ARENA readies for renewables relay race

The chair of the Australian Renewable Energy Agency has given the clearest outline of where the government body will be directing funding and it seems the overlap with the Clean Energy Finance Corporation could be much more significant than most expected – and that is good news for clean energy development.

Greg Bourne, chair of ARENA, outlined to delegates at All-Energy 2012 the long-term vision he and his team will showcase in the release of a general funding strategy in coming weeks. Bourne, referring to the document as ARENA”s “near-term investment strategy”, made the clear distinction that it would be a high-level document without a “hit-list of technologies”.

As such, ARENA is leaving the door open to all technologies, with nothing seemingly off limits, including wind. Wind projects would however, need to be innovative to receive the funding of the Agency, likely only seen in the case of the displacement of on-site diesel grid generation.

Indeed, Bourne is bullish on the potential for renewables to play a part in our mining boom, with ARENA keen to fund projects that will supplant diesel generation.

“We see that renewable energy could either partially or completely displace onsite or isolated grid diesel generation,” the ARENA chair suggested. “This could involve either PV or wind technology used as stand-alone power sites of hybridisation with diesel.”

According to a December 2011 report from the Bureau of Resources and Energy Economics, the mining sector will be the biggest growing consumer of energy, expected to rise 5.2 per cent on average out to 2034/35. This figure combined with the suitability of off-grid and micro-grid developments to test clean energy integration explains why ARENA appears set to direct substantial funding toward the development of local demonstration projects in rural areas.

“The off-grid environment or the mini/micro-grid environment is an ideal area for testing the integration of one or more sources of renewable energy, with or without gas or diesel generation, in a range of climatic conditions,” Bourne explained.

ARENA and the CEFC

ARENA – with $3.2 billion of funding – and the CEFC – with $10 billion – have long been viewed as complimentary bodies, but rarely overlapping. That perception should be muddied by the graph below, which highlights the crossover between the two.

Source: ARENA

It is logical for overlap to ensure there are no gaps left between R&D and deployment and more critically, between early deployment and commercial deployment. Bourne used the metaphor of a relay, whereby ARENA and the CEFC hold the baton at the same time for a short period before ARENA leaves the latter to sprint to the finish line.

Interestingly, Bourne hinted at the prospect of ARENA and the CEFC supporting the same project from time-to-time, with the former offering “innovative grants” and the latter supplying finance. This could potentially work through the whole development cycle, driving a project from R&D through to commercial deployment.

Ultimately, Bourne indicated the principal objective of the two government bodies would be the same: to improve the bankability and the perception of bankability of renewable technologies. The latter part of this point is crucial as costs of solar PV and onshore wind have come down swiftly, but the extent of this is largely underestimated. And when it comes to drumming up support from the public and government, perception might as well be reality.

It will all become tricky if the Coalition wins the next election and disbands the CEFC, but for now, everyone is on the same page.