In 2019, a groundbreaking entity called New Zealand Green Investment Finance (NZGIF) emerged, with a primary objective of accelerating investment in low-carbon, climate-resilient projects nationwide. With a substantial investment capital of $700 million, NZGIF provides financial support and expertise to companies and projects that contribute to reducing greenhouse gas emissions and transitioning to a sustainable, low-carbon economy.
By offering various financing solutions, including debt, equity, and other financial instruments, NZGIF aims to bridge the gap between green investment opportunities and access to capital. The organisation focuses on sectors such as renewable energy, energy efficiency, and clean transportation.
In the Government's budget announced in May, NZGIF was granted an impressive $300 million of additional investment capital. Curious to delve into their plans and vision, I had the privilege of chatting with Waruna Karunaratne, the investment director responsible for many of the solar investments within NZGIF.
Waruna expressed NZGIF's strong interest in solar energy, as it supports their mandate to prioritise renewables, particularly through smaller-scale solar and battery initiatives. The rationale behind this approach is to not only provide carbon-free energy but also facilitate distributed generation, which helps accelerate electrification, and enhance the resilience of local electricity grids.
NZGIF also recognises the additional benefits of distributed solar energy paired with battery systems. These systems contribute to “grid stability and accelerate electrification” Waruna explained. It is no wonder that their initial foray into the solar market began with Solarzero, an innovative company specialising in leasing solar and battery systems to residential customers.
To meet the needs of the market NZGIF aims to cultivate, they have developed an efficient Power Purchase Agreement (PPA) backed financing model that supports distributed, small and mid-scale solar developments.
This is a long-term debt product that any organisation or business could take up such a school or supermarket. The customer would first engage with one of NZGIF’s partner solar installation companies who would be empowered to write the PPA and install the assets.
In a PPA, the solar company designs, installs, and operates a solar energy system on the customer's premises. The customer agrees to purchase the electricity generated by the system at a predetermined rate for a fixed duration, usually ranging from 10 to 20 years.
Therefore, while the customer doesn't technically own the asset, they reap the rewards of a fixed price arrangement for electricity, accompanied by the added benefit of enhancing their profile with clean and green credentials.
Where NZGIF stands apart from many other lending facilities, as Waruna explains “we can take pretty long-term views on relatively small-scale assets that most commercial banks wouldn’t be interested in.” This distinctive approach empowers NZGIF to support projects that align with their mandate, fostering the fast injection of renewables to the market while making financial sense.
NZGIF is excited to start rolling out this product, a catalyst for the swifter adoption of renewable energy sources across New Zealand. By merging carbon emissions reduction and financial viability, NZGIF is set to make a mark in the renewable energy landscape in New Zealand.
If you’re interested in finding out more about the work NZGIF is doing, contact [email protected].
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