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Coalition to strip ARENA to fund million solar roofs program

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The Federal Coalition is to strip the Australian Renewable Energy Agency of $150 million in funds over the next three years – and possibly up to $500 million – to help pay for its million solar rooftops plan.

The announcement came amid the budget costing released by treasury spokesman Joe Hockey on Thursday. Also revealed in the costings is the cancellation of the “geothermal and tidal” town programs – a key part of the original Direct Action plan – because the technologies had not progressed as quickly as thought.

Opposition climate spokesman told RenewEconomy the decision to cut $150 million from ARENA’s funding and direct it to solar rooftops cames as the Coalition also decided that the rebates offered under its millions solar roofs program will be cut from $1,000 per household to $500. This,and the $40 million from the “towns” program, form the bulk of cuts to Direct Action over the forward estimates, which will now have a budget of $2.88 billion instead of $3.2 billion.

The decision to draw funds from ARENA means less money for the agency to invest in its core programs, which included emerging renewable energies – possibly including solar thermal like that proposed in Port Augusta, as well as remote, off-grid and hybrid renewable programs. It also funds research and development through the former Australian Solar Institute.

It is not clear if ARENA will be required to continue to fund the million roofs program over the 10 year period. If it is, it would strip a total of $500 million from its $3 billion budget. ARENA CEO Ivor Frischknett said the agency had not been officially advised of the funding changes. Over the long term it could impact its investment plans, but he said ARENA was also working on financing options – such as attracting bank finance for leases – that could help the Coalition achieve its policy aims.

Hunt said the decision to cut the proposed rebate for the million solar roofs program reflected the falling cost of solar PV modules. He said it was yet to be decided where the funding would be sourced beyond the forward estimates.

The emissions reduction fund, a key component of the Direct Action policy, will retain its $1.55 billion funding over the forward estimates. Asked if Direct Action would be scalable beyond a 5% reduction target to 2020 – say to 15 per cent or 25 per cent – Hunt said that decision would be taken in 2015, after the international climate change conference scheduled for Paris.

“It’s capped and it’s fixed, and that is the policy for the foreseeable future,” Hunt told RenewEconomy.  “We’ll address further measures if there is a change in international circumstances.”

The Coalition will also redirect $9 million from a clean energy employment hub to a national climate adaptation research facility.

The Coalition also announced a $185 million cut to the “connecting renewables” program, which was to be administered by the Department of Energy. It was designed to help fund transmission links to new renewable energy facilities.

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  • Leon

    Hi Giles, I can’t find any reference anywhere else to this suggestion that the million roofs program is going to be shifted into ARENA and be paid for out of the existing ARENA budget, has the coalition outlined this plan or was it a renew interview? Also, Is it a typo in para 3 where you say “…also means that the $150 million…” Is that supposed to be $500million? Or am I misunderstanding costing of the program?

    • Giles

      Hi, sorry not very clear, it was written in a bit of a rush, what with the madness of today. Hunt walked me through the costings, so it’s about as gospel as you will get. The $150 million refers to the three years left in the forward estimates (direct action doesnt start till July, 2014). so that’s correct. Yes, right to assume $500 million costing over 10 years – versus $1 billion – but Hunt said there was no agreement yet on where that would be funded, arena or elsewhere. I think they just made all this up this week.

      • Leon

        Thanks for the clarification. I see you’ve tweaked the article, yep that makes sense. Cheers

  • Sean Scanlon

    Hi Giles, where do we stand with the Small and Large Scale technology certificate program. Is there likely to be any change to the program in the near future e.g. reducing the number of certificates for installations or scrapped altogether?

    • Giles

      Who knows. I guess that is what the RET review will look at next year. There is certainly a push from big utilities against solar – see our grant king interview, but the solar lobby is becoming more powerful. I think the greater potential threat comes in access, connections and fixed tariffs.

  • Tim Buckley

    Giles
    The idea of ARENA introducing or sponsoring a solar leasing model around the government FIT liabilities looks interesting. US funding for solar leasing has taken off big time, so not a bad idea to help get this “off-the-books” of the state governments using a low cost, large volume securitised loan product.While it is straight financial engineering, if it makes the existing solar obligations less visible, it might encourage the government to think for a minute about longer term low carbon energy policies.