Jason Patrick.
Four years after launching, New Zealand Green Investment Finance (NZGIF) has become the largest direct investor in new New Zealand companies and technologies intent on reducing carbon emissions and meeting the country’s climate goals.
“One of the powerful things about the organisation is the breadth and flexibility of the investments we can pursue,” says Jason Patrick, NZGIF’s chief investment officer.
“One of the things we like to talk about concerning climate change policy and investment is that if we are going to do something about the problem, then we need to pursue every solution.
“We are focused on several sectors — agriculture, transport, built environment, energy, industry and waste — and we always seek to attract additional private capital to the investments we pursue.
“We can bring to the table initiatives that mainstream investors can’t today — this is one of the ways we build the market for climate investment in New Zealand,” says Patrick. “There’s no lack of need for decarbonisation funding.”
NZGIF, the Crown-owned green investment bank, was established in 2019 and received an additional $300 million in the last budget, taking its total investment capital to $700m. Some $400m has already been committed to more than 20 investments ranging from solar systems and electric buses, to renewable energy infrastructure and methane inhibitors.
NZGIF’s investments are made on a commercial basis — it doesn’t offer grants, subsidies or concessionary terms but instead provides tailored capital solutions to support decarbonisation initiatives.
“We invest in scalable companies, technologies and projects that are commercially-ready and offer low carbon benefits for New Zealand,” says Patrick. “Our investments can range from senior debt through to equity with the ability to offer terms and tenor that help attract co-investors.” He says there is growing interest from private sector investors in climate investment opportunities, and “we can structure investments so that they work for our partners.
NZGIF considers investment on a case-by-case basis. “Businesses and technologies within each sector are at different stages of maturity,” says Patrick. “For mature businesses and technologies, senior debt may be all that growing companies need.
“For less mature businesses, we often consider venture capital equity, structured debt and hybrid instruments.
“If a new business went to a major bank, it may be able to get a loan, for say, five years. But five years may not be workable for the new business models and technologies we need for decarbonisation, and we can provide lending for 10 or even 20 years for the right opportunities,” says Patrick.
Patrick says when NZGIF takes an equity position it prefers to be a significant minority shareholder.
“But we can play a role by helping with governance, strategic direction and decarbonisation approach.”
Patrick has been a director of ESP (Efficiency, Sustainability, Performance), Carbn Group Holdings and Internet of Things telco Thinxtra, and chair of TNUE (Total Nutrient Use Efficiency). He joined NZGIF in 2019 after being managing director of Real Options International, an investment management firm specialising in the energy and low-carbon market, and BioCarbon Group, a direct investment firm backed by Macquarie, the International Finance Corporation and Global Forest Partners LP. Both businesses were based in New York.
Patrick has an MA Economics from New York University, a Master of Environmental Management from Yale University and a Bachelor of Science from the University of California, Berkeley.
He was also a vice-president at Bank of America Merrill Lynch where he led investment and marketing of environmental and renewable power commodity products.
Patrick and his team have been busy assessing smart new businesses and technologies capable of meeting the climate change challenges in an effective way. Or as Patrick puts it: “Changing the way we all live in society.”
NZGIF provided a $10m debt facility for Christchurch-based Solagri Energy to help finance up to 120 solar arrays over the next three years and help decarbonise New Zealand farms. These arrays are expected to avoid 36,100 tonnes of carbon dioxide emissions over the life of the assets.
Solagri provides a solar-as-a-service offering tailored specifically for dairy farms. The arrays are normally ground mounted on a quarter hectare close to the dairy shed and provide the farm with low-cost electricity and long-term energy security.
Solagri currently has eight systems at different stage of consenting and construction, with more development in the pipeline.
Patrick says one of the exciting things about Solagri’s service is that they install, own and maintain the solar arrays, including insurance, cleaning and monitoring of the equipment, with no upfront costs to the farmer. This removes a significant cost barrier to transitioning to solar energy and allows for more predictable energy budgeting. The investment should accelerate the rollout of solar arrays across the country.”
NZGIF has also turned its attention to methane emissions. It has made a $2.5m equity investment in Waikato-based Ruminant BioTech during a capital raising round that also involved United States climate-focused fund Regeneration.VC. The investment will accelerate Ruminant Biotech’s business development programme, help set up manufacturing and get its product to market faster.
Ruminant Biotech is developing a slow-release, biodegradable methane-inhibiting bolus for livestock.
The bolus, or ball, with active ingredients is swallowed by the animal and sits in the stomach for up to six months. The ingredients are released over time and have the effect of reducing methane emissions.
Initial trials show Ruminant Biotech could deliver a 70 per cent methane emission reduction per treated cow over six months, and the company is aiming to launch its bolus as a commercial product in 2025.
NZGIF has also taken a $2.5m equity stake in TNUE, which aims to produce a new fertiliser that significantly reduces nitrous oxide gas emissions, using a novel control release membrane technology.
This investment will help TNUE build a processing plant near Taupō and is expected to open by the middle of next year.
NZGIF has additionally provided a $15m working capital facility to Lodestone Energy, based in Auckland. It is building five solar farms in Kaitaia, Dargaville, Whitianga, Edgecumbe and Waiotahe. When completed, Lodestone’s solar farms will generate renewable energy of 199MW, enough to power 50,000 average homes, and the company will become the largest independent solar energy generator in the country.
There will be 360,000 solar panels on 350ha of land feeding into the national power grid.
Patrick says the working capital will assist development of Lodestone’s next phase of projects.
An element of the facility will be used for a letter of credit to enable construction of connection assets by Transpower for the Waiotahe solar farm, near Ōpōtiki.
NZGIF is also financing further energy connections in the under-resourced Eastern Bay of Plenty.
Eastland Generation has a $25m lending facility from NZGIF to fund connections for the new 49MW TOPP2 geothermal power station at Kawerau, as well as upgrade the existing grid connection of the nearby Te Ahi o Maui 26MW geothermal plant. Patrick says NZGIF’s tailor-made funding will support Eastland Generation and subsequently the energy resilience of the Eastern Bay of Plenty, benefiting industry and farming in the region.
In transport, NZGIF has provided a $50m capital expenditure facility alongside other major investors for Kinetic, Australasia’s largest bus transport operator, to help decarbonise public transport in New Zealand.
This will support the aquisition of more than 150 zero-emission buses and avoid more than 100,000 tonnes of carbon dioxide over the life of the assets.
In January Kinetic opened Australasia’s largest fully electric bus depot at Panmure in Auckland.
The first 35 electric buses are among 152 the company will deliver in partnership with Auckland Transport over the next two years.
Kinetic has also delivered electric buses in Tauranga, Wellington and Christchurch.
But buses and other electric vehicles need charging stations. NZGIF has provided a $1m debt facility for Thundergrid to accelerate the roll out of EV charging infrastructure and other services such as scheduling cheaper charging during off-peak times.
Patrick says the investment is an important step in encouraging more New Zealanders to consider switching to EVs.
“One of the most common reservations is whether they’ll have problems finding a place to charge their car. That’s why building an EV charging network is so critical to helping decarbonise New Zealand’s transport sector.”
Hamilton-based Kayasand is focused on reducing carbon emissions in concrete production by as much as 20 per cent. NZGIF made a $3.5m equity investment in the company in May this year. A further $1.8m of private investment was secured, bringing Kayasand’s capital raise to $5.3m.
Kayasand, a distributor of advanced concrete production technology, is opening its first V7 high-technology manufacturing demonstration plant in New Zealand.
The plant uses waste products such as recycled glass, concrete and slag, and turns them into premium aggregate for concrete.
There’s no shortage of investment possibilities. Patrick says “we are keeping our sights on the policy goal of net zero emissions by 2050.
“There’s a lot more to come, both via the new capital we are utilising and recycled capital from our existing initiatives.
“We are making inroads and I think New Zealand can meet the net zero target. Other countries don’t have some of the benefits New Zealand has such as a renewable electricity base.
“There’s more widespread understanding of the climate problem — and the emissions trajectory is lower now than it would have been if we weren’t pursuing it. It’s an exciting opportunity for New Zealand.
“You’ll see a lot more from NZGIF as we continue to grow — broader and deeper investments across our economy driving more capital with our partners. We’re excited to be a part of the solution,” says Patrick.
· New Zealand Green Investment Finance is an advertising sponsor of the Herald’s Sustainable Business and Finance report.
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