$100m finance available for deep retrofits

Up to $100 million of debt finance is available through the Clean Energy Finance Corporation (CEFC) for deep retrofits to commercial properties. The finance is hoped to reinvigorate Australia’s ageing building stock and improve its energy productivity.

CEFC CEO Oliver Yates says an agreement with leading non-bank commercial loan manager Balmain Corporation extends the CEFC’s commitment to accelerate energy productivity and contribute to the sustainability of the commercial property sector.

“Up to 80% of Australia’s commercial office buildings are at least a decade old. Retrofitting and improving existing buildings with modern energy efficient technology is one of the most cost-effective opportunities for improving their productivity, reducing energy and overhead costs and reducing carbon emissions,” Yates said.

“This agreement will provide an incentive for major property upgrades that reduce building energy costs and increase average annualised returns - a good news story for all interested in sustainability in the property sector.”

The CEFC finance will be used for major building retrofits that lift a property’s NABERS rating by at least two stars, up to at least four stars (or the equivalent thereof).

Industry research shows that high NABERS rated CBD office buildings generate average investment returns significantly higher than the returns for lower-rated buildings (10.5% compared to 7.4%).

CEO Balmain Andrew Griffin said there was a strong desire by Balmain’s property clients to upgrade and improve their commercial holdings.

“This finance from the CEFC will help provide an incentive to invest in energy efficiency and improve sustainability, while cutting building operating and maintenance costs,” he said.

“While there can be a positive business case for significantly improving energy efficiency as part of a major retrofit, often building owners have other priorities for their available capital so this targeted financing will make a difference. With recent technological improvements, there is tremendous potential for upgrading that brings benefits to building owners and tenants.”

The agreement between CEFC and Balmain complements and helps further scale up the CEFC’s finance available for energy efficiency upgrades in the property sector. This includes up to $80 million jointly made available through National Australia Bank for Environmental Upgrade Agreements, up to $200 million jointly available through the Commonwealth Bank for Energy Efficient Loans, and $8 million in on-bill finance through Origin