equity investment shared equally between the Commonwealth, Victoria and Tasmania to get this critical project off the ground.

·        Up to $1 billion of low-cost debt from Rewiring the Nation for Tasmania’s Battery of the Nation projects, including Tarraleah Power Station redevelopment and Lake Cethana Pumped Hydro.

Low-cost debt to link Cressy, Burnie, Sheffield, Staverton and Hampshire in Tasmania, known as the North West Transmission Developments (NWTD), which will increase the capacity of the network in Tasmania.

Victoria ·        $1.5 billion of concessional financing from Rewiring the Nation available for REZ projects in Victoria, including offshore wind projects

·        A commitment to coordinate Victorian and Commonwealth regulatory processes to support the rapid development of the Victorian offshore wind industry

·        Rewiring the Nation, through the Clean Energy Finance Corporation, will provide a concessional loan of $750 million for VNI West to ensure it is completed by 2028

Victoria will contribute equally with the Tasmanian and Commonwealth Governments to a total 20 per cent of project equity to deliver Marinus Link.

NSW Establish these critical transmission and REZ projects

·        Sydney Ring – Hunter Transmission Project (HTP)

·        Central-West Orana Renewable Energy Zones (REZ)

·        New England REZ

·        HumeLink

·        VNI West

·        Hunter-Central Coast REZ

·        Sydney Ring – Southern Sydney Ring

·        South-West REZ.


The pace of our transition to renewables needs to increase.

It appears that around $11 billion of the $19 billion available is already ear marked according to the announcements. The challenge is on to solve the financeability of these large projects in a way that gives investors certainty early enough in the projects to allow them to proceed in a timely manner.

If not, the pressure on RTN funds may continue to be focused in the transmission space, risking the outcome of maximising the benefits of the fund across all energy projects for the benefit of the community.


[1] Minister for Climate Change and Energy and Minister for Finance, Explanatory Statement, CEFC Act 2012 and CEFC Investment Mandate Direction 2023, 21 July 2023

[2] https://www.aemc.gov.au/sites/default/files/2023-04/Commonwealth%20Minister%20for%20Climate%20Change%20and%20Energy%20-%20Financeability%20rule%20change%20request.pdf

[3] Clean Energy Finance Corporation Investment Mandate Direction 2023

[4] https://minister.dcceew.gov.au/bowen/media-releases/joint-media-release-rewiring-nation-plugs-marinus-link-and-tasmanian-jobs

[5] https://minister.dcceew.gov.au/bowen/media-releases/joint-media-release-rewiring-nation-supercharge-victorian-renewables

[6] https://www.energy.gov.au/news-media/news/rewiring-nation-deal-fast-track-clean-energy-jobs-and-security-nsw#:~:text=Rewiring%20the%20Nation%20will%20enable,realise%20its%20Electricity%20Infrastructure%20Roadmap.