Several weeks ago, ITIF profiled a new Australian governmental agency, the Australian Renewable Energy Agency, or ARENA. ITIF conducted an interview with a representative of the agency for greater insight into its creation and intended role.
ITIF: ARENA seems to have many similarities with an American government agency, ARPA-E. Is this coincidental, or did ARENA take inspiration from ARPA-E or other programs outside Australia?
ARENA: The Australian Renewable Energy Agency was established out of a desire to consolidate existing support for renewable energy technology development, as part of the Government’s package of measures for Australia’s clean energy future. The Government wanted to build on the success of existing local initiatives such as the Government-funded Australian Solar Institute (ASI).
Australia has a history of sharing learnings with the US through the United States-Australia Solar Energy Collaboration; in particular there has been collaboration between Australian solar researchers supported by the Government through ASI and US researchers through the US [Department of Energy’s] SunShot Program.
ITIF: While many renewable energy policies the world over focus on the deployment of existing technologies over the innovation and development of new technologies, ARENA seems much more geared towards the latter over the former. What has informed this focus?
ARENA: Given the huge range of renewable energy technologies being developed, and the early stage of development of much of this technology, it is unclear which renewable energy technologies are likely to offer the best prospects of commercial viability in the long term. In order to provide maximum options for commercialization investment, ARENA has decided to focus on building a pipeline of technologies and projects as the best way to achieve its objectives of improving the competitiveness of renewable energy technologies; and increasing the supply of renewable energy in Australia. This means ARENA will support the development of emerging technologies by funding research and development; and also assist mature technologies to bridge the commercialization gap by contributing to project financing.
ITIF: How was the agency able to secure funding out to 2020? Long-term funding doesn’t always seem feasible, especially in times of fiscal austerity.
ARENA: Although ARENA is an independent statutory authority, it is still an entity within the Australian Government and using Australian Government funding. ARENA is part of the Australian Government’s plan to reshape the economy, cut carbon pollution, drive innovation and help avoid the increased costs of delaying action on climate change. This is why the funding was set out in legislation until 2020, providing improved long term funding and policy certainty for industry.
Key to the Australian Government’s plan for a Clean Energy Future are measures that complement the carbon price, such as investment in new technologies. As a result the Government guaranteed this investment through legislation.
ITIF: How is ARENA’s support meant to differ from typical private sector investment?
ARENA: Private sector investment is generally focused on a financial return…ARENA is considering a range of funding mechanisms to improve the competitiveness of renewable energy technologies; and increase the supply of renewable energy in Australia. Ideal returns from this investment are expected to come in the form of proven and demonstrated technologies and knowledge sharing.
ITIF: Can you provide greater insight into the kind of projects ARENA will be supporting?
ARENA: ARENA will support the research, development, demonstration, deployment and commercialization of renewable energy and related technologies. ARENA will give priority to projects that show the best potential to make a long-term contribution to the development of renewable energy in Australia.
Further details will be provided through the funding strategy, which ARENA is finalizing in consultation with the sector. [Editor’s note: Consultation continues as of this blog post’s publication; more information on the process can be found here].
Comments have been edited for the sake of brevity.
Above photo is of the Windorah Solar Farm in Queensland. Photo credit: Wikimedia Commons.