Describing the investment by QIC on behalf of its clients the Future Fund and those invested in the QIC Global Infrastructure Fund, AGL said the partnership was a first in the Australian renewable energy space.

PARF is a partnership created by AGL to develop, own and manage around 1000MW of large-scale renewable energy infrastructure assets and projects. To help meet the Commonwealth’s Renewable Energy Targets and climate change goals, while supporting Australia’s transition to a low-carbon economy.

“Support for the PARF demonstrates the strong appetite among Australia’s foremost infrastructure investors for the development of large-scale renewable energy projects,” AGL managing director Andy Vesey said.

It is estimated that 5000MW of new renewable generation capacity will be required by 2020 to meet the RET goal.

Vesey said PARF would build large-scale projects “as rapidly as energy market conditions permit”, and wanted to deliver 20% of the RET.

“PARF is a major step forward in helping to unlock growth in renewable generation – but other challenges remain, first and foremost addressing Australia’s over-supplied energy generation market,” he said.

“An orderly exit of aged, high carbon emitting plant is integral to creating sustainable conditions for further investment in new renewables and Australia’s pathway to decarbonisation. We look forward to working with energy industry participants, the government and the community to address this.”

QIC CEO Damien Frawley said that by combining with a key industry player such as AGL, QIC had developed an innovative platform to unlock the level of investment required to meet the RET.

“PARF enables QIC to provide its investor clients with strong risk-adjusted returns by developing a pipeline of large scale renewable energy generation in Australia,” he said.

QIC, on behalf of its managed clients including the Future Fund, will provide $800 million in equity funding to PARF.

AGL, which is Australia’s largest privately-owned operator and developer of renewable energy projects and has 1920MW of renewable generation, will provide $200 million.

It is anticipated AGL’s proposed wind farms in Silverton (up to 200MW) in New South Wales and Coopers Gap (up to 350MW) in Queensland will be the first two projects offered to the fund.

The PARF expects to acquire AGL’s existing 102MW Nyngan and 53 MW Broken Hill solar plants as seed assets and to commit to its first new build project by March 2017.

“The PARF enables the appropriate allocation of risk amid a rapidly-changing energy landscape by bringing like-minded organisations together to share that risk over the medium to long term,” AGL chief bean counter Brett Redman said.

“The balance of the PARF’s funding will be raised through debt on a project-by-project basis. From feedback we’ve received from our lending group, we are confident of securing strong debt-market support to participate in this innovative project.

“AGL is proud to be leading the energy sector with innovative solutions to helping transform Australia’s generation mix.”

AGL expects PARF will generate about 3000 gigawatt hours that will abate around 2.7 million tonnes of greenhouse gases, the equivalent to removing circa 800,000 cars from the road.

At that level it will power more than half a million homes.