Coalition to strip ARENA to fund million solar roofs program

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.