ARENA's unanswered questions

The Australian Renewable Energy Agency has billions at its disposal to make a valuable contribution to clean energy development in Australia. But its general funding strategy is so vague it could potentially waste that opportunity.

The Australian Renewable Energy Agency released its General Funding Strategy and Investment Plan yesterday – and it left more questions than answers. These documents are intended to inform those engaged in renewable energy and the general public as to how ARENA intends to allocate $2.2 billion, and why.

Considering the quantities of public money involved you’d expect a bit of detail. 

Well the General Funding Strategy barely filled five pages and the Investment Plan was two pages. 

Of course length is not a measure of the quality of a strategy or plan, but it is so open ended and vague that you are left completely guessing what ARENA might do. The documents state that it will consider supporting technologies “where Australia has a world leading intellectual property position or the capacity to commercially exploit a particular renewable energy resource.” Yet there is no detail or even examples of which technologies are and are not considered consistent with such criteria, nor how this criteria might be applied.

ARENA staff argue this is because they want to be focussed on outcomes rather than specific technological inputs. Yet on this point it is also open ended.

While its decision to set-up a program focussed on use of renewable energy to replace diesel in off-grid and remote mini-grid applications is a reasonably specific and definable opportunity, they also mention they’d like to get involved in:

“Promoting the integration of renewable energy technologies into major grids and hybrid solutions. This may also involve identifying opportunities for renewable transport fuels.”

This could cover an incredible array of things.

It’s true that government has got itself into trouble in the past being too prescriptive with what it wanted something to look like, without having much regard to the benefits it might deliver to broader community – in particular the Solar and CCS Flagship programs. Also encouraging greater use of renewables instead of diesel is a useful and worthy goal and it could provide useful pilots in how one might manage high levels of renewable energy penetration in main grids.

But at the same time there are lots of other areas where ARENA might be able to play a valuable role too. The ARENA board should be laying out in a lot more detail what the potential options could be for what they might spend their $2.2 billion on, and the possible processes for allocating it to applicants. This should then help guide a debate about priorities amongst stakeholders. 

This doesn’t mean abandoning flexibility to respond to really good project ideas from industry that weren’t imagined when the original strategy was conceived. But without a more detailed understanding of what they’re doing and why there’s a risk, ARENA could run every which way and have little to show for its efforts.

At the moment we are being asked to largely take the ARENA board on trust. Based on governments’ past track record with such grant funding programs, that isn’t good enough.

Next year ARENA needs to update its strategy. By that time we should expect to see:

-- A detailed outline on areas of unmet need or capability gaps in facilitating the expansion of renewable energy, which ARENA funding could address and aren’t addressed by others. This should include specific examples.

-- Which ones are deemed to be priorities by ARENA and why.

-- What are the alternative processes for allocating money (project by project tendering, feed-in tariffs, prizes etc.) for projects to address these needs or capability gaps and an evaluation of which ones might be best fit for purpose.

-- How ARENA will report to the general public on its funding selection decisions, and also on the status of past projects it has funded and the outcomes achieved from these projects.