Source: NZ Green Investment Finance
New Zealand Green Investment Finance (NZGIF) has led a second debt issuance, making a total of $365m (NZD) available for medium to long term debt to solar providers.
In addition to $90m of private sector debt sourced in September 2023 from First Sentier Investors and Natixis Investment Managers, Societe Generale has now financed a further $130m of available debt into NZGIF’s Solar Finance programme. NZGIF has invested $145m into the programme (1).
The new solar lending will further finance Aotearoa New Zealand’s largest residential PPA (Power Purchase Agreement) portfolio, managed by SolarZero. The total lending facility will help provide access to affordable renewable generation for 20,000+ New Zealand households.
NZGIF Solar Finance is meeting its objective of becoming a simple and repeatable financing solution for solar energy. The scalable nature of the programme can accommodate new investors and new operators.
“NZGIF Solar Finance is structured for growth. Private capital provides the scale that’s needed to accelerate investment into decarbonisation,” says Jason Patrick, Chief Investment Officer, NZGIF.
“Having the support of a major European bank like Societe Generale is significant and welcomed. Societe Generale, First Sentier Investors and Natixis Investment Managers all see value in New Zealand’s renewable energy sector. Our opportunity is to now harness this type of financial support, from domestic and offshore investors, towards other sectors and additional partners, capable of reducing New Zealand’s carbon emissions,” Patrick adds.
“NZGIF Solar Finance is the first programme of its kind in Australasia, and it represents an excellent investment opportunity for New Zealand. We are pleased to leverage our innovative financing solutions and support New Zealand’s energy transition as part of Societe Generale’s long-term commitment to decarbonisation,” says Arkady Lippa, Co-Head of Securitisation & Fund Financing for Asia Pacific at Societe Generale.
Solar energy
Solar energy has a crucial role to play in New Zealand’s future energy requirements.
Matt Ward, SolarZero CEO, says, “Our electricity demand is going to increase by 50-60% by 2050. Solar is the cheapest form of generation on the planet right now, so it’s only logical that solar plays a part in that.”
Solar energy currently makes up around 1% of New Zealand’s delivered electricity. Transpower predicted in 2020 that this would rise to 13% of New Zealand’s delivered electricity by 2050 under a scenario where electrification of the economy is accelerated. (2)
The distributed nature of rooftop solar energy, like that provided by Solar Zero, is important for community resilience also. This was proven in the recent potential grid emergency issued on 10 May.
“So, on the 10th of May, for instance, when New Zealand had its grid energy crisis, SolarZero deployed 30 megawatts of power and effectively helped keep the lights on,” says Ward.
Each partner in this programme has a role
NZGIF Solar Finance bridges the gap between market needs. Solar operators need long term fixed rate debt as well as warehousing debt facilities, and existing funders have been cautious about financing the more disruptive and innovative participants in the sector.
“We took a bundle of residential solar assets and solar contracts and were able to structure them for investors in this programme. Under attractive criteria and standardised terms, we created an opportunity that has brought in offshore investors looking for a long-term investment,” says Patrick.
“New Zealand is a strong jurisdiction from a credit perspective, with clear government policy and public investment entity support. This programme is also a testament to what NZGIF is good at designing and putting together. NZGIF’s involvement has been pivotal in securing this financing. We are honoured to have contributed to this public private collaboration,” says Lippa.
Ward adds, “We need alternative funding models and capital models to do that. We need to solve the energy trilemma for Kiwis, i.e. decarbonise the economy, make sure energy is reliable so there’s no blackouts, and make sure it’s affordable. We couldn’t do it without NZGIF, First Sentier Investors, Natixis Investment Managers and Societe Generale.”
