NAB clears the way for fund manager investment in renewables

Fund managers are set to be offered a new avenue into renewable energy investment.

Fund managers are set to be ­offered a new avenue into renewable energy investment with ­National Australia Bank offering a slice of its growing portfolio of loans to wind and solar projects.

Addressing what the bank said was a shortage of opportunities for investors in renewable energy, NAB said its new fund would also increase its ability to recycle money into increased lending to the sector.

It came as the bank hardened its position against lending on new coalmines, with chairman Ken Henry set to announce that the bank would cease lending to greenfields projects.

Under the new policy, the bank would only lend to existing customers wanting to buy or expand existing projects. NAB said it would reconsider if carbon emissions reduction technology such as carbon storage and ­capture became commercially ­viable.

The NAB Low Carbon Shared Portfolio would take a $200 million slice of its more than $1 billion in wind and solar farm loans into a closed-end wholesale unit trust, in what is an Australian first.

Australia is in the middle of a $8bn investment boom as local and international developers rush to meet the 2020 renewable energy target of 23 per cent of generation from wind and solar.

But there have been slim pickings for investors with no access for such projects to public debt markets and renewables projects at major energy retailers such as AGL Energy and Origin Energy mingled in with a coal-heavy generation fleets. NAB chief ­customer officer, corporate & ­institutional banking, Mike Baird, said the bank would remain the principal lender to the projects and hoped to free up further lending capacity through the fund.

“There is a lot of interest in it and it allows us to provide an additional source of funding,” Mr Baird said.

NAB has arranged $6.2bn in renewable energy project finance since 2003 and is the leading arranger in the Australian sector and ranked number five globally

This year it has done 23 deals totalling more than $16bn in project value.

The projects in the new fund created energy that avoided more than 460,000 tonnes of carbon dioxide emissions, equivalent to 66,000 Australian households.