Connected is a quarterly insight that shares the team’s solar energy news across Australia and the United States from the business’s quarterly report and offers an outlook on the period to come.
The second quarter of 2019 (Q2) was a busy period for New Energy Solar (NEW), as the team achieved several important milestones for investors.
From achieving Commercial Operation at our second Australian asset, Beryl in New South Wales, to improving the long-term capital structure of the business, the team is confident that as we enter the third quarter of 2019, investors will benefit from streamlined operations and a carefully considered investment mandate.
"For the fourth year, NEW was announced the ABA100 Winner for Eco Innovation..."
Of note during Q2 was the achievement of Commercial Operation at Beryl Solar Plant, which increased NEW’s operating portfolio capacity by 110.9 megawatts (MWDC). Within a month of its commissioning in June, the plant announced the execution of an additional power purchase agreement (PPA) with Kellogg’s in Australia – part of the leading multi-national cereal company and a member of the RE100 initiative, the signatories to which have committed to sourcing 100% of electricity needs from renewable resources by 2050. The combination of the Kellogg’s PPA and Beryl’s existing PPA with Sydney Metro means that almost all of Beryl’s output is under contract. This further supports NEW’s strategy of building a portfolio of stable, long-term, contracted cashflows in partnership with a diversified range of investment-grade counterparties – thereby enhancing NEW’s ability to deliver attractive, risk-adjusted returns to investors.
In case you missed it, NEW also partnered with The Guardian to discuss the new energy era and whether we believe Australia is on the front or back foot when it comes to the uptake of renewables, as well as our country’s relationship with coal in comparison to the United States, and why we believe Australia may be perfectly positioned to be a leader in solar power – if we implement appropriate policies. You can view these articles through our website.
Post quarter-end, NEW also entered the Australian Business Awards and, for the fourth year, was announced the ABA100 Winner for Eco Innovation. We believe this consecutive achievement recognises our continued dedication to driving positive change in the renewable energy sector, along with our support of a charitable initiative through the business’s partnership with SolarBuddy. With the help of our investors, SolarBuddy has brought light to communities across Papua New Guinea (PNG) and, specifically, to 250 students at Kamali Primary School in Central Province, PNG.
Operations and project pipeline
NEW’s operating portfolio achieved material social benefits over the quarter, generating 236,000 MWh of electricity. As an investor, your investment has contributed to the generation of enough electricity to displace approximately 153,000 tonnes of CO2 during the quarter or power approximately 30,300 equivalent US and Australian homes for an entire year. This positive contribution is expected to increase further once Mount Signal 2 is operational later this year.
During the quarter, the team improved NEW’s long-term capital structure, incrementally reducing the cost of debt and lengthening the tenor of a specific facility. As announced, an existing 12-month debt facility was refinanced with a 7.75-year, fully amortising debt instrument at an average interest rate of 3.3%. This quarter, NEW also made the decision not to proceed with the previously announced acquisition of six projects from Cypress Creek Renewables. The delays and changes to these remaining projects led to the decision that proceeding was not in the best interests of our investors. As originally agreed, NEW has not funded any portion of acquisition or construction costs for these projects.
From four solar plants at the time of listing in 2017 to 15 operational assets by this quarter’s end, the business is currently fully invested. Looking ahead, we expect the portfolio to be fully operational, with a projected total capacity of 772 MWDC by the end of 2019 – generation that could make a strong contribution to the global transition towards renewable energy. In the meantime, New Energy Solar’s statutory financial results for the first half of 2019 will be released on 14 August 2019 and will be available on both the New Energy Solar website and the ASX website.