ARENA has $1.3bn to spend on renewable energy “revolution”

Over the coming half century there will be a dramatic increase in the proportion of our electricity generated from renewable sources. This will happen because renewable energy makes good business sense, and because consumers want cleaner, quieter and healthier sources of electricity supply. It will need to remain reliable, providing many more services than it does today.

Like any revolution, the transition to more distributed renewable energy is challenging. The energy industry is facing a new future, and this is where ARENA comes in. ARENA’s role is to help make the transition to tomorrow’s energy easier, cheaper and quicker.

ARENA has completed its third year of operation, focused on the twin objectives of reducing the cost and increasing the supply of renewable energy in Australia. With those goals in mind, we continued to invest in game-changing research and high quality projects that have the best prospect of advancing affordable renewable energy technologies and solutions.

We understand that in addition to being challenging, the transition to renewable energy will take time and has to be competitively driven. Many of the barriers to progress are related to being an early mover, because it often costs more to do something the first time.

As a result, ARENA helps projects to overcome early mover disadvantage, such as making up for the higher cost of finance, higher supply chain costs and larger construction contingency margins. We take a long lens approach because we know there are no shortcuts to achieving substantial, meaningful change. And we participate where others won’t because the timeframes are too long and/or the rate of return isn’t high enough to attract commercial investors.

Highlights of 2014-15 include the announcements of $21.5 million in funding for 12 innovative solar research and development projects worth more than $70 million. The results of another competitive research and development round will be announced by early 2016.

We also announced $163 million in funding for another 25 projects, which operate at different stages along the innovation chain, creating new technology solutions, new skills and jobs and more efficient supply chains.

ARENA had a strong focus on regional and remote areas over the past year. We committed funding support for projects that are building the mining industry’s confidence in renewable energy options for remote operations; providing cheaper and more reliable electricity with renewables in more than 30 off-grid Indigenous communities; and constructing Australia’s largest solar farms in rural and regional locations.

We also provided support for innovation in storage solutions that are poised to change the way householders use rooftop solar, and provide a new way for electricity grid operators to improve reliability at low cost.

Other ARENA-supported projects involved the first-ever array of wave power generators connected to an electricity grid, the production of green crude from microalgae, and a number of renewable energy options for thermal energy.

A range of digital mapping and forecasting tools were also developed with ARENA support that will help both the renewable and broader energy industries to better plan, build, integrate and manage renewable energy.

The diversity of ARENA’s investment portfolio reflects the value that we see in developing and keeping technology options open for the future.

Looking ahead, ARENA has $1.3 billion in uncommitted funds. At 30 June 2015 we were assessing 116 applications that were seeking $1.4 billion in ARENA funding for projects worth $4.5 billion, of which only some will secure our investment.

We will continue to target our investments towards a renewable future by creating the conditions that accelerate change and increase the bankability of emerging renewables.

Ivor Frischknecht is the CEO of ARENA. This article is reprinted from ARENA’s annual report released on Monday.