Transpower planning switch to green funding following framework certification

Transpower New Zealand plans to issue its first green bond in 2022 having recently received certification of its green finance framework. The company is the first transmission grid to receive Climate Bonds Initiative approval and convert its existing debt to a green format.

All future transactions and refinancing will be Climate Bonds Initiative (CBI)-certified, the borrower says. Transpower notes proceeds from its future green bonds will fund the integration of renewable energy, a core focus of the firm’s sustainability strategy.

The company’s adoption of a green finance framework follows CBI’s release of its “grids and storage criteria” in late 2021. Chris Sutherland, Wellington-based treasurer at Transpower, says the criteria made a green finance framework possible.

The criteria detail the requirements grid and storage assets and projects must meet to be included in a CBI certified climate bond. They apply to transmission, distribution and storage of electricity, and contain mitigation adaptation and resilience requirements.

“We were able to identify eligible green assets, enabling the inclusion of infrastructure such as interconnection transmission assets – substations and transmission lines across the length of New Zealand – which facilitate infrastructure for new renewable, zero carbon or low carbon intensity generation,” Sutherland explains.

Transpower now plans to refinance maturing debt later this year with green-certified transactions, he adds. The company has NZ$3 billion (US$1.9 billion) of debt outstanding, including nearly NZ$1.5 billion of domestic notes of which NZ$250 million comprises 2022 maturities – in June and September (see chart 1).

Source: KangaNews 12 May 2022

“The adoption of the framework shows Transpower is proactive, enabling new renewable generation and focusing on a net-zero grid pathway. The green-bond framework over our debt portfolio fits well with Transpower’s wider strategy and sustainability focus.”

CHRIS SUTHERLAND TRANSPOWER

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Transpower now has capacity to issue a further NZ$1.5 billion in green debt under the CBI certification, which represents the total value of its green assets.

“The adoption of the framework shows Transpower is proactive, enabling new renewable generation and focusing on a net-zero grid pathway,” Sutherland tells KangaNews. “The green-bond framework over our debt portfolio fits well with Transpower’s wider strategy and sustainability focus.”

Transpower is the latest New Zealand energy infrastructure company to introduce a green finance framework. Genesis Energy, which executed a NZ$125 million green bond on 4 March, was the first company in New Zealand to align all its bonds, loans and sustainable-finance framework with the Climate Transition Finance Handbook (CTFH) and only the fifth in the world to do so.

Source: KangaNews 12 May 2022

Sutherland says Transpower’s advocacy of low carbon, renewable generation and sustainability is not a new development – the company was simply waiting on suitable criteria to execute its green-bond certification and issuance plans.

He comments: “Transpower reviewed all the criteria requirements to make sure it could meet them, which was a relatively lengthy, 12-month process from the publication of the initial draft criteria and included verification of the final framework. It should be simpler for us to issue now we have programmatic certification for green bonds in place, due to the amount of eligible green assets identified in our framework.”