State ministers say ARENA funding vital as priorities pivot to hydrogen and storage

State energy ministers have expressed their support for funding to extended to the Australian Renewable Energy Agency, arguing that support is still needed for emerging clean energy innovations, and as the energy market shifts its focus to renewable hydrogen and energy storage options.

Addressing a forum of energy ministers held by the Clean Energy Council, the South Australian energy minister said  it was important that governments help support the emergence of high potential innovations reach the point where they become commercially viable.

“My desire that it be extended is absolutely very strong. ARENA has played a very important part, as has the Clean Energy Finance Corporation. You’re not the only one focused on that deadline,” South Australian energy minister Dan van Holst Pellekaan said in response to a question.

Van Holst Pellekaan said ARENA had a vital role to play as the energy market moves to develop technologies that are currently less commercially viable but will play a crucial role in a future energy market, including hydrogen technologies and large-scale energy storage.

“I think all of us … would agree with the principle that you use taxpayers money to subsidize or encourage in some other way,” van Holst Pellekaan told the energy ministers forum,” he said.

“You do that for a fixed period of time, then when that technology matures becomes commercial on its own right, you step away and support something else.

“In our world, we move forward to storage, small scale storage, and large scale storage. And we have ARENA as a partner and the CEFC as a partner. We are very, very glad to have them,” van Holst Pellekaan added.

“So the principle of helping something mature, then you start with something else. Taking the baby steps and helping build up is incredibly important. [WA energy minister Bill Johnston] and I both do see hydrogen as one of the very next key opportunities.”

The Western Australian energy minister, Bill Johnston told the ministers forum that he found the prospect of his state establishing itself as a global hydrogen export leader as “exciting” and that it would be an easier opportunity for the state to seize, than the export of electricity into Asia.

“The risk with physical interconnections is that they get broken,” Johnston said. “That’s why the export of hydrogen itself rather than the export of electrons is much more exciting, because your transportation risk is then just one cargo. Whereas if you lose a DC link, you lose 100 per cent of your export.”

“So we are very, very excited about the export of hydrogen; whatever technology form that takes. Whether it is ammonia or direct hydrogen, we don’t know. We don’t mind because that’s for clever people to work it out. But there is an absolute opportunity for a global scale, hydrogen export industry in the Pilbara.”

“Here in Western Australia, you can see that we the wonderful, renewable resource here, we have a lot of things going for us to support the transition to a renewable hydrogen export industry.”

ARENA will oversee $70 million in grant funding to support new large-scale hydrogen projection projects and recently revealed that it had been flooded with requests for funding, having received more than $1 billion in proposals.

ARENA is approaching the end of its funding window, with the last allocation of funding to be provided to the agency in 2021-22. If ARENA’s funding allocation were allowed to come to an end, it would see research and innovation funding for clean technologies reduce by a considerable amount.

There were increased fears that the Morrison government was preparing to wind up the renewable energy agency after energy minister Angus Taylor extended the terms of its board members by just three months.

However, it is understood that the Morrison cabinet is preparing to consider a proposal that would extend the life of both ARENA and the Clean Energy Finance Corporation, but a proposal that may include expanding the investment mandates of both agencies to include low emissions technologies like gas and carbon capture and storage.

Federal energy minister Angus Taylor is also preparing to make new ARENA board appointments, as the three month extension to the terms of the existing board members will again expire on 17 July.