Wave energy developer Carnegie Wave Energy Limited signed a $20m loan facility with the Clean Energy Finance Corporation to support the development of a CETO 6 project.
The Clean Energy Finance Corporation (CEFC) is providing a five-year $20 million loan facility that will provide part of the financing required for the next stage of CETO technology development and commercialisation, the CETO 6 Project. Further details on the design and location of the CETO 6 project will be released shortly.
Carnegie’s Chief Executive Officer and Managing Director, Dr Michael Ottaviano, said: “This capital from the CEFC will help Carnegie take a significant step forward in our development and commercialisation of the CETO technology and put us in a strong position to compete in the global, developing wave energy market. With our wave energy resource and technology capabilities particularly in the offshore oil and gas industries we believe there is significant potential for Australia to be a leader in this field which can create new industry and export opportunities.”
Mr Oliver Yates, Chief Executive Officer of the Clean Energy Finance Corporation, said: “Australia has the wave energy resources and the skills to become a major player in the global wave energy sector. This is an industry of the future with great potential for Australia. We are delighted to be supporting Carnegie and the development of its CETO 6 project.”
The development of the CETO 6 project officially began in 2013 and is currently in the concept design stage. Carnegie has previously announced that the CETO 6 unit will have increased power output, at least twice the power capacity of the 240kW CETO 5 unit being used in the Perth Wave Energy Project (PWEP). The CETO 6 project will follow the completion of Perth Project which is currently under construction off Garden Island, Western Australia and utilises the CETO 5 generation. By delivering step changes in power and efficiency, CETO 6 will advance the CETO technology towards commercial deployment in a wide range of targeted markets globally by reducing the levelised cost of energy produced.
The loan facility is CEFC’s first wave energy investment and is the first of a new hybrid corporate loan/project finance financing structure that was developed for this transaction by Carnegie and the CEFC. The new financing model is designed to fund the development of a specific project but upon draw down places security over the assets of the company including any cash refunds the company will receive under the R&D tax incentive. While technically a corporate loan, upon draw down, which is at Carnegie’s election, this facility has a high level of structural controls akin to those found in project finance transactions.
The $20 million 5 year term facility is provided at commercial rates and fees with no concessionality. The establishment fee and commitment fees for 2014 can be paid by Carnegie through the issue of 15 million ordinary shares in Carnegie. The shares are to be issued in 3 tranches of 5 million. The first tranche of 5 million shares was issued by Carnegie on execution of the facility agreement. Further details of the facility terms will be provided once Carnegie draws down debt under the facility.