The geothermal industry in Australia is at a critical point, with investors reluctant to support unproven prospects.
Speaking at the Australian Geothermal Energy Conference in Adelaide yesterday, National Australia Bank senior adviser and former John Howard chief of staff Arthur Sinodinos said there was a strong market appetite before the financial crisis, but companies were turning away from high-risk, long-term yield investments, such as hot rock technology.
“I think the industry is at a crossroads … because of where we’ve reached with the financial crisis they do need to look for sources of capital that are more long-term and patient,” Mr Sinodinos said.
The respected economist said geothermal companies needed to consider other sources of private sector funding, such as superannuation. “The superannuation area is investing for the long-term, patient capital — finding good assets of yield over a long period of time,” he said.
“The bank I work with, and others, are very keen to see the extent to which there can be synergies between providing debt funding, with equity funding put in by superannuation funds.”
Mr Sinodinos said the financial crisis had forced banks to rely more on wholesale funding from overseas, which put increased costs. This meant were less likely to invest in high-risk areas.
In addition to the Australian Centre for Renewable Energy, which provided funding for green energy, Mr Sinodinos said the government should consider using income from the mineral rent tax to fund renewable energy.
“Using the proceeds from the depletion of fossil fuels, because we’re mainly talking about coal” might enable a sovereign wealth fund to fund the transition to renewable energy, he said.
