Its 2013-14 annual report reveals the portfolio is expected to earn a return of about 7%, or around 3.5% above its benchmark cost of the federal government five-year bond rate.

The forward project pipeline is worth more than $3 billion and potentially includes energy efficiency aggregation financing programs focused on small to mid-sized business, rooftop solar financing, bioenergy and waste-to energy projects as well as initiatives in transport, storage and remote and end-of-grid power solutions.

However, diversification is important given some areas of the portfolio – most notably the aggregation programs directed at increasing energy efficiency in the public and not-for-profit sectors – exhibit a lower financial return and a distinct risk profile. In other segments the CEFC seeks a higher return consistent with its commercial counterparts.

It is also developing complementary financing programs to support the Emissions Reduction Fund (ERF), addressing market gaps for projects seeking to secure ERF funding.

As at June 30, the CEFC had contracted investments of more than $930 million in projects with a total value of over $3.2 billion, what CEO Oliver Yates described as a diversified investment portfolio.

“We have worked with co-finance partners developing investment opportunities, which has mobilised more than $2.20 of other funds in projects for every dollar from the CEFC,” Yates said.

“Once fully operational, the CEFC’s investment projects are expected to deliver an estimated 4.2 million tonnes of carbon dioxide equivalent abated annually, at a positive return for the taxpayer, while assisting industries Australia-wide in lowering emissions.”

CEFC chair Jillian Broadbent, who addresses the National Energy Efficiency Conference in Sydney today, said businesses have reduced their energy costs by anywhere between 25-50% while making a major contribution to Australia’s overall productivity and competitiveness.

“Australia currently spends more than $100 billion a year in end-use energy, so it’s easy to see how small gains in the way we use energy can have a sizeable impact on our economy,” she said.

“This is particularly important given the current environment of rising electricity costs and predicted gas price rises. There is plenty of scope for improvement. Australia's annual average growth in energy productivity is just over 1% while countries like the UK and Germany are achieving energy productivity increases of over 8%.”

The experience of rising energy prices over recent years and the anticipation of this trend continuing – particularly for those businesses which use gas – has meant a strong demand for energy efficiency and on-site generation as a hedge.

Looking ahead, the CEFC has active discussions underway with more than 30 project proponents who are seeking more $1 billion of CEFC finance.

“We will continue to invest in a commercially responsible manner and we and our co-finance partners have developed financing programs which are well positioned to finance the upfront project implementation costs of many of the types of projects, large and small we would expect to bid for the ERF,” Yates said.