This week the Australian Renewable Energy Agency (ARENA) funded 12 cutting-edge solar power projects. In what may be ARENA’s most successful funding announcement to date, the dozen power plants shared in $92 million which will unlock more than $1 billion in private investment and dramatically bring down the cost of these amazing new technologies.
It could be the last grant funding it ever makes.
The Australian Renewable Energy Agency (ARENA) has around $1.3 billion in funding that is in the firing line as part of the Federal Government’s budget omnibus savings package. This money helps to make new clean energy technologies cheaper, faster.
Slashing this funding is entirely at odds with the government’s innovation agenda. If supported by the ALP, it would also be a disappointing backflip by the party which established the organisation when it was last in power.
The attempt to cut ARENA’s funding is short-sighted and ignores the crucial role it has had – and can continue to play – in driving the innovation in the energy sector that will grow the Australian economy in decades to come.
Here’s why: The energy sector globally is in a state of massive transition. In Australia, our energy system is old and carbon-intensive, making it an even more acute challenge for our nation. Complemented by the Clean Energy Finance Corporation and the national Renewable Energy Target, ARENA has had extraordinary success in developing exciting and innovative new clean energy technologies.
Development of energy technology is both capital-intensive and has very long lead times. For this reason, every new energy technology ever developed – and this includes coal, gas, hydro and nuclear power – has been underpinned by a government funding commitment, given the challenges for private sector investors to fully accept or realise these risks.
Since it was formed in 2012, ARENA has successfully funded hundreds of projects that would not otherwise have enjoyed any time in the sun.
These projects will form the foundations for the next generation of Australia’s energy system, helping to deliver affordable clean energy for everyone – a goal supported by nine out of every ten Australians every time a poll does the rounds.
The effectiveness of ARENA has motivated a group of innovative leaders including GE, AGL, Tesla, ABB, Infigen Energy, First Solar and many more to sign an open letter calling on the Australian Parliament to preserve the agency’s grants funding.
The implications of substantial cuts to the agency are profound. Not only does ARENA directly fund the developers of innovative new technologies like wave energy and large-scale solar power, it also puts hundreds of millions of dollars into world-leading university research.
The agency is also helping to drive down the cost of new technologies such as large-scale solar. Based on the cost reductions which have been delivered on the back of ARENA’s investment, large-scale solar power can now play a huge role in the future of Australian energy. But that’s if we don’t rip the rug out from under it before the job has been finished.
It’s been a bumpy few years for the renewable energy industry in Australia. We have slipped down the global indexes for investment levels and attractiveness at the hands of seemingly constant policy change and political instability. International investors are flooding back into the country now as stability returns and the fundamentals of clean energy investment start to shine through.
But these same investors will be spooked if one of the first moves of the new Parliament is to take an axe to ARENA’s funding. In business, perception is reality. Creating a perception that Australia has returned to the bad old days of constant policy chopping and changing will send some investors packing again.
In days ahead, the Australian Parliament will get to decide if our great country is going to cut and slash its way backwards to the 20th century, or innovate and grow to embrace the opportunities of the 21st century. The decision it makes on the future of funding for ARENA is one small but significant indication of the future of our nation. Let’s hope it’s a smart decision befitting a clever country with a big (and clean) future.
Kane Thornton is Chief Executive of Clean Energy Council.