ARENA future clouded as Taylor fudges on board appointments

New questions have been raised over the potential future of the Australian Renewable Energy Agency after federal energy minister Angus Taylor opted to extend the appointments of ARENA’s board members by just three months.

The terms of all but one of ARENA’s existing board members were set to expire on Friday, but Taylor’s office told RenewEconomy that rather than make a new round of appointments for a full two year term, the minister has instead agreed to extend the term of board members until the middle of the year.

It avoids the potentially embarrassing situation where the terms of the ARENA board members are allowed to expire without new appointments being made – potentially for the third time in six years.

The short-term extension is likely an interim measure before full two year appointments are made and potentially with a fresh set of board members as chosen by Taylor.

But that may depend on whether ARENA receives any extra funds, as it will shortly exhaust its already reduced funding package, despite the critical role it has played in new technologies in Australia, bringing down the cost of large scale solar, and supporting pilot and commercial projects in storage and other key technologies.

ARENA was first left without a functioning board in 2014 under the Abbott government, which at the time was attempting to abolish ARENA. Then minister for industry Ian McFarlane eventually reappointed two board members, chair Greg Bourne and director Judith Smith, to a barebones board along with former NSW government bureaucrat Martin Hoffman and industry department secretary Glenys Beauchamp.

It happened again in 2016 under the Turnbull government, leaving then department of environment and energy secretary Gordon de Brouwer as the sole board member.

According to the Australian Government’s directory of board appointments, the terms of six of ARENA’s seven board members were set to expire on Friday.

The ARENA board carries wide reaching responsibilities for the agency, including being responsible for approving ARENA’s investment priorities and workplan.

The board is also responsible for approving ARENA’s funding commitments of up to $50 million, meaning it plays a crucial role in deciding which projects are awarded grant funding.

Only one board member holds an ongoing position on the board, the secretary of the Department of Industry, Science, Energy and Resources David Fredericks, as the position comes with an ex officio spot on the board.

It means that at times ARENA has been left with a single federal government bureaucrat carrying total responsibility for the agency’s funding decisions and strategy. It also means that decisions about the awarding of ARENA’s funds to projects may be made without the oversight of board members who are independent of government, and who hold direct industry experience.

The Australia Institute’s energy policy and regulatory lead Dan Cass told RenewEconomy that he hoped a long-term board appointment issue would be resolved soon, given the vital work of the agency and renewed calls for ARENA’s funding to be extended.

“The current board has steered ARENA to important new investments in transport, industry, hydrogen and the big challenges in electricity which are dispatchable generation and storage and the coordination of distributed energy resources.” Cass said.

“Unfortunately ARENA will run out of money for new projects this year, so the federal government has to move quickly to make a budget commitment to ARENA of at least $460 million over the next two years.”

“Most Australians support refunding ARENA and according to Australia Institute research it needs around $2.5 billion over the 2020s, to help us meet our Paris climate commitments and build a reliable and affordable grid powered by renewable energy,” Cass added.

The ARENA board is chaired by Martijn Wilder, who has a long history of involvement in Australian climate and energy policy, including as head of the head of Baker McKenzie’s global climate law and finance practice, a founding director of the Clean Energy Finance Corporation and as a founding partner of climate investment advisory firm Pollination Group.

The other board members include Horizon Power CEO Stephanie Unwin, diplomat and former COO of the Clean Energy Finance Corporation Meg McDonald, former Sundrop Farms COO Dougal McOmish and CEO of the Australian Geothermal Energy Association Susan Jeanes.

The current board was appointed by former energy minister Josh Frydenberg.

The short-term extension of board member terms adds to the growing uncertainty around ARENA’s future, with the agency approaching the end of its funding allocation, raising the likelihood that crucial funding for renewable energy research and development could dry up.

Late last year, ARENA CEO Darren Miller told a senate estimates hearing that ARENA had around $200 million in available funding remaining.

$70 million of this funding has already been set aside to fund the deployment of large-scale renewable hydrogen production facilities, with the agency announcing earlier this week that it was now receiving applications for that funding.

RenewEconomy understands that the federal cabinet is set to consider a package of proposals, which will include changes to both the operation and future funding of ARENA and the Clean Energy Finance Corporation, but the timing of those decisions is now uncertain due to the disruptions caused by Covid-19.

It is likely that if the roles and responsibilities of ARENA are changed by legislative amendments, that the make-up of the agency’s board could be changed to reflect its new priorities.

ARENA has played an instrumental role in the emergence of Australia’s renewable energy sector. ARENA provided key funding support to some of Australia’s early large-scale solar projects that helped the solar industry rapidly achieve cost competitiveness.

According to the Australian Bureau of Statistics, the large-scale solar industry went from employing virtually no one in 2010, to growing to supporting more than 4,700 full-time jobs by 2018-19. The growth of this industry is partly thanks to early ARENA support.

In total, ARENA has provided almost $1.5 billion in funding support to more than 500 different projects, including solar photovoltaic research, demand response, electric vehicles, better integration of renewables into Australia’s grids and more recently, pushed the development of Australia’s renewable hydrogen industry.

The Department of Industry, Science, Energy and Resources have been contacted for comment.

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