ARENA defends renewables role, fights for funds and independence

One week after the federal government was advised to scrap the Australian Renewable Energy Agency, the CEO of ARENA has defended it against claims its role in supporting the development of renewable energy technology was duplicated by other agencies and finance mechanisms.

Established in 2012 as an independent statutory body by the Labor/Green coalition, and armed with $3.2 billion to invest in emerging renewable technologies, ARENA has since suffered a series of raids on its budget and, according to recent speculation, will be stripped of more funds in the May budget, or folded back into a government department.

This speculation was further fueled last week, when National Audit Commission advised that ARENA be scrapped as part of broad-ranging cuts to Australia’s $9 billion research and innovation sector, along with the National Low Emissions Coal initiative, Carbon Capture and Storage Flagships and the Innovation Investment Fund.

Speaking at the Australian Solar Council conference in Melbourne on Friday, ARENA CEO Ivor Frischknecht conceded the Agency would be expected to do its share of the budgetary “heavy lifting” through further cuts to funding, but hit out at the Audit Commission’s claims that ARENA duplicated the work of other organisations.

“No other agency supports projects along the commercialisation pathway from basic laboratory research to large-scale pre-commercial activities,” Frischknecht said.

“No other agency generates both the technology push and market pull that will ultimately deliver the most prospective renewable energy technologies to market.

“And while ARENA aims to increase the use of renewables in Australia, we do not subsidise the use of commercial renewable energy technologies like the Renewable Energy Target.”

ARENA, described by the ASC on Friday as “critically important” to the Australian solar industry, has so far used around 60 per cent of its $1 billion of committed funds to support 140 solar projects, research fellowships and PhDs.

Last month, a feasibility study into a potentially game changing portable solar hybrid power plant was announced as the agency’s latest funding recipient.

But Frischknecht, who noted the impressive gains solar had made over the past few years, warned against resting on the assumption that the hardest work had been done.

“Australian researchers hold the world record for solar cell efficiency but this needs further refinement if solar energy is going to become cost-competitive with fossil energy,” he said.

“Solar solutions that meet baseload demand must be proven, and ways found to overcome grid integration challenges. Perhaps most importantly, affordable storage technologies must be brought to market as soon as possible.

To this end, another ARENA-backed project was launched last month – $1.7 million, small-scale concentrating solar thermal demonstration plant at Newcastle’s Wallsend Pool. Although small in scale, the project will demonstrate solar thermal’s game-changing ability to provide 24/7 electricity – in this case, via first-of-its-kind technology developed by the University of Newcastle and the Newcastle Institute for Energy and Resources, which combines integrated solar thermal storage with a gas heat engine.

“Any renewable energy system that can help decrease the sole dependence on diesel would be invaluable in remote communities but also help reduce the cost on mine sites throughout regional Australia,” Frischknecht said in a speech at the Newcastle project’s launch.

On a much larger scale, Frischknecht said on Friday, “the sharing of knowledge gained through the construction and operation of utility-scale, grid-connected solar power is an essential step towards overcoming early mover disadvantages,” which included higher development costs, higher contingency margins, which lead to higher construction costs, and higher borrowing costs.

But as Frischknecht also noted, solar’s biggest challenges in Australia today were not just about technology and cost, but also about ideology.

“Solar energy systems can be applied at the business level today, yet some of the business community still treats the technology with scepticism. Without uptake by business and industry, renewables will remain a niche energy provider,” he said.

If the audit commission’s recommendations are accepted, ARENA could be absorbed back into the Industry ministry, losing the independence gained when it was made an independent statutory body under the Labor government. However, such moves – along with major funding changes – would need to pass through parliament – no sure thing in the current or the post July Senate.