Australian Retirement Trust naming Guy Debelle as an adviser is a sign of the times

Guy Debelle has joined the Australian Retirement Trust, which operates SunSuper and QSuper. Picture: Britta Campion

The appointment of former Reserve Bank deputy governor Guy Debelle as an investment adviser to the $240bn Australian Retirement Trust is a sign of the times – signalling a greater potential role for the $3.4 trillion superannuation industry in green energy investments.

While super funds are resisting suggestions that they would invest in projects that don’t have a good return for their members, their executives are looking at green projects to see if they can be structured to make economic sense.

With billions of dollars flowing into the super sector each year – a gross $155bn in new contributions in the year to December, or net flows of $64bn taking out benefit payouts in lump sums and pensions – the super sector can be powerful source of funding for Australia’s energy transition if the policies are right.

ART is now the second largest super fund in the country, after the $260bn AustralianSuper, following the merger of QSuper and Sunsuper a year ago.

With 2.2 million members, the fund has some $18bn a year in net capital inflows a year and is expanding by absorbing smaller funds.

Super funds are finding their members showing a keen interest in more green investing but they have to tread carefully in not making investments that could hamper their investment performance, which is now being tallied annually under the Your Future, Your Super tests.

Debelle’s appointment is a clear sign that ART, which is reinventing itself from a Queensland base to a national fund, wants to do more in this space.

As deputy governor of the RBA, Debelle had a keen interest in the clean energy transition which saw him leave the central bank early last year for a senior role in Andrew Forrest’s green energy arm, Fortescue Future Industries, a subsidiary of his Fortescue Metals.

While his time as chief financial officer of FFI was brief – only a few months – Debelle is still close to Forrest as a director of FFI.

He has been a key player in FFI’s links with consulting firm Deloitte which produced a report last week on the outlook for the green hydrogen sector in Australia, a key focus for Forrest and FFI.

His appointment raises the question of whether ART will seek to move into the nascent green hydrogen sector in Australia or whether it might focus on the more traditional area of renewable energy generation.

Super funds are increasingly looking at green investments. Supplied

A report by the Association of Superannuation Funds of Australia (ASFA), released last week on Superannuation and the Economy, takes a look at the growing investment by super funds in renewable energy.

It notes that direct investments by super funds into large-scale renewable electricity projects in Australia have risen sharply over the past few years.

Super funds now account for about 5 per cent of Australia’s renewable energy generation capacity, or about 10 per cent if indirect investments are included.

Total direct super fund investment by super funds in renewable energy has risen from 100MW of generating capacity in 2016 to 360MW in 2019 to 530MW last year.

The report includes a list of recent super investments in renewable energy.

These include REST Super’s 100 per cent ownership of the Collgar Wind Farm near Merredin in WA’s central wheatbelt.

The $150bn Aware Super has a 33 per cent stake in the Snowtown 2 wind farm in South Australia, alongside Palisade Investment Partners.

Other institutional investors in the wind farm include health industry super fund HESTA.

Construction industry super fund the $75bn Cbus has an ownership stake in the Albany Grasmere Wind Farm, the Warradarge Wind Farm and the Greenough River Solar Farm in Western Australia through Bright Energy Investments – a joint venture with Synergy, the WA government energy generator and retailer, and DIF, an institutional investment partner.

A number of funds, including Hostplus and Brighter Super, have investments via Tilt Renewables, including in the Broken Hill and Nyngan solar plants in NSW, and the Coopers Gap and Silverton wind farms in Queensland.

Other wind and solar generation facilities with super fund investment include Bald Hills in Victoria (Future Super) and Stockyard Hill in Victoria (Aware).

Aware has also made an investment in North Harbour Clean Energy, a company working to develop renewable energy storage projects.

The super fund for the retail sector, the $70bn REST, has a commitment to increase its investment in renewable energy from $1.2bn to $2bn according to its chief investment officer, Andrew Lill.

Lill says REST is planning to expand the fund’s renewable energy capacity using the expertise from its ownership of the Collgar wind farm to add solar to the site.

This will see it increasing its investment in connecting the wind and solar farms to the electricity grid in WA.

Lill says his fund’s strong net cash inflow of between $300m and $600m a month gives it the capacity to invest in unlisted assets.

He also makes the point that REST’s members – many of whom are women under 30 – have a strong interest in climate change and environmental issues.

In a recent interview, Lill described the transition away from fossil fuels as “probably the biggest opportunity for investors of my generation”, and which was “both a responsibility and an opportunity.”

The ASFA report says super funds will be providing funding for companies and governments to build new facilities, either through direct ownership or specialised third party vehicles.

More investments can be expected once the federal government clarifies its policies around renewable energy and hydrogen.

Debelle is a high profile appointment, but behind the scenes in the super industry are many other players looking at green energy investments in Australia.

At a time when super tax breaks are under fire, it is a timely reminder of the super industry’s key role in providing capital for Australia’s development.