Australian GovernmentAustralian Renewable Energy AgencyInvestmentPlan2013/14 – 2015/16
This document should be read in conjunctionwith the ARENA General Funding Strategy. Itwill be updated from time to time as ARENAreleases new, or modifies existing, initiatives.If an inconsistency arises, the GeneralFunding Strategy takes priority.InvestmentPlan2013/14 – 2015/16
In its inaugural General Funding StrategyARENA adopted a thematically-based,outcomes focussed approach tosupporting renewable energy technologydevelopment and deployment. Thisinvolved fresh thinking about the way inwhich support mechanisms are structuredand described. The approach is prudentyet proactive in seeking to identifyopportunities where ARENA investmentwill facilitate the greatest return interms of deployment and improvedcompetitiveness.ARENA’s investment strategy frameworkcomprises three tiers:
Investment ApproachTier 1Strategic InitiativesStrategic initiatives are larger in scope and scale andtypically fund market-oriented, near commercial,projects. While ARENA expects to implement only asmall number of strategic initiatives over time, thisis where the bulk of ARENA’s funding is likely to beallocated, given the costs associated with large scaledemonstration and deployment.Tier 2Supporting InitiativesSupporting initiatives are of more limited scopeand address specific roadblocks to the success ofa strategic initiative; they may also create the preconditions necessary for the emergence of the nextgeneration of strategic initiative solutions.As their name implies, the purpose, design andtimeframe of supporting initiatives will be stronglydefined by the strategic initiative they are supporting.Tier 3Complementary InitiativesComplementary initiatives provide ARENA withthe flexibility to invest in a diverse range ofopportunities maximising the prospects of ultimatelyfulfilling all of its functions. These initiatives mayhave a wider scope and often address themescommon to multiple initiatives, helping balance theARENA portfolio. ARENA anticipates that this tierof the investment strategy will support a diversemix of activities and provide scope for trialling moreinnovative funding models.1
GovernancePerformance MeasurementThe ARENA Board decides which renewableenergy projects will be financially supported,according to the General Funding Strategyand Investment Plan. ARENA’s Board iscomprised of six Board members appointedby the Minister for Resources and Energy,and the Secretary of the Departmentof Resources, Energy and Tourism. Theappointed members of the Board haveskills in renewable energy technology,commercialisation, business investmentand corporate governance.ARENA has developed a range of keyperformance indicators to assist in assessingits performance against its objectives.ARENA takes a portfolio approach, witheach investment selected through a carefulanalysis of its potential benefits in makingrenewable energy more affordable andincreasing supply. ARENA is committedto being an agent of change throughits transparency, encouraging projectparticipants to share knowledge regardingrenewable energy barriers, ensuring thatproject outcomes are replicable and buildinga strong culture of learning-by-doing.ARENA seeks to build a portfolio ofinvestments, supporting a range of differentprojects across the innovation chain – fromresearch in the laboratory to large-scaletechnology projects – with a focus onattracting investors. This approach coversboth innovative technology solutionsfor earlier-stage projects and innovativecommercial models for later-stage projects.ARENA welcomes investment proposalsfrom both foreign and Australian basedcompanies that would result in increasingthe supply and competitiveness ofrenewable energy in Australia.2ARENA is aware that in order to achieveits objectives it must be an effective andefficient organisation and hence ARENA willalso measure itself on this basis.Indicators for both its legislative objectivesand its organisational effectiveness aredesigned to be quantifiable and applicableacross the full range of ARENA’s work.
Figure 1. ARENA Performance MeasurementWhatImprove thecompetitivenessof renewableenergytechnologiesIncrease thesupply ofrenewable energyin AustraliaOrganisationaleffectiveness How MeasureImprove the technical and commercial readiness oftechnologies within Australia from ARENA’s actions.Yes / NoEnter agreements to deliver two signiﬁcant multi-participantknowledge-sharing products by December 2013.Complete /IncompleteFund a range of knowledge sharing projects by May 2014.Number of projectsMaintain a diverse portfolio of technologies.Take-up ofARENA programsIncrease the total amount of renewable energy withinAustralia from ARENA’s actions.MWs ofcapacity fundedARENA funding leverages additional funding and in-kindcontributions from project partners.Leverage ratioFinalise the assessments of one round of ARENA’s RegionalAustralian Renewables Initiative by April 2014.Complete /IncompleteDesign and launch one new investment strategy (program)by June 2014.Complete /IncompleteConduct a baseline stakeholder survey by April 2014.Complete /IncompleteIncrease the number of ARENA website visitors by at least20 per cent from May 2013 to June 2014.Number of websitevisitorsReview the ARENA General Funding Strategy for 2014–15 to2016–17 and submit to Minister by June 2014.Complete /IncompleteDevelop the ARENA work plan for 2014–15 and submit toMinister by June 2014.Complete /Incomplete3
Knowledge Management 40 – 60m 35 – 55mFigure 2.ARENA's IndicativeFunding along theInnovation ChainUncommittedfunding byinnovationchain stageIndicativefundingallocation(all funds) Research andDevelopmentEmergingTechnologyExistingTechnology 200 – 300m DemonstrationPilot ScaleCommercialScale 400 – cial 600 – 900m 900 – 1200m 1000 – 1300m 1400 – 1700m4
Funding allocation alongthe innovation chainTo achieve ARENA’s objectives mosteffectively, the majority of ARENA’s fundingwill be invested in demonstration and earlydeployment projects, which help de-riskand build investor confidence in renewabletechnologies. These types of projects requirehigh volumes of capital.ARENA will closely monitor the mix ofsolutions, funding mechanisms and businessmodels deployed and, where necessary,adjust its level or mode of funding. Bringingthe next wave of renewable energytechnologies forward is also important, soARENA will continue to take a flexible andfacilitative approach in this area, fundingstudies and projects which have the potentialto overcome barriers impacting on renewableenergy technology development.ARENA is developing commercial readiness toolsto identify common barriers across technologysolutions and provide a rigorous frameworkfor evaluating the steps required for differentrenewable energy solutions to progress towardscommercialisation. The tools will providea collaborative framework for discussionand help ARENA engage in meaningfuland informed dialogue with stakeholders.For ARENA to achieve its objective ofaccelerating the commercial deployment ofrenewable energy – building more renewables,cheaper, faster – a detailed understanding ofthe commercialisation pathways to unlockinginvestment capital is required.Figure 3. ARENA’s Committed Funding,Initiatives with Announced Funding andFunding for Future Initiatives 260 – 860mFuture initiatives 300 – 900mInitiatives with funding yet tobe announced** 740mInitiatives with announcedfunding* 1100mCommitted fundingARENA’s proposed indicative allocation for itsoverall funding, including already allocatedfunds, is outlined in Figure 2.Of this funding, 1,100m (as of June 2013) iscommitted to individual projects. This leaves 1,900m available. The indicative remainingavailable funds by innovation chain stage areshown in Figure 2.Of the 1,900m of funds not committed toindividual projects as of June 2013, 740mhas already been allocated to ARENA’s newlylaunched initiatives. A further 300m – 900m is expected to be allocated to otherinitiatives detailed in this Investment Plan.This leaves 260m – 860m for allocation toinitiatives in future Investment Plans.Note: Figures are rounded to nearest 10m.* Includes Regional Australia’s RenewablesInitiative, Accelerated Step Change Initiativeand Removing Roadblocks and the SHAREInitiative which are administered via theEmerging Renewables Program.** Includes Discovering Renewable Potentialthrough Hybridisation, IntegratingRenewables Into the Grid, BuildingAustralia’s Next Generation Solar andUpholding and Identifying Australia’s TopRenewable Research and Deployment.5
ContinuingInitiativesInvestmentStrategyTier 1Tier 2Strategic InitiativesSupporting InitiativesARENA willcontinue theinitiatives outlinedin its 2012-13Investment Plan:Regional Australia’s RenewablesRemoving roadblocks for regional andremote renewable energySupports renewable energy demonstrationin regional and remote locations with theobjective of increasing the deploymentof commercially prospective remoterenewable energy generation systems.Such demonstrations are likely to includeintegrated and hybrid systems.Deploying utility scale renewable energy(closed to new applicants)Evaluates the remaining large scale solarprojects referred to it by the Minister forResources and Energy, and supports thoseapproved for funding.6Seeks to overcome roadblocks to strategicinitiative outcomes. The current focus ison removing roadblocks to regional andremote deployment including systemintegration, variability, storage, technologydemonstration and testing facilities.Building Australia’s next generation solarBuilds on Australia’s world-class solar skillsand capabilities, including ongoing formerASI projects. During 2013-14, ARENA willconsider expanding our support into othersectors (see Upholding and identifyingAustralia’s top renewable research anddevelopment opportunities under newinitiatives on page 8).
Tier 3Complementary InitiativesEmerging Renewables ProgramAssists the development of renewableenergy technologies at any point of theinnovation chain, except basic research anddevelopment. The Emerging Renewablesprogram supports innovation and knowledgesharing, with a focus on helping technologydevelopers improve the technology andcommercial readiness levels of theirtechnologies.Renewable Energy Venture CapitalFund programFunding a 100 million investment in the 200 million Southern Cross RenewableEnergy Fund managed by Southern CrossVenture Partners.Advanced Biofuels Investment Readinessprogram (closed to new applicants)Builds the investment case for significantand scalable pre-commercial demonstrationprojects for the production of high energy,drop-in advanced biofuels in Australia.Supporting High-value AustralianRenewable Energy (SHARE) KnowledgeAddresses knowledge gaps throughreporting requirements of its programs andtargeted projects. It is intended that this willincrease knowledge of the barriers whichimpact renewable energy projects and thepossible solutions available. More details areoutlined opposite. Current SHARE Knowledge priorities1. Understanding renewable energypotentialExamples include funding the updateof the Australian Energy TechnologyAssessment; development of an inauguralAustralian Liquid Fuel TechnologyAssessment; a review of Australiangeothermal pathways; deeper analysis ofrenewable energy in the Australian EnergyResource Assessment; in depth reviewof the challenges and prospects of theoff-grid market; and detailed study of thetechnical and commercial feasibility oflarge scale hybridisation of existing fossilfuel power plants in Australia.2. Grid integrationExamples include funding an in-depthanalysis of the barriers to, and lessonslearned in, negotiating grid connectionfor renewable energy projects andthe collection and publishing of solarirradiation data to assist the integrationand financing of solar projects.3. International engagementExamples include supporting Australianparticipation in the International EnergyAgency’s Implementing Agreements wheretechnologies align with ARENA’s priorities.7
NewInitiativesARENA willcommencesupport for thefollowing newpriorities:Precursor study toTier 2Strategic InitiativeSupporting InitiativesDiscovering renewable potential throughhybridisationIntegrating renewables into the gridHybridisation of existing fossil fuelgeneration offers the opportunity to scale uprenewable energy technologies at lower costthan construction of a stand-alone renewableplant. Potential trials of hybrid solutionscould help demonstrate that renewables cansupply power reliably and build experienceamong generators operating and maintainingrenewable energy plants, while alsodisplacing emissions from fossil fuels.At present there are some key knowledgegaps in hybrid solutions in Australia. Theseinclude the technical factors that enablehybridisation, the number of plants andthe types of technologies suitable forhybridisation, the level of funding and thefactors that influence the decision-makingof energy producers when determining thedesign and scale of power plants.ARENA will fund a study to examine thepotential for widespread integration ofrenewable energy in existing power stationsin Australia and the possible role forARENA. Subject to the conclusions of thisstudy, ARENA may consider launching astrategic initiative to encourage the broaderdeployment of hybrid technology, with theobjective of demonstrating utility scalerenewable energy, which is comparable incost to fossil fuel generation.8Due to the success of a range of renewablepolicy measures and accompanying costreductions for technologies such as wind andsolar photovoltaics, renewables are reachinghigh penetrations in a number of locationsaround Australia. This potentially poses anarray of challenges and opportunities fornetwork and distribution operators suchas forecasting, technical standards andbalancing supply with demand to ensurethat maximum benefit is derived from highrenewable penetration.ARENA will launch a supporting initiativeto review grid integration barriers to higherlevels of renewable energy penetration withthe objective of increasing the deploymentand utilisation of renewable energygeneration systems at both residential andcommercial scale. This will have a focuson demonstration projects, developed inconsultation with network and distributionoperators. Studies on grid integration will alsobe supported through SHARE.Upholding and identifying Australia’stop renewable research and developmentopportunitiesAustralia has produced many leading solarresearchers who now hold senior positionsin the world’s top solar companies. ARENAbelieves that Australia has other significantworld leading areas of research anddevelopment in the renewable energy field.To cultivate and continue these world-classresearch areas, ARENA’s supporting initiativeon research and development will seek toevaluate and identify potential areas tosupport. Potentially expanding our researchand development commitment beyond solaris in keeping with our approach of makinginvestments which have the best prospectsfor successful commercialisation, regardlessof technology.
Tier 3Complementary InitiativesAccelerated Step Change InitiativeFramework for the identification of barriersARENA has significant discretion in themechanisms and processes it can use toprovide financial assistance. Flexibilityof approach is necessary to ensure thatARENA is able to maximise the value of itsinvestments and their contribution to thedevelopment of the Australian renewableenergy industry.ARENA is actively developing commercialreadiness tools to assist in targeting barrierswhich are common to a number of differenttechnology solutions. ARENA will workwith industry and draw upon internationalrenewable energy commercialisationexperience plus commercialisation practicesfrom other sectors to develop its framework.ARENA needs to be adaptable butaccountable in the way it responds to thefast pace of change and dynamic nature ofthe Australian renewable energy industry.It also requires the ability to collaboratewith strategic partners (especially otherCommonwealth bodies) in order to maximisethe leverage and impact of the assistance itprovides. To address these needs, ARENA’sAccelerated Step Change Initiative (ASCI)will provide a transparent mechanism toprovide financial assistance and supportfor exceptional (high merit) opportunitiesthat might arise or that ARENA might seekout, where those opportunities are notcaptured by initiatives or programs under itsInvestment Plan. ASCI targets opportunitiesexceeding 20 million and is focussed onhelping projects beyond the R&D stagemove further and faster along the path tocommercialisation.9
A diagrammaticsummary of ARENA’sinitiatives across theinnovation chain.Figure 4. Overview of Initiatives(funding amounts included where ot ScaleDeploymentCommercial ScaleSupportedCompetitiveInitiatives from previousInvestment Plans orcontinued InitiativesKnowledge sharing, collaboration and engagementRegional Australia’s Renewables( 400m)Emerging Renewables Program including RemovingRoadblocks and SHARE (total funding envelope 215m*)ABIR – Advanced BiofuelsInvestment Readiness ( 10m)*Of which 50mis contracted orunder discussionas of June 2013Building Australia’s Next Generation SolarRenewable Energy Venture Capital Fund Program ( 100m)Ongoing and referred projects – 1100mDeploying Utility ScaleRenewable Energy (Big Solar)Initiatives outlinedin this Investment PlanAccelerated Step Change Initiative( 120m )Identifying Australia’s Top Research andDevelopment Opportunities (non-Solar)Integrating Renewables Into The GridDiscovering Renewable PotentialThrough Hybridisation10
Further information on initiatives and individualprojects is available on ARENA’s websitearena.gov.auAustralian Renewable Energy AgencyGeneral enquiriesPhone: 61 2 6243 7773Fax: 61 2 6243 7037Email: [email protected] addressGPO Box 643Canberra ACT 2601
and Investment Plan. ARENA's Board is comprised of six Board members appointed by the Minister for Resources and Energy, and the Secretary of the Department of Resources, Energy and Tourism. The appointed members of the Board have skills in renewable energy technology, commercialisation, business investment and corporate governance.