News: Australia's AGL and state-owned funds establish renewables fund

Australia's second-largest energy retailer AGL Energy Ltd (AGL) said on Wednesday it had set up the nation's largest renewable energy fund, worth A$2-3 billion, with Australia's sovereign wealth fund and a Queensland government-owned fund.

The Powering Australian Renewables Fund (PARF) plans to develop 1000MW of renewable energy and will acquire two existing AGL solar plants, which together produce 155MW, AGL said in a statement.

"It demonstrates that funding is available for large scale renewable projects and demonstrates that AGL is able to do these projects if the risks are shared," AGL chief financial officer Brett Redman told Reuters by telephone.

"It breaks in a material way the logjam around funding for large scale renewables."

QIC Global Infrastructure, Queensland state's public-service pension fund, and Australia's sovereign wealth fund, the Future Fund, will contribute A$800 million to the renewables fund and AGL A$200 million at the outset.

The fund's 1000MW of new renewables comprise about 20 percent of the new renewable generation capacity required for Australia to meet its renewable energy target of 33,000 GWh by 2020.

Two AGL wind farm projects, at Silverton in New South Wales state and at Coopers Gap in Queensland will also be transferred to the PARF, along with the existing solar plants, AGL's statement said.

"The built sites provide ballast and cashflow," Redman said. "It becomes real at the very beginning and that turns this from an announcement in to a genuine fund with genuine cash."

Redman said that AGL eventually plans to close its coal-fired power plants. In February it quit the coal-seam gas business.