Councils are missing out on lower-cost clean energy solutions

The CEFC Market Report ‘Clean energy opportunities for local government’ finds that councils typically hold large property and infrastructure portfolios with long operating lives. But while councils generally have stable cash flows and a strong capacity to service debt, many councils are making relatively little use of currently available low-cost finance to update this critical infrastructure.

“We believe it is time for councils to take a longer-term view of their infrastructure, improve their energy efficiency and increase their use of clean energy to limit their carbon emissions,” CEFC Local Government sector lead Melanie Madders said.

“Much of this ageing infrastructure is energy inefficient, meaning councils have higher operating costs and a higher carbon footprint than necessary. Some councils also have zero-debt policies, which are putting the cost burden of inefficient long-life assets onto current ratepayers, rather than sharing these costs with future ratepayers who will also share in the benefits.

“We believe it is time for councils to take a longer-term view of their infrastructure, improve their energy efficiency and increase their use of clean energy to limit their carbon emissions.”

The CEFC Local Government Finance Program provides councils with access to tailored finance for a range of clean energy and energy-efficiency investments. Reflecting the particular financing needs of councils, the CEFC finance includes access to competitive fixed-rate longer-dated senior debt of up to 10 years. The finance can be drawn over a three-year availability period and includes the ability for multiple councils to enter into joint financing agreements for eligible projects.

“Depending on a council’s energy consumption patterns and energy upgrade opportunities, the savings from clean energy investments can offset the loan repayments, improving council operating budgets while meeting environmental goals,” Madders said.

“This kind of sustainable borrowing is integral to prudent long-term asset management, which is especially important given the significant infrastructure challenge that councils face. Importantly, the cost savings and emissions reductions from clean energy projects continue after the debt is repaid.”

The CEFC Market Report provides a brief guide to clean energy investment opportunities for Australian councils and sets out how the CEFC Local Government Finance Program can help councils invest to reduce energy costs and lower carbon emissions. It also identifies a number of areas where councils can act immediately to benefit from clean energy investments.

The CEFC Market Report: Clean energy opportunities for local government, is available here: https://www.cleanenergyfinancecorp.com.au/media/188941/CEFCMarketReport.pdf.