There’s utility in Green for SA Power Networks

The return of SA Power Networks to the green bond market this year demonstrated that investor demand remains strong for credible issuers, particularly utilities.

Electricity distributors are at the frontline of the energy transition being responsible for building, maintaining and operating the infrastructure that distributes renewable energy. South Australia’s leading role in Australia’s renewables push places SA Power Networks centre-stage for investors and fellow grid operators.

While investor enthusiasm for sustainable issuances remains, the Australian Sustainable Finance Taxonomy provides clarity to the market about labelling, which could bring non-traditional sectors to follow in SA Power Networks’ footsteps. 

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Green light for bond return

In May, SA Power Networks issued $A285 million in three-year bonds and $A250 million at a duration of 10 years, with ANZ acting as joint-lead manager and sole-sustainability coordinator.

This came on the back of last year’s breakthrough, when SA Power Networks became the first Australian electricity distributor to issue certified green bonds. The company raised a total of A$495 million.

SA Power Networks Head of Treasury Bruno Bellon tells ANZ Insights the enthusiasm from investors encouraged the distributor to come back to the market again.

“Investors and financiers were just completely amazed with the amount of renewable energy coming through our network,” Bellon says.

He adds that green bonds are still the right structure for SA Power Networks because the proceeds are being used to fund the entire network.

“All of our infrastructure is available to enable the delivery of renewable energy through the system to households and businesses, but also coming back the other way as well,” Bellon says, which is why its entire operations qualifies for green bond funding.

SA Power Networks has just released its Green Bond Report 2025. This is the first such report that will be released annually. The report provides investors with transparency about how the funds raised from the green bonds have been used by SA Power Networks, and the impact metrics derived from those investments.

Global attention for SA’s shift

The excitement from international investors stems from the unique position that SA Power Networks finds itself in, and how those lessons could be applied elsewhere.

SA Power Networks Chief Executive Andrew Bills explains to ANZ Insights how significant the geographical challenge is for the distributor compared to its global peers.

“Landmass wise, it's about the size of France and Germany combined, but with a much smaller population.”

And yet, South Australia is widely regarded as the one of the world's most advanced renewables grid. The state boasts a rooftop solar penetration rate above 40 per cent, often generating so much power that it exports surplus renewable energy to the east coast.

Combined with a raft of behind-the-meter innovations provided by others, including batteries and EVs, SA Power Networks’ infrastructure enables renewable energy to be distributed for the National Electricity Market, and serves as a testing ground for fellow distributors on how to handle the influx of renewables.

This is a far cry from the days of ETSA, SA Power Networks’ government-owned -predecessor. ETSA was founded in 1946 – when it opened its first bank account with ANZ – in part to reduce the state’s reliance on NSW black coal generation.

Bills says South Australia has set a national blueprint that other jurisdictions can follow.

“We’ve proven that it’s possible to build a smarter, more flexible grid, even within today’s market and regulatory settings.

“Our peers can take what we’ve learned to plan ahead, build smarter, and leap over some of the hurdles we had to crash through.”

ANZ Co-Head Institutional, SA & Head of Corporate Finance, SA Rachel Leach, who has been working with SA Power Networks for the last four years, says the state’s grid is a glimpse into the future.

“SA Power Networks has been very innovative to manage this influx of variable renewable energy,” Leach tells ANZ Insights. “They’re not borrowing off a well-established playbook, they are writing entire chapters.”

Utilities the focus of SusFin uptick

SA Power Networks’ second issuance comes as sustainable finance is getting a fresh injection of confidence, both from the raw numbers and policy developments that could bring in new issuers.

As reported in the ANZ Sustainable Finance Insights Q2 report, cumulative lifetime issuance of green, social, sustainable and sustainability-linked debt instruments has exceeded USD$10 trillion. For utilities globally, green bonds were also the largest sustainable finance category, making up 42 per cent of issuances for the year to June 30. 

Meanwhile, according to Morningstar, the Australia sustainable fund market was up 10 per cent on June 30 compared to three months earlier, highlighting continued appetite for sustainable assets.

ANZ Executive Director Sustainable Finance, Bronwyn Corbet, tells ANZ Insights the fact that SA Power Networks returned to the market in 2025 was an encouraging sign for utilities, investors and beyond.

“Investors appreciate the critical role that the electrical utilities sector has in executing Australia’s transition to a low carbon economy,” says Corbet. “The seismic transition underway in Australia’s electricity system requires considerable investment.

“What sets SA Power Networks apart is the depth of renewables penetration they’re handling. It’s a compelling value proposition when you consider the levels of reassurance they offer the market through the green bond process.”

SA Power Networks has just released its first green bond report that provides transparency for investors as to how the funds are being spent.

Meanwhile, issuers and investors remain focused on the Federal Government’s Sustainable Finance Roadmap, which aims to mobilise capital for the transition by ensuring markets have access to high-quality, credible and comparable information on climate and sustainability.

This includes the introduction of mandatory climate-related financial disclosure requirements and the release of the Australian Sustainable Finance Taxonomy, which is a framework to classify economic activities that positively contribute to key environmental sustainability objectives.

“The broad recognition of the importance of energy infrastructure is reflected in the taxonomy,’ Corbet says. “Building out and upgrading that infrastructure enables more integration of renewable electricity into the system.”

Guidance for bond issuance is due early next year, but the Australian Sustainable Finance Institute says bonds could appear in market claiming taxonomy alignment sooner.

The Government has also flagged a ‘climate first, not only’ approach to sustainable finance, in the context of opportunities framed around nature-related outcomes, as well as emissions reduction.

“These reforms are providing clarity to industries that perhaps hadn’t considered labelled finance before,” Corbet says.

“What it means for investors is we may see companies in non-traditional industries entering the sustainable finance market, the taxonomy provides that confidence to tell their story and emulate what SA Power Networks has done.”

Alexander Liddington-Cox is a contributor with ANZ Institutional Insights.