Australian Renewable Energy Agency (General Funding Strategy) Determination 2018

I, JOSH FRYDENBERG, Minister for the Environment and Energy, make the following Determination under sub-section 20(2) of the Australian Renewable Energy Agency Act 2011.

Dated: 23/7/18

JOSH FRYDENBERG

Minister for the Environment and Energy

 

 

 

Contents

1  Name

2  Commencement

3  Authority

4  Definitions

5  Repeals

6  Approval of General Funding Strategy

Schedule 1—General Funding Strategy 2018/19 – 2020/21

 

1  Name

  This instrument is the Australian Renewable Energy Agency (General Funding Strategy) Determination 2018.

2  Commencement

  This instrument commences on the day after it is registered.

3  Authority

  This instrument is made under sub-section 20(2) of the Act.

4  Definitions

  In this instrument:

Act means the Australian Renewable Energy Agency Act 2011.

5  Repeals

  This instrument, on the day it comes into force, repeals the Australian Renewable Energy Agency (General Funding Strategy) Determination 2017.

6  Approval of General Funding Strategy

  For the purposes of sub-section 20(2) of the Act, the General Funding Strategy at Schedule 1 is approved and made on the date of signature of this instrument.


Schedule 1—General Funding Strategy 2018/19 – 2020/21

1  Introduction

ARENA is a statutory agency established by the Australian Government on 1 July 2012 by the Australian Renewable Energy Agency Act 2011 (Cth) (ARENA Act), which provides for funding until 2022. This General Funding Strategy (GFS) guides how the Australian Renewable Energy Agency (ARENA) provides financial assistance to eligible activities, in accordance with the ARENA Act and subsidiary regulations.

ARENA applies the GFS principles to set investment priorities, which are detailed in the Investment Plan (IP).

When determining which activities will be financially supported, ARENA takes into account a proposal’s fit with the investment priorities. The GFS reflects how ARENA intends to achieve its objective and takes account of the Government’s priorities as reflected in the Minister’s Statement of Expectations.

ARENA is required to develop and publish a general funding strategy that outlines its principal objectives and priorities for the provision of financial assistance covering a period of three financial years.

The GFS is reviewed each year, updated if necessary, and provided to the Minister for the Environment and Energy for approval. This GFS remains in force until a subsequent version is approved by the Minister.

ARENA may only provide financial assistance to new activities in accordance with the GFS. While ARENA considers the GFS and IP to be consistent, the GFS takes precedence if any conflict arises between the two.

In addition to meeting its current investment priorities, a significant focus for ARENA is delivering the benefits from past projects. This may include providing financial assistance for extension or complementary projects, as well as knowledge sharing through the collection, storage, analysis, curation and sharing of information, experience and know-how gained from these and related projects.

2  ARENA’s objective

The ARENA Act sets out ARENA’s main objective, which is to:

Renewable energy technologies are defined, in the Act, to include hybrid, related or enabling technologies. To pursue this objective, the Act enables ARENA to provide financial assistance and share knowledge to support innovation in renewable energy, as well as in hybrid and other related technologies, such as energy storage.

ARENA seeks to accelerate Australia’s shift to an affordable and reliable renewable energy future. ARENA enables more renewables and lower emissions by driving innovation and commercialisation. By funding projects and sharing knowledge, we improve the competitiveness of renewable energy and support the transformation of Australia’s energy mix benefiting the Australian economy, industry and wider community.

ARENA’s support for innovation and the commercialisation of clean energy technology provides options to reduce future greenhouse gas emissions at least cost. This enhances Australia’s ability to transition to a low emissions and energy productive economy.

While ARENA favours investments with the potential to deliver near-term impacts, it also takes account of the potential for larger long-term impacts from investments that could take time to pay off. Accordingly, ARENA takes a long-term view of its objective, aiming to have an impact between 2020 and 2040.

3  Investment priorities

ARENA pursues investment priorities that it has identified as likely to have the most impact on achieving its objective, and publishes them in the IP. In developing these priorities, ARENA takes into account views from a wide range of stakeholders, research and complementary initiatives such as the Low Emissions Technology Roadmap.

ARENA's approach balances certainty and transparency for applicants with the flexibility to respond to changes in the market, including commercial breakthroughs and policy developments.

The investment priorities also enable ARENA to focus its efforts to ensure it achieves impact in the activities it undertakes.

The IP provides guidance for applicants and informs knowledge sharing activities.

ARENA also publishes analysis of the potential for activities and relevant technologies to contribute to its purpose. This increases transparency of the priority-setting process.

For the period of this GFS, ARENA will place a high priority on delivering secure and reliable electricity, accelerating solar PV innovation, improving energy productivity and exporting renewable energy.

As part of Australia’s contribution to Mission Innovation, ARENA intends to grow its total spending on research and development through the period of this GFS, providing a base to at least double research and development spending by 2020.

4  Guiding principles for ARENA financial assistance

ARENA helps advance technologies or applications towards commercialisation, particularly by overcoming the early-mover disadvantage that leads to under-investment in new clean energy options. ARENA financial assistance is therefore expected to deliver changes beyond the funded project, such as to:

ARENA takes five principles into account when developing and delivering investment priorities. These principles need to be balanced against each other, targeting financial assistance to areas of maximum impact, while allowing for a degree of diversity to cater for less likely but potentially significant advances.

Targeted for maximum impact

ARENA seeks to accelerate clean energy innovation, thereby increasing energy productivity of the Australian economy and providing options for the transition to a low emissions future.

ARENA sets its investment priorities to target the areas where it can make the most impact. Among other factors, this means taking into account:

ARENA works cooperatively with Commonwealth agencies, state and territory governments, proponents and others, and aims to complement other programs and initiatives to ensure its activities achieve maximum value. In particular, ARENA works closely with the Clean Energy Finance Corporation and the Australian Research Council to align public effort to further clean energy innovation.

When setting its priorities and making funding decisions, ARENA seeks to complement and leverage impact from other programs and funding sources, including private finance and the Clean Energy Innovation Fund.

Technology neutral

Within its technology remit of renewable energy, hybrid, related and enabling technologies, ARENA takes a technology-neutral approach to developing its investment priorities. This allows a full range of options to be explored, increasing the chances of the lowest cost and most effective solutions being available in the long term.

Responsive and agile

ARENA aims to be responsive to market conditions, technology developments and industry needs as they arise.

ARENA reviews its IP periodically in light of its existing investment portfolio and developments in technology, market and policies, to best ensure it invests in the highest impact activities.

ARENA aims to be agile, responding swiftly to take advantage of opportunities that could have a transformative impact on renewable energy in Australia. ARENA provides financial assistance to novel ideas and approaches, recognising there is no certainty they will pay off, and expands or contracts support depending on experience.

Diverse

Given the uncertainty and risk inherent in researching, developing and commercialising new energy solutions, ARENA seeks diversity in its investment portfolio to ensure options are kept open for the future and its portfolio has an impact in different policy and economic scenarios. ARENA aims for its overall portfolio to:

Accordingly, ARENA looks to ensure its overall portfolio includes activities at different stages of development on the commercialisation pathway:

ARENA also achieves diversity in its investment portfolio by providing support across multiple dimensions, for example:

Commercially focused

ARENA’s financial assistance is provided to advance technologies or applications towards commercial readiness, improve business models, address barriers or reduce overall industry costs. ARENA does not fund activities that are commercially viable without ARENA support.

ARENA seeks to provide the minimum financial assistance needed, and in the most appropriate form, to deliver the desired outcome, thus maximising value for public investment.

ARENA-funded activities are required, where appropriate, to share knowledge. This increases the return on public investment by extending the impact of ARENA financial assistance beyond the proponent to the broader industry.

Fig 1  Supporting innovation and commercialisation

This figure, entitled "Figure 1 Supporting innovation and commercialisation", shows the span of ARENA's work. It depicts a "commercialisation pathway", arranged from left to right into three broad categories of activity. The first stage of the pathway, at the far left, is "research and development". This is further split into two subcategories: first "early stage research" and then "development". The second stage of the pathway, in the centre, is "demonstration". This is further split into first "pilot scale" and then "large scale" subcategories. Finally, the last stage of the pathway, at the far right, is "deployment". This is further split into first "pre-commercial" and then "commercial" subcategories. The figure indicates that ARENA's work spans almost the entire commercialisation pathway. A box indicates that the entire research and development category is covered by ARENA's "research and development program". Another box indicates that the entire demonstration category, as well as the pre-commercial subcategory of the deployment category, are covered by ARENA's "advancing renewables program". The final commercial subcategory of the deployment category remains uncovered by ARENA. Further boxes indicate that ARENA engages in knowledge sharing activities across all categories, and that ARENA develops new funding programs or new funding rounds across any categories as needed.

 

Fig 2  A partnership across the innovation chain

This figure, entitled "Figure 2 A partnership across the innovation chain", shows ARENA's contribution to the innovation chain. It depicts an "innovation chain", arranged from left to right into six broad categories of activity: "research", "development", "demonstration", "deployment", "market accumulation" and "diffusion". A series of boxes arranged from top to bottom locate a number of entities and Government policies on the innovation chain. ARENA's box indicates that it covers late-stage research, the entirety of development and demonstration and early-stage deployment. This places it in roughly the same range as CSIRO. Most of the other depicted entities and Government policies span the deployment, market accumulation and diffusion stages.