Industry funds could solve energy crisis: ISA

Industry superannuation funds believe they hold the key to unlocking Australia's energy crisis.

Peak industry superannuation body Industry Super Australia today released a new discussion paper calling for industry funds to take a leading hand in solving Australia's energy crisis.

The paper, Modernising electricity sectors sees ISA chief economist Stephen Anthony highlight how the collective investment power of the industry funds could help solve some of Australia's energy problems.

According to Anthony, policy inertia has seen regulatory uncertainty rise in the energy sector, allowing savvy investors to game the market through public subsidies and price movements.

"While the climate debate rages on, Australia's ageing energy infrastructure continues to fall further and further behind the rest of the world. Much of the heavy industry has already gone, costing jobs and driving power costs up even further," Anthony said.

"The failure to achieve a consensus framework for emissions abatement, coupled with the subsidisation of renewables has seen wholesale prices triple over the decade and volatility reach stratospheric levels."

This is where industry super believes it has the power to make change.

ISA chair and former Minister for Climate Change and Energy Efficiency Greg Combet said industry funds were ready to help the Government address these issues, with "the purpose and capital" to drive productivity and develop long-term solutions "to otherwise intractable problems".

"In the event of continued stand-offs on energy policy making, far-sighted industry super funds can play a role," Combet said.

"With the best interests of their members at heart, industry super funds have the purpose, and the capital, to work with the Government to develop a long-term solution as investment partners."

Rainmaker analysis of APRA data shows around $100 billion of Australia's $2.7 trillion super system is invested in infrastructure. Not-for-profit funds are responsible for roughly 87% of those allocations, streets ahead of their retail counterparts. Industry funds alone contribute about $61 billion.

However, Anthony said industry funds have the capacity to do more and their capital could be put to specific use in the energy sector.

"There is no single simple solution to Australia's energy trilemma right now. There is no reason to exclude any of the major technological contenders - solar, wind, combined-cycle gas, pumped and even nuclear - from the current or future energy mix," he said.

"The existing fleet of baseload generators need replacing, while there must be an agreed pathway to progressively phase out coal-fired generators.

"This is where industry funds can contribute. They can pre-empt future government decision-making to fill potholes in grids, replace existing network capacity, or develop innovative financial products that better helps to manage risks both here and overseas," he said.

Yesterday, Rest announced it would take full ownership Western Australia's largest wind farm in a move to boost its infrastructure portfolio.

The fund agreed to buy out UBS Asset Management's 60% stake in Collgar Wind Farm, which it already held a 40% stake in.

The project generates between 40% and 50% of the state's renewable electricity on average and held a five-star Global Real Estate Sustainable Benchmark rating in 2018.

Read more: SuperISAGovernmentRESTSuperannuationCollgar Wind FarmGlobal Real Estate Sustainable BenchmarkGreg CombetIndustry Super AustraliaStephen AnthonyUBS Asset Management
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