ARENA Annual Report 2014-15

Australian Renewable Energy Agency Annual Report 2014-15

Contents

Australian Renewable Energy Agency

NewActon Nishi
2 Phillip Law Street
CANBERRA ACT 2601

GPO Box 643
CANBERRA ACT 2601

Phone: +61 2 6243 7773

Contact person for this report: General Manager, Strategic Communication

Content: Australian Renewable Energy Agency

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Printing: Canprint Communications Pty Ltd – www.canprint.com.au

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Email: arena@arena.gov.au

Website: arena.gov.au

Web address of this report: /about-arena/corporate-publications/

This work is copyright, the copyright being owned by the Commonwealth of Australia. With the exception of the Commonwealth Coat of Arms, the logo of ARENA and other third-party material protected by intellectual property law, this copyright work is licensed under the Creative Commons Attribution 3.0 Australia Licence.

Under this licence you are free to copy, communicate and adapt the work, so long as you attribute the work to the Commonwealth of Australia (Australian Renewable Energy Agency) and abide by the other licence terms.

This work should be attributed in the following way:

© Commonwealth of Australia (Australian Renewable Energy Agency) 2015

Requests and enquiries concerning reproduction and rights should be addressed to arena@arena.gov.au.

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Letter of transmittal

OFFICE OF THE CHAIR

GPO Box 643
Canberra ACT 2601
Tel: +61 2 6276 1000
ABN: 35931927899
arena.gov.au

23 September 2015

The Hon Greg Hunt MP
Minister for the Environment
PO Box 6022
Parliament House
CANBERRA ACT 2600

Dear Minister

I am pleased to present to you the annual report of the Australian Renewable Energy Agency (ARENA) for the financial year 2014–15, in accordance with the requirements of the Australian Renewable Energy Agency Act 2011 and the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

Under section 46 of the PGPA Act, the ARENA Board must prepare the annual report in accordance with the Public Governance, Performance and Accountability (Consequential and Transitional Provisions) Rule 2014.

The ARENA Annual Report 2014–15 details how ARENA is achieving its objectives to improve the cost competitiveness of renewable energy technologies and the supply of renewable energy in Australia. The report was approved by a resolution of ARENA’s Board on 25 August 2015.

Yours sincerely

Greg Bourne's signature

Greg Bourne
ARENA Chair

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Report from the Chair

Greg Bourne, Chair

The world is stepping up its renewable energy efforts and building on the momentum created over the past decade. The rapid growth in adoption of renewable energy is being driven by technological and commercial advances, and will continue as the world’s energy systems are transformed.

Here in Australia, there is a growing realisation that our country is home to some of the best renewable resources in the world. We have the highest per capita solar resource and very good wind and wave resources, as well as potential in other areas.

Australia’s challenge lies in fully realising its renewables potential and taking advantage of these resources, not only to achieve a cost effective energy system but also to become an exporter of energy intensive products and expertise based on renewable energy.

Bridging the gap between Australia’s world-leading renewable potential and the market will help to develop and implement the next generation of affordable renewable energy.

ARENA helps do this by identifying and advancing the most prospective renewable energy technologies and applications through targeted, considered investment in projects right along the commercialisation pathway. Our support not only drives research and encourages innovation but supports pilot projects and helps to de-risk worthwhile deployment projects. ARENA also shares experience and know-how generated from each project with the sector.

To ensure that the projects we support are best placed to accelerate change, we keep an eye on the big picture so that we can respond to market conditions, technology and commercial developments, and industry needs. As a result, several of the projects in our investment portfolio have achieved Australian firsts, particularly at the research end of the development pathway. We are also supporting a number of landmark projects at the deployment end.

ARENA’s role is unique in that we target our investment towards pre-commercial projects, but every project we fund must have an identified pathway to being fully commercial and adopted in the market. We also look for at least matching funding and encourage co-investment from sources other than the Australian Government. As a result, each dollar of ARENA funding has leveraged approximately $1.50 of funding from other sources.

ARENA’s distinction is also due to the skills-based board which works closely with the CEO Ivor Frischknecht and CFO Ian Kay; both from the banking and finance world; and ably supported by ARENA’s dedicated staff.

The renewables industry in Australia has faced much uncertainty over the past year leading to a dramatic drop in investment during 2014-15. With Government legislation to abolish the agency still to be considered by the Senate, ARENA has faced similar uncertainty over the period. However, until enacted, ARENA very much remains open for business, with funding available until 2022.

In the coming year we will be seeking to invest in a number of new priority areas including large-scale solar photovoltaics, off-grid and fringe-of-grid, integrating renewables into grids, and renewables for industrial processes.

Added to ARENA’s current investment portfolio, projects in these priority areas will not only help Australia to realise and benefit from its vast renewables potential, but become a leader in renewable technology and know-how and create options for Australia’s energy and
industry future.

Greg Bourne's signature

Greg Bourne
Chair

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Report from the Chief Executive Officer

Ivor Frischknecht, Chief Executive Officer

Over the coming half century there will be a dramatic increase in the proportion of our electricity generated from renewable sources. This will happen because renewable energy makes good business sense, and because consumers want cleaner, quieter and healthier sources of electricity supply. It will need to remain reliable, providing many more services than it does today.

Like any revolution, the transition to more distributed renewable energy is challenging. The energy industry is facing a new future, and this is where ARENA comes in. ARENA’s role is to help make the transition to tomorrow’s energy easier, cheaper and quicker.

ARENA has completed its third year of operation, focused on the twin objectives of reducing the cost and increasing the supply of renewable energy in Australia. With those goals in mind, we continued to invest in game-changing research and high quality projects that have the best prospect of advancing affordable renewable energy technologies and solutions.

We understand that in addition to being challenging, the transition to renewable energy will take time and has to be competitively driven. Many of the barriers to progress are related to being an early mover, because it often costs more to do something the first time.

As a result, ARENA helps projects to overcome early mover disadvantage, such as making up for the higher cost of finance, higher supply chain costs and larger construction contingency margins. We take a long lens approach because we know there are no shortcuts to achieving substantial, meaningful change. And we participate where others won’t because the timeframes are too long and/or the rate of return isn’t high enough to attract commercial investors.

Highlights of 2014-15 include the announcements of $21.5 million in funding for 12 innovative solar research and development projects worth more than $70 million. The results of another competitive research and development round will be announced by early 2016.

We also announced $163 million in funding for another 25 projects, which operate at different stages along the innovation chain, creating new technology solutions, new skills and jobs and more efficient supply chains.

ARENA had a strong focus on regional and remote areas over the past year. We committed funding support for projects that are building the mining industry’s confidence in renewable energy options for remote operations; providing cheaper and more reliable electricity with renewables in more than 30 off-grid Indigenous communities; and constructing Australia’s largest solar farms in rural and regional locations.

We also provided support for innovation in storage solutions that are poised to change the way householders use rooftop solar, and provide a new way for electricity grid operators to improve reliability at low cost.

Other ARENA-supported projects involved the first-ever array of wave power generators connected to an electricity grid, the production of green crude from microalgae, and a number of renewable energy options for thermal energy.

A range of digital mapping and forecasting tools were also developed with ARENA support that will help both the renewable and broader energy industries to better plan, build, integrate and manage renewable energy.

The diversity of ARENA’s investment portfolio reflects the value that we see in developing and keeping technology options open for the future.

Looking ahead, ARENA has $1.3 billion in uncommitted funds. At 30 June 2015 we were assessing 116 applications that were seeking $1.4 billion in ARENA funding for projects worth $4.5 billion, of which only some will secure our investment.

We will continue to target our investments towards a renewable future by creating the conditions that accelerate change and increase the bankability of emerging renewables.

Ivor Frischknecht's signature

Ivor Frischknecht
Chief Executive Officer

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Highlights

ARENA’s project achievements during the two thousand and fourteen to fifteen financial year. One point one billion dollars committed to support projects. Two point seven billion dollars in project value facilitated by ARENA investment. Largest solar farm in the southern hemisphere now sending electricity into the grid. World first wave farm connected to the grid and now providing power to a naval base. thirty plus remote communities and industries to benefit from one hundred and forty million dollars in ARENA funding for twelve projects in remote off-grid and fringe-of-grid locations. Two point seven billion dollars in project value facilitated by ARENA investment. thirty seven new projects worth three hundred and sixty five million dollars announced in two thousand and fourteen to fifteen, supported with one hundred and eighty five million dollars in ARENA funding. thirty thousand litres of green crude produced from microalgae at demonstration plant. World record achieved by project that converted more than forty percent of the sunlight hitting a solar cell into electricity. ARENA honoured with inaugural World Environment Day Award from UN Association of Australia.

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About ARENA

ARENA was created in 2012 to support improvements in the competitiveness of renewable energy and related technologies, and the supply of renewable energy. It does this by providing financial assistance to eligible, high-merit projects, developing analysis and advice, and sharing related knowledge and information.

The agency plays a unique role in the advancement of renewable energy. It provides support to hasten the commercialisation of emerging technologies and applications while being mindful that the process must focus on the most prospective innovations and can take many years.

Accordingly, ARENA’s funding extends to 2022 and covers the innovation chain from laboratory research to pre-commercial deployment.

This distinctive function and scope ensures that ARENA complements other Australian renewable energy programmes and initiatives. Pre-existing renewable energy programmes and projects were merged into ARENA at the time of its establishment to further reduce the likelihood of overlapping roles and responsibilities.

ARENA provides funding grants not only to develop technologies but also to improve investment confidence in renewable energy projects. This is done by helping to offset the additional costs faced by early-movers, and reduce the risk that commercial investors perceive in renewable energy projects.

ARENA’s investment strategy is commercially focused and based on market opportunity, the extent to which ARENA can make a difference, and the mix of technologies and applications in the agency’s existing portfolio of projects.

ARENA’s relationship with the CEFC and RET

ARENA plays a complementary role to the Clean Energy Finance Corporation (CEFC) and Renewable Energy Target (RET) in advancing Australia’s renewable energy potential.

ARENA provides the support needed to accelerate the development of promising technologies towards commercialisation. The CEFC provides finance to de-risk and demonstrate bankability, which helps to bring near-commercial and commercial projects to reality. And the RET drives the uptake of the cheapest mature renewable energy technologies.

ARENA sometimes co-invests with the CEFC in later-stage projects that are not yet fully commercially competitive.

These projects are also generally eligible for the RET, which reduces the amount of CEFC and ARENA funding required.

Figure 1: ARENA, the CEFC and RET

ARENA’s relationship with the CEFC and RET. Stages of involvement from the three parties: 1. Research and development, Early-stage research, Development. 2. Demonstration, Pilot-scale, Large-scale 3. Deployment, Pre-commercial, Commercial: ARENA plays a complementary role during all stages upto pre-commercial; ARENA CEFC co invest projects during stage 2, large-scale; CEFC are involved in stage 2. Large-scale and stage 3. Pre-commercial, commercial; RET adopt the cheapest mature renewable energy technologies during stage 3. Pre commercial and commercial stages of the relationship.

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Governance and operational performance

Enabling legislation

The Australian Renewable Energy Agency (ARENA) is a statutory agency established under the Australian Renewable Energy Agency Act 2011 (ARENA Act). On 1 July 2014 the Commonwealth Authorities and Companies Act 1997 (CAC Act) was repealed and replaced with the Public Governance, Performance and Accountability Act 2013 (PGPA Act). ARENA is a corporate Commonwealth entity under the PGPA Act.

The objectives of the ARENA Act are to improve the competitiveness of renewable energy technologies and increase the supply of renewable energy
in Australia.

ARENA provides financial assistance to renewable energy technologies across the innovation chain from research and development to demonstration, deployment and commercialisation. ARENA also develops analysis and advice, sharing information and knowledge on renewable energy and related technologies. ARENA works cooperatively with both industry and government to maximise the benefit from the financial assistance it provides.

ARENA also provides advice to the portfolio Minister in relation to renewable energy and related technologies.

To ensure accountability and transparency for expenditure of a significant sum of public funds, the Australian Government has put in place safeguards that ARENA must follow when making funding decisions.

The ARENA Act requires the portfolio Minister to approve programme guidelines that permit grants for projects in excess of $15 million. The Minister must also approve projects where grants in excess of $50 million are to be awarded.

The portfolio Minister appoints ARENA Board members (other than the Secretary of the portfolio Department, who is on the Board by virtue of s29 of the ARENA Act) and the CEO. The Minister also approves ARENA’s General Funding Strategy.

During the financial year there was one amendment to ARENA’s enabling legislation via the Clean Energy Legislation (Carbon Tax Repeal) Act 2014. This amended ARENA’s funding schedule (see ARENA funding on p17).

No legislative instruments were enacted during the year under the ARENA Act.

ARENA funding

ARENA provides financial assistance to develop technologies and improve investment confidence in renewable energy projects.

Under the ARENA Act, the agency has significant discretion and flexibility in how it chooses to provide this financial support to the renewable energy sector. However the ARENA Act requires the portfolio Minister to approve significant programme guidelines and projects (see p16).

S64 of the ARENA Act stipulates ARENA’s funding to 2022. Subsequent changes to ARENA’s funding were enacted through the Clean Energy Legislation (Carbon Tax Repeal) Act 2014 (see below) which received royal assent on 17 July 2014.

This amendment legislated and brought the following into effect:

  • a 2013-14 Federal Budget measure to re-profile $370 million in funding for ARENA over the forward estimates (2014-15 to 2016-17) into later years (2019-20 to 2021-22)
  • a reduction in funding for ARENA by $434.9 million over the forward estimates (2014-15 to 2016-17).

The table below summarises the impact of these changes on ARENA’s funding, taking into account actual expenditure to 2013-14 and subsequent rollovers of unspent funding.

These funding changes did not affect projects that already had funding agreements in place with ARENA.

Table 1: Amendments to ARENA Act s64

Financial year ARENA Act $’000 ARENA Act (as amended)
$’000
2012–13 $659,6391 $56,1932
2013–14 $344,904 $265,1502
2014–15 $436,640 $244,4932
2015–16 $321,810 $355,9643
2016–17 $299,550 $56,950
2017–18 $221,000 $499,893
2018–19 $237,000 $237,000
2019–20 $368,340 $468,340
2020–21 $135,000
2021–22 $135,000
1 For 2012-13 $278.9 million was added to ARENA’s special appropriation in accordance with the ARENA Act Subsection 64(3) Determination (signed by the Minister for Finance on 25 June 2013), and a further $88.2 million added relating to Australian Solar Institute Limited’s closing bank account balance in accordance with the ARENA Act Subsection 64(5).2 Actual amounts drawn down and spent in 2012-13, 2013-14 and 2014-15.3 Includes $266.0 million of unspent 2014-15 funding rolled over, in accordance with the ARENA Act Subsection 64(2).

 

Key governance events and other activities affecting ARENA

The Australian Government announced in the 2014-15 Budget its intention to abolish ARENA, consolidate its functions into the Department of Industry and Science, and return uncommitted funds to the budget. This would require the repeal of the ARENA Act.

To give effect to this announcement, the ARENA Repeal Bill was tabled in the House of Representatives on 19 June 2014. If the Bill is passed by the Parliament, ARENA’s signed funding agreements and other assets and liabilities at the time of repeal would transfer for management to the Department of Industry and Science.

The Bill was passed by the House of Representatives on 1 September 2014, and at 30 June 2015 remained subject to decision by the Senate. Accordingly, ARENA continues to operate under the ARENA Act (see p16-17 for further details).

ARENA did not have any ‘material’ matters disclosed in the financial statements (as defined in paragraph 7 of the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015.

Responsible minister

The Minister responsible for ARENA in 2014-15 was the Hon Ian Macfarlane MP, Minister for Industry and Science.

Since its establishment ARENA has worked with successive relevant Ministers, keeping them informed about the operations of ARENA by providing reports of each ARENA Board meeting, including key deliberations, meeting outcomes and significant correspondence.

ARENA has also outlined to successive Ministers its efforts to improve the competitiveness of renewable energy technologies and increase renewable energy supply in Australia over the longer term, consistent with the ARENA Act.

Ministerial approval

The General Funding Strategy 2015-16 to 2017-18 (GFS) and the Advancing Renewables Programme Guidelines were presented to the Minister in June 2015, and approved on 8 July 2015. Projects in excess of $50 million and guidelines that permit grants for projects in excess of $15 million require ministerial approval.

The GFS for 2013-14 to 2015-16 remained in force during 2014-15.

Ministerial requests and directions

No requests were made by the Minister under section 11 of the ARENA Act for 2014-15, and no ministerial directions were made under section 13 in respect of seeking advice in relation to renewable energy technologies.

Under section 22 of the PGPA Act, ARENA must comply with Government Policy Orders (made by the Finance Minister) to the extent that they apply. No Government Policy Orders applied to ARENA for 2014-15.

ARENA Board

At 30 June 2015, the Directors of the ARENA Board were Mr Greg Bourne (Chair), Ms Judith Smith, Mr Danny Broad, Mr Martin Hoffman and Ms Glenys Beauchamp (ex-officio). Mr Hoffman’s term ceased in July 2015.

Meetings and the operation of the Board were conducted in accordance with the requirements of legislation applicable to ARENA. Further information on the Board is provided at Appendix 1.

The Board regularly reviewed its operation as part of its commitment to continually improve the efficiency and effectiveness of its processes.

The Board continually refreshed its knowledge of the renewable energy sector through in-depth workshops. Its funding decisions were informed by analysis of the market context and commercialisation prospects of relevant technologies.

Greg Bourne, Chair
Chair: Greg Bourne
Danny Broad, Director
Director: Danny Broad
 Judith Smith, Director
Director: Judith Smith
 Martin Hoffman, Director
Director: Martin Hoffman
 Glenys Beauchamp, Ex-officio Director
Ex-officio Director: Glenys Beauchamp

ARENA Chief Executive Officer

At 30 June 2015, the ARENA CEO was Mr Ivor Frischknecht. Further information on the CEO is provided at Appendix 1. The CEO is supported by an executive team, including a Chief Financial Officer (CFO).

ARENA Advisory Panel

The ARENA Advisory Panel provides advice to support the development and selection of projects for funding. The panel’s role includes assessing funding applications and providing expert specialist advice as required.

For a current list of advisory panel members see ARENA Advisory Panel.

Staff

At 30 June 2015, the agency had two ARENA staff (CEO and CFO), 51 departmental staff (47.7 FTE), including staff in non-ongoing positions and one staff member on secondment out of ARENA, and a number of specialist consultants.

During 2014-15, the majority of ARENA’s staff was based in Canberra (Australian Capital Territory). Staff working in other locations included two staff members (2.0 FTE) in Sydney (New South Wales), and one (0.8FTE) in Albury (New South Wales). Specialist consultants also worked in ARENA’s Sydney and Melbourne offices.

Culture

ARENA is a dynamic and outcomes-oriented agency. It is staffed by highly qualified and experienced people overseen by a Board that is commercially and technically astute. The culture of ARENA emphasises a commercially-orientated and flexible attitude when dealing with stakeholders. ARENA aims to be an agile agency that responds quickly to changes in the operating environment.

Figure 2: ARENA organisational structure at 30 June 2015

Organisational structure of ARENA. Top level: Chief Executive Officer Ivor Frischknecht. Next level: Chief Financial Officer Ian Kay, General Manager Legal and Governance Heather Wilson, General Manager Strategy Danny De Schutter, General Manager. Projects Louise Vickery, General Manager Strategic Communication Andrea Gaffney

1Appointment made under the ARENA Act

 

Operating environment

In 2014-15, ARENA’s operating environment encompassed:

  • the Board, CEO, CFO and financial assistance initiatives administered under the ARENA Act and the PGPA Act
  • departmental resources provided to ARENA and subject to the Public Service Act 1999 and the PGPA Act.

ARENA operated in compliance with a Board-approved governance framework that sets out the application of the differing requirements under these various Acts.

Service level agreement

The portfolio Department provides corporate support for ARENA’s day-to-day operations. This relationship is managed by a service level agreement, which sets out the arrangements for the provision of services to ARENA.

Planning and reporting framework

ARENA uses the framework shown in Table 2 to streamline its planning and reporting processes.

Table 2: Planning and reporting framework 2014-15

Audience Planning Reporting
Board and Minister – Ministerial Statement of Expectations
– ARENA Statement of Intent
– General Funding Strategy
– Work Plan
– Board meetings
– CEO reports to Board
– Chair reports on Board meetings to Minister
– Risk and Audit Committee Chair reports to Board
Funding recipients – Investment Plan – ARENA website
Other external – Annual Report
– Senate estimates hearings
Internal – Business Plan
– Risk Management Plan
– Fraud Control Plan
– Business Continuity and Disaster Recovery Plans
– Risk and Audit Committee Annual Work Plan
– Internal Audit Work Plan
– Other Board-approved policies
– Board meetings
– Risk and Audit Committee meetings
– ARENA executive meetings
– ARENA staff meetings

Operational priorities

ARENA’s approach to funding support is set out in its GFS and Investment Plan (IP). Refer to page 29 for more information. The IP for 2013-14 to 2015-16 sets out how ARENA will measure its performance.

Table 3 shows ARENA’s results against the performance measures set out in the IP.

Financial performance

ARENA reported a net surplus of $22.9 million for 2014-15. This was the result of accounting requirements to report a number of items funded through revenue on the Statement of Financial Position and, all things being equal, is expected to be reversed in 2015-16. The Australian Government provided ARENA with $244.4 million in revenue for ARENA operations.

Table 3: Results against ARENA performance measures 2014-15 (at 30 June 2015)

What How Measure
Improve the competitiveness of renewable energy technologies Improve the technical and commercial readiness of
technologies within Australia from ARENA’s actions.
See Programme Performance on pages 24-47
Maintain a diverse portfolio of technologies. Ongoing. See Programme Performance on pages 24-47
Increase the supply of renewable
energy in Australia
Increase the total amount of renewable energy within
Australia from ARENA’s actions.
Projects expected to install at least 495 MW capacity
ARENA funding leverages additional funding and in-kind
contributions from project partners.
Leverage ratio 1.5

Agency resource statement

The agency resource statement (see Table 4) reconciles the final usage of all resources in cash terms, by declaring the actual available appropriation for 2014-15, including carried forward cash balances and further adjustments, and comparing this to the actual payments made.

ARENA was not published as a Portfolio Agency in the 2014-15 Portfolio Budget Statements, in line with the Government’s stated intention to repeal the ARENA Act.

The difference between the payments made by the portfolio Department of $244.4 million shown in Table 4 and the actual total expenses of $236.5 million disclosed in Table 5 are due to accruals and prepayments, plus Resources Received Free of Charge from the portfolio Department.

The balance remaining of $266.0 million is largely a result of the expenditure profile of ARENA differing from ARENA’s standing appropriation.

Table 4: Agency resource statement 2014-15

Actual available appropriation for
2014-15
$’000
Payments made
2014-15
$’000
Balance remaining
2014-15
$’000
(a) (b) (a) – (b)
Opening balance/Reserves at bank 26 (443) 469
REVENUE FROM GOVERNMENT
Payments from related entities1
Amounts from portfolio department >510,4662 244,493 265,973
Total funds from government 510,466 244,493 265,973
Total net resourcing & payments for ARENA 510,492 244,050 266,442
1 Amount received from Department of Industry and Science, which receives a Special Appropriation for the purposes of funding ARENA.2 Comprised of $194.3 million contained within the ARENA Act (as amended) and $316.1 million of unspent funding rolled over from 2013-14 in line with Subsection 64(2).

 

Expenses by outcome

The budget for ARENA was not required to be presented as the agency is not reported as a separate entity in the Portfolio Budget Statements of the portfolio Department, in line with the Government’s stated intention to repeal the ARENA Act.

Table 5: Expenses by outcome 2014–15

Outcome 1: Support improvements in the competitiveness of renewable energy and related technologies and the supply of
renewable energy by administering financial assistance, developing analysis and advice about and sharing information and knowledge with regard to, renewable energy and related technologies.
Budget
2014-15
$’000
Actual Expenses
2014-15
$’000
Variation 2014-15 $’000
(a) (b) (a) – (b)
Programme 1: Supporting Outcome 1
Revenue from government
Payments from related entities 236,517 (236,517)
Total for Programme 1 236,517 (236,517)
Outcome 1 Totals by appropriation type
Revenue from government
Payments from related entities 236,517 (236,517)
Total expenses for Outcome 1 236,517 (236,517)
2014–15 2014–15 Variation
Average Staffing Level (number) 1 2 (2)
1 ARENA has only two employees, the CEO and CFO. Under section 62 of the ARENA Act all other staff necessary to assist ARENA must be persons employed under the Public Service Act 1999 who are employed by the portfolio Department and made available to ARENA by the Secretary of the Department.

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Programme performance

Programme overview

ARENA’s funding programmes support renewable energy activities that develop technologies, improve investor confidence, build skills and knowledge, and hasten commercialisation.

The funding programmes uniquely span the innovation chain from research in the laboratory to large-scale pre-commercial deployment activities.

Number of projects supported by ARENA funding including active and complete projects. two hundred and thirty two projects have been supported with; one hundred and ninety active projects, forty two completed projects. These supported projects comprise: one hundred and forty two projects in the research and development phase, eighty five projects in the demonstration phase, five projects within the deployment phase. Projects by technology: one hundred and forty eight solar energy projects: comprising 110 solar PV projects and 38 solar thermal projects, forty eight enabling technology projects, seventeen bioenergy projects, eleven hybrid projects, five ocean energy projects, three geothermal projects.

Strategic approach to investment

ARENA’s investment objectives are to:

  • demonstrate renewable energy’s role in addressing Australia’s current energy issues and/or
  • provide renewable energy technology options for the long term.

These objectives reflect the range of timeframes over which ARENA intends its investments to contribute to reducing the cost and increasing the use of renewable energy.

Because meaningful and lasting change takes time, ARENA takes a long-term view with the aim of having maximum impact from its investments by 2020 to 2040.

To achieve its objectives, ARENA funds activities that are expected to advance renewable energy technologies towards commercial readiness, improve business models or reduce overall industry costs.

This reflects ARENA’s functions in the ARENA Act, which include providing financial assistance for research, development, demonstration, commercialisation or deployment of renewable energy and related technologies, as well as the storage and sharing of related knowledge and information.

Figure 3: ARENA’s innovation impact

Number of projects supported by ARENA funding including active and complete projects. two hundred and thirty two projects have been supported with; one hundred and ninety active projects, forty two completed projects. These supported projects comprise: one hundred and forty two projects in the research and development phase, eighty five projects in the demonstration phase, five projects within the deployment phase. Projects by technology: one hundred and forty eight solar energy projects: comprising 110 solar PV projects and 38 solar thermal projects, forty eight enabling technology projects, seventeen bioenergy projects, eleven hybrid projects, five ocean energy projects, three geothermal projects

AGL Solar Farm
By AGL

Construction of a large-scale solar farm, over two locations, to develop Australian skills and experience.

At 155 MW it will be the largest solar PV plant in the southern hemisphere. The majority of ARENA funds were spent on the Australian supply chain to reduce supply chain costs.

  • $167 million – ARENA funding
  • $440 million – Total project value
  • 102MW – at Nyngan site
  • 53MW – at Broken Hill site

Investing along the innovation chain

In order to support the development of lower cost renewables and accelerate their progress towards commercialisation, ARENA focuses on areas where it has strengths in solving problems and reducing barriers to commercialisation, as well as the most effective ways to unlock investment capital.

ARENA applies that knowledge not only to research and development activities but also to projects that have reached the demonstration and pre-commercial phases.

Paired with ARENA’s long-term funding, this broad investment scope makes the agency uniquely positioned to help Australia’s renewable energy technologies move along the commercialisation pathway, or innovation chain (see Figure 4), to the brink of commercialisation.

General Funding Strategy and Investment Plan

ARENA provides funding assistance to renewable energy activities in accordance with its General Funding Strategy (GFS) and Investment Plan (IP).

The agency uses the principles in the GFS to identify investment focus areas, which are provided in the IP. To determine which renewable energy activities will be financially supported, ARENA assesses all proposals for best fit with the investment focus areas.

The GFS is reviewed each year, updated if necessary, and provided to the portfolio Minister for approval. The IP is reviewed from time to time and updated if necessary.

Investment priorities in 2014-15

ARENA focused its new investments during 2014-15 on activities that explored opportunities for renewable energy generation and fuels in off-grid and fringe-of-grid areas, and ways to overcome the challenges presented by the integration of renewables into major electricity grids.

Figure 4: ARENA funding across the innovation chain

The areas of ARENA’s funding across the innovation chain and the point at which the funding concludes and becomes fully commercial. The funded stages of investment include: Research and development: Early stage research, Development. Demonstration: Pilot-scale, Large-scale. Deployment, Pre-commercial (ARENA funding concludes at this stage), Commercial. Fully commercial

Perth Wave Energy Project
By Carnegie Wave Energy

Commercial-scale wave energy array connected to the grid. First array of wave power generators connected to an electricity grid in Australia and worldwide.

Commenced generating electricity for Australia’s largest naval base HMAS Stirling in February 2015.

  • $13 million – ARENA funding
  • $32 million – Total project value

Programmes and initiatives in 2014-15

The programmes and initiatives that advanced ARENA’s objectives during 2014-15 were:

Figure 5 demonstrates where each of these programmes and initiatives apply to the innovation chain.

Funding mechanisms

ARENA uses a range of funding mechanisms to provide the appropriate type and level of support for projects. These include grant-based financial support mechanisms, which may include recoupable grants, through open programmes or targeted competitive funding rounds, as well as the commissioning of specific analysis or other work as required.

Figure 5: ARENA programmes across the innovation chain

ARENA’s programmes across the innovation chain: 1. Research and development, 2. Demonstration, 3. Deployment. The first stage comprises: Early stage research and; Development. ARENA programmes in this stage; Research and development, Emerging Renewables Programme, Renewable Energy Venture Capital Fund, Knowledge sharing collaboration and engagement. The second stage comprises: Pilot-scale, Large-scale. ARENA programmes in this stage; Emerging Renewables programme, Regional Australia’s Renewables Initiative, Accelerated Step Change Initiative, Utility-scale Renewables. The following programmes continue through this stage: Renewable Energy Venture Capital Fund, Knowledge sharing collaboration and engagement. The third and final stage comprises: Pre-commercial, Commercial. ARENA programmes in the pre-commercial stage; Emerging Renewables programme continues, Regional Australia’s renewable initiative continues, Accelerated Step Change Initiative continues, Utility-scale Renewables continues, Renewable Energy Venture Capital Fund. The following programmes continue through to the final stage of commercial deployment: Knowledge sharing collaboration and engagement

Technology Readiness Levels and Commercial Readiness Index

Technology Readiness Levels

The Technology Readiness Level (TRL) index is a globally accepted benchmarking tool for tracking progress and supporting the development of a technology through the early stages of the innovation chain, from blue sky research (TRL 1) to actual system demonstration over the full range of expected conditions (TRL 9).

ARENA uses the US Department of Energy Technology Readiness scale to measure the technology readiness of renewable energy projects.

Commercial Readiness Index

ARENA also uses a Commercial Readiness Index (CRI) to assess the commercial viability of projects.

The CRI was developed by ARENA based on pre-existing academic research and extensive consultation with industry, and has been adopted for use by a number of entities internationally, including the Hawaiian Electric Power Companies to inform future investment in electricity generation capacity.

The CRI is used from the stage where a technology can be trialled and demonstrated in the field (for example TRL 7) up to the stage where the technology is being commercially deployed and has become a bankable asset class (CRI 6).

The index provides a rigorous structure for evaluating where one or more industry sectors are facing barriers, and enables ARENA to structure its funding support to best reduce risks and barriers at the various stages along the pathway to commercialisation.

Both the TRL and CRI are publicly available on the ARENA website (see Readiness tools) for applicants to use when considering their projects and developing funding applications for ARENA consideration.

Figure 6: Technology Readiness Level and Commercial Readiness Index on the innovation chain

The technology readiness and commercial readiness Index on the innovation chain, using the technology readiness (TRL) index which is a globally accepted benchmark. Using the (TRL) benchmark 1 demonstrates a low readiness all the way up to 9, demonstrating a high level of readiness. Stage 1. Research and development: Early stage research (Technology readiness: 1,2,3), Development (Technology readiness: 4,5,6). Stage 2. Demonstration: Pilot-scale (Technology readiness: 7,8,9), Pilot-scale (Commercial readiness: 1,2), Large-scale (Commercial readiness: 3). Stage 3. Deployment: Pre-commercial (Commercial readiness 4,5), Commercial (Commercial readiness 6).

Project selection process

ARENA has identified investment focus areas that will help the organisation achieve its objectives. The investment focus areas guide ARENA’s investment decisions, either as merit criteria for open programmes or as eligibility criteria, in some cases, for competitive funding rounds.

All projects funded by ARENA must also have an identified pathway to commercialisation, which is assessed using the TRL and CRI detailed on the previous page.

ARENA works collaboratively with proponents, except in the case of competitive funding rounds, and undertakes due diligence on proposals to maximise the capacity of projects to deliver value for money and meet ARENA objectives. This may include the use of specialist technical and financial advice to ensure maximum value for money and projects are rigorously managed.

Figure 7 indicates the general process used by ARENA to assess funding applications, which may differ depending on the programme or competitive round. More information is provided in the programme guidelines which are available at Programmes.

Figure 7: Indicative ARENA application assessment process

Note: May differ between programmes. *Involves staff, ARENA Advisory Panel and ARENA Board

The indicative application assessment process. 1. Expression of interest, 2. EOI merit assessment (eligibility, completeness, merit), 3. Full application, 4. Full application assessment (eligibility, completeness, merit), 5. ARENA offer process

Programme outcomes

Over the course of 2014-15, ARENA continued to consolidate and build:

  • 49 applications for funding were formally assessed
  • 37 new project funding approvals were announced
  • 24 projects reached completion
  • 4 projects were discontinued.

From ARENA’s commencement until 30 June 2015, $1.1 billion in support had been spent or committed by the agency for 232 projects with a total value of $2.7 billion. Each dollar of ARENA funding leveraged approximately $1.50 of funding from other sources.

Projects for which ARENA provided financial assistance in 2014-15 are listed in Appendix 2 of this report. Project profiles are also published on the ARENA website at Projects.

Deploying utility-scale renewable energy

ARENA has announced two large-scale, grid-connected, pre-commercial renewable energy deployment projects. At 30 June 2015, ARENA had committed $268 million to these utility-scale solar PV projects, which have a combined total value of $628 million and have the potential to add 211 megawatts of new generation capacity to the east-coast electricity grid.

First of a kind concentrated solar PV power tower
By RayGen Resources

Pre-competitive pilot of sun-tracking heliostat mirrors that focus sunlight onto a central receiver. Supplying 200 kW of peak power to a local agricultural business.

  • $1.75 million – ARENA funding
  • $3.6 million – Total project value

Redeployable hybrid power
By Laing O’Rourke

Pilot-scale deployment of 1 MW fully redeployable hybrid solar/diesel power plant. Supplying power to a large construction project’s 350-bed accommodation village.

  • $450 thousand – ARENA funding
  • $1.7 million – Total project value

Northern Territory Solar Energy Transformation Program
By Power and Water Corporation

Integrating 10 MW of solar PV into more than 30 remote communities to displace the use of diesel for power generation.

  • $27.5 million – ARENA funding
  • $55 million – Total project value

Research and Development Programme

ARENA’s Research and Development (R&D) Programme provides support to world-class research and development projects to increase the competitiveness and use of renewable energy technologies.

The Programme’s objectives are to deliver a range of high quality and innovative renewable energy technologies that: enhance Australia’s research position or are specific to Australian conditions; increase relevant skills, capacity and knowledge; or increase investment that improves technology readiness and commercial readiness of priority renewable energy technologies.

The results of the first competitive funding round under the R&D Programme, which focused on solar excellence, were announced in August 2014. The competitive round involved the assessment of 110 applications for funding, and the commitment of $21.5 million in ARENA funds for 12 cutting-edge solar research and development projects totalling more than $60 million.

A second competitive funding round was announced in April 2015, offering up to $20 million for partnerships between industry and eligible Australian research institutions to develop and commercialise renewable energy technologies, and provide a broad range of energy options to reduce future energy costs. The outcomes of this round are expected to be announced by early 2016.

The R&D Programme complements the portfolio of solar research projects that were transferred to ARENA from the former Australian Solar Institute.

During 2014-15 ARENA’s research and development activities involved 60 projects, 47 research fellowships and 35 PhD scholarships, with combined ARENA grants of $188 million. These activities include two strategic research initiatives, the Australian Solar Thermal Research Initiative (ASTRI) and the Australia-US Institute for Advanced Photovoltaics. For more information see Research and Development Programme.

Fellowships and scholarships: Eighteen point five million dollars ARENA funding. ARENA supports PhD scholars and post doctoral fellows to conduct research into a range of solar technologies. Eighteen point five million dollars has been committed to more than eighty projects, the last of which is scheduled to complete in two thousand and seventeen.

Solar and storage trial for residential development
By Synergy

Testing the commercial feasibility of a new energy retail model that involves community scale battery storage and more than 100 rooftop solar PV systems.

  • $3.3 million – ARENA funding
  • $6.7 million – Total project value

Emerging Renewables Programme

The Emerging Renewables Programme (ERP) supports studies and projects that drive innovation in renewable energy technologies, and reduce or remove roadblocks to commercialisation.

Over the past year ARENA supported a broad range of feasibility studies through ERP, as well as development, demonstration and early-stage deployment projects.

During the period 24 new funding agreements were entered into, representing $62 million in ARENA funding and $255 million in partner co-contributions. At 30 June 2015 ARENA was managing 36 projects under ERP.

Regional Australia’s Renewables

The RAR Initiative supports renewable energy projects in remote off-grid or fringe-of-grid locations, including mining operations and remote communities.

A focus for the initiative is to displace expensive existing diesel generation and lower the perceived investment risk of renewable energy. RAR also seeks to reduce roadblocks to renewable energy deployment through ongoing knowledge sharing, with a focus on system integration, output variability, storage and project construction and related logistics.

RAR has two components: an industry programme (I-RAR) and a community programme (CARRE). I-RAR focuses on the application of renewable energy for industrial applications, particularly the mining industry. Through CARRE, ARENA is working with network businesses to demonstrate the viability and reliability of renewable energy systems for small and very remote off-grid communities.

RAR Industry Programme

In the reporting period, $98 million in ARENA financial assistance was awarded to eight I-RAR projects worth $212 million.

Community and Regional Renewable Energy Programme

Four CARRE projects worth $98 million were awarded $50 million in ARENA financial assistance during the same reporting period.

Green crude
By Muradel

Australia’s first integrated demonstration scale plant to sustainably convert microalgae into green crude.

Producing 30,000 litres of green crude each year.

  • $4.4 million – ARENA funding
  • $10.8 million – Total project value

Accelerated Step Change Initiative

ARENA launched ASCI in June 2013 to place the agency in a flexible position to respond to significant but unforeseen opportunities that may arise but are not captured under its other funding programmes. No ASCI projects were announced by ARENA during the reporting period.

Supporting High-value Australian Renewable Energy Knowledge

ARENA undertakes and supports knowledge sharing to overcome or reduce barriers to the deployment of renewable energy that are caused by a lack of information about renewable energy technologies. Accordingly, the capture and sharing of knowledge is an essential requirement for all activities supported by ARENA.

ARENA’s approach to knowledge sharing is to work with industry to collect, store, analyse, and share data, information and lessons learned that are of value to renewable energy developers, financiers, regulators and end users.

During the reporting period, ARENA supported knowledge sharing in the following ways:

1. ARENA funded projects

All projects funded by ARENA are required to include knowledge sharing outcomes that specify the knowledge the project will generate and how it will be shared with the industry and public. These knowledge sharing reports are available at Projects on the profile page of individual projects. All knowledge sharing reports are also available from ARENA’s Knowledge bank.

2. Directly commissioned work

In the reporting period, ARENA supported the development of new knowledge as well as knowledge sharing systems and platforms including:

  • an analysis of the energy storage sector to inform the identification of ARENA’s investment focus areas
  • the Australian PV Institute’s award-winning Australian Solar Mapping Tools
  • the Energy Networks Association’s online stocktake of information on over 170 renewable energy grid projects from across Australia as well as the most relevant international projects, including Europe, the US, Korea and Japan.

3. Proponent initiated projects

ARENA also provided support under the Emerging Renewables Programme for industry initiatives to create high-value knowledge products. These included:

  • development by National ICT Australia (NICTA) of an online national renewable energy and energy infrastructure mapping platform
  • development of the University of Adelaide’s online Australian energy storage knowledge bank
  • creation by the University of Technology, Sydney of online maps of electricity network constraints to better inform network investments and increase the use of renewables.

4. ARENA facilitated activities

ARENA also connected people to knowledge and each other by organising knowledge sharing events. During the reporting period these included:

  • Big Solar CEO roundtable held during Clean Energy Week
  • meetings of RAR and Big Solar project proponents to share knowledge and lessons learned, including managing risks; building, commissioning and operating remote projects; community consultation; and WHS
  • meeting of RAR and Big Solar project proponents with lead solar PV and solar thermal researchers at the Asia Pacific Research Conference to discuss research priorities for industry and trends
  • presentation and discussion of ARENA funded feasibility study and solar thermal projects at ARENA funded ASTRI annual meeting
  • facilitation of five researcher-industry workshops to discuss the second competitive funding round for ARENA’s R&D Programme.

Australian Wave Energy Atlas
By CSIRO

An online national wave energy atlas that will allow users to better assess the feasibility of wave power projects.

With some of the best wave energy resources in the world, Australia could source 10 per cent of its energy from wave power by 2050.

  • $1.3 million – ARENA funding
  • $3.3 million – Total project value
  • March 2015 – Unveiled

Renewable Energy Venture Capital Fund Programme (Southern Cross Renewable Energy Fund)

ARENA’s Renewable Energy Venture Capital Fund (REVC) Programme was created to foster skills and management capability and to provide funding confidence to renewable energy projects in order to strengthen their chance of success.

ARENA’s $100 million investment commitment was matched by Softbank China Venture Capital, creating the $200 million Southern Cross Renewable Energy Fund, which is managed by Southern Cross Venture Partners Pty Ltd.

Information about investments made by the Southern Cross Renewable Energy Fund.

Advanced biofuels

Under the previous Australian Centre for Renewable Energy (ACRE), the Australian Government supported the development of advanced biofuels by launching the $10 million Advanced Biofuels Investment Readiness (ABIR) programme and providing a $5 million foundation grant to James Cook University for its High Energy Algal Fuels project. ARENA subsequently assumed responsibility for these activities.

The ABIR programme supports the development of advanced biofuel technologies by seeking to progress the deployment of pre-commercial demonstration projects for the production of drop-in advanced biofuels in Australia. Almost $10 million is committed to two advanced biofuels projects under the programme.

Figure 8: ARENA investment portfolio

Fellowships and scholarships: Eighteen point five million dollars ARENA funding. ARENA supports PhD scholars and post doctoral fellows to conduct research into a range of solar technologies. Eighteen point five million dollars has been committed to more than eighty projects, the last of which is scheduled to complete in two thousand and seventeen.

Mapping network opportunities for renewable energy
By Institute for Sustainable Futures at University of Technology Sydney

Online maps of electricity network constraints to help better inform network investments and increase the use of renewable energy. The maps will be updated annually and made freely available online.

  • $425 thousand – ARENA funding
  • $1 million – Total project value

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Other reportable matters

Work health and safety

The Work Health and Safety Act 2011 (WHS Act) aims to secure the health and safety of workers and workplaces through the elimination or minimisation of risks, so far as reasonably practicable.

The ARENA Board promotes a positive safety culture at ARENA through the proactive steps that it takes to exercise its due diligence obligations under the WHS Act.

ARENA is committed to taking active steps to protect the health and safety of all employees, contractors, visitors and third parties. The ARENA Board closely monitors health and safety in ARENA projects and in ARENA workplaces.

ARENA considers health and safety throughout the life cycle of the funding process. ARENA is supported in securing the health and safety of its staff during its day-to-day operations by arrangements put in place by the portfolio Department. Those arrangements incorporate:

  • agreed responsibilities in maintaining a safe and healthy working environment for workers
  • agreed WHS frameworks and consultative forums
  • systems for identifying hazards and effectively managing risk
  • measures for monitoring, evaluating and striving for continual improvement in WHS performance
  • procedures for the reporting and resolution of WHS issues.

In respect of ARENA staff, no investigations were conducted nor notifiable incidents reported during 2014-15. Reporting in respect of Departmental staff made available to ARENA is covered in the Department of Industry and Science’s Annual
Report 2014-15.

Consultancies

The Board has voluntarily adopted key principles of the Commonwealth Procurement Rules for ARENA procurements. Section 63 of the ARENA Act states that consultants may be engaged by ARENA to provide technical and specialist advisory services to assist ARENA in the performance of its functions. ARENA must not engage consultants to perform operations or administrative duties of a kind that are performed, or are capable of being performed, by Departmental staff made available to ARENA.

In 2014-15, ARENA entered into 53 new consultancy arrangements, involving total actual expenditure of $2,573,324 (inclusive of GST). In addition, 86 ongoing consultancies were active during 2014-15, involving total actual expenditure of $3,793,607 (inclusive
of GST).

ARENA’s money should not to be applied to costs associated with Departmental staff made available to ARENA. Procurements undertaken by ARENA in relation to such Departmental staff are paid from Departmental funds and, as such, are subject to the Commonwealth Procurement Rules.

Ecologically sustainable development

Table 6 sets out ARENA’s report against section 516A of the Environment Protection and Biodiversity Conservation Act 1999.

Corporate governance

ARENA places considerable emphasis on strong governance arrangements.

Table 6: Contribution to ecologically sustainable development 2014-15

Reporting criteria Performance
Accordance with and contribution to ecologically
sustainable development (ESD), including the development
and implementation of policies, plans, programmes and
legislation.
ARENA is specifically tasked with facilitating research,
development, demonstration and deployment of renewable
energy technologies with a view to driving the
commercialisation and reducing the cost of renewable
energy. ARENA’s policies, plans and programmes all accord
with and contribute to the ESD principles by:

  • helping to foster the long-term sustainability of
    Australia’s energy sector while promoting the reduction
    of energy-related greenhouse gas emissions
  • taking into account economic, environmental and
    social considerations when developing renewable energy
    measures.

Information on ARENA’s projects is provided on pages
64-75.

Environmental performance, including the impact
of the agency’s activities on the natural environment, how
any impacts are mitigated and how they will be
managed.
ARENA’s accommodation and facilities arrangements are
supported by the portfolio Department. The Department
operates under the Energy Efficiency in Government
Operations policy. Its purpose is to reduce the energy
consumption of government operations, with particular
emphasis on the energy efficiency of buildings.The Department also aims to improve its environmental management practices, reduce the impacts of its operations,
and foster greater efficiencies and operational costs
savings consistent with legislative, regulatory and policy
requirements such as the Australian National Audit Office’s
Public Sector Environmental Management Better Practice
Guide of April 2012. For more information, please refer to
the Department of Industry and Science’s Annual Report
2014–15. For the duration of 2014-15, ARENA’s Canberra offices
were located in the NewActon Nishi Building. The Nishi
Building offices have a 6-star Green Star Design rating.
NewActon Nishi is considered to be Canberra’s most
sustainable mixed-use building complex.

Ethics and risk management

In 2014-15 the ARENA Board continued to implement the conflict of interest policy that was adopted in 2012. The policy describes:

  • the duties and obligations in respect of potential conflicts for all ARENA personnel, including
    • members of the Board
    • members of the Risk and Audit Committee (RAC) (and any other subcommittee of the Board)
    • the Chief Executive Officer and the Chief Financial Officer
    • all ARENA staff, including employees and contractors of the Department who are made available to ARENA
    • consultants engaged by ARENA, including probity advisers, expert due diligence advisers and other independent technical advisers
    • members of ARENA assessment advisory committees
  • how individuals are to discharge their duties under the policy
  • how declarations are managed.

ARENA is committed to integrating risk management practices into all processes and operations.

ARENA manages risk commensurate with ISO 31000:2009, Risk management – Principles and guidelines. Accountability and responsibility for ARENA’s performance lies with the Board. This includes accountability for ARENA’s management of risk. While the Board and ARENA executive are ultimately accountable for risk management, it is the responsibility of all ARENA personnel to manage risk.

ARENA’s RAC provides independent assurance and advice to the Board on ARENA’s risk management. In 2014-15, the RAC was provided with information on ARENA’s approach to managing ARENA’s major risks including those associated with individual programmes, projects and significant procurements. More information about the RAC is available on page 58.

ARENA service charter

ARENA aims to provide a high standard of service to all its stakeholders. ARENA focuses on achieving honest and ethical relationships with stakeholders, underpinned by genuine consultation and feedback.

ARENA provides high quality, evidence-based advice and decisions through informed judgment and prudent risk management. ARENA staff are bound by the Australian Public Service Values and Code of Conduct.

As ARENA continues to help drive the development and deployment of renewable energy in Australia, it anticipates an increase in the volume of contact with stakeholders. ARENA aims to continue to deliver professional and timely services to an expanded customer base.

Complaints and handling

ARENA has an established internal complaints and review process, which allows reviews of ARENA decisions and complaints about service quality to be resolved fairly and simply. For information on the complaints and review process see Complaints.

Public Governance, Performance and Accountability Act 2013

On 1 July 2014, Commonwealth Government authorities administered under the Commonwealth Authorities and Companies Act 1997 and the Financial Management and Accountability Act 1997 became ‘corporate Commonwealth entities’ under the PGPA Act. Board Directors and staff of corporate Commonwealth entities have a range of new duties under the Act.

ARENA undertook the following to prepare for implementation of the PGPA Act:

  • considered the new sources of authority in the PGPA Act and updated internal controls and internal delegations
  • informed staff about the new legislative framework
  • updated policies, plans and procedures.

Importantly, implementation of the PGPA framework will be ongoing, gradual and staged consistent with the approach adopted by the Department of Finance and the PGPA implementation work undertaken by the Department of Industry and Science.

Training and development

ARENA’s commitment to quality, innovation and professionalism are core elements of the organisation’s competitive advantage, and underpin ARENA as an employer of choice.

ARENA has a strong commitment to building the skills and expertise of its people. ARENA employees have participated in a wide range of training including postgraduate study, leadership training and secondment opportunities within the Department and other agencies. For example, during 2014-15, ARENA employees attended training from the Australian Energy Market Operator on the operation of the National Electricity Market.

All new employees receive an induction pack and training in their respective teams. New ARENA employees meet members of the executive and learn more about current activities in ARENA.

Topics covered in the induction material given to new ARENA employees include:

  • introduction to ARENA
  • overview of business functions including strategy, business development and contract negotiations, project management, strategic communication, knowledge management and business support functions
  • Code of Conduct
  • conflict of interest and probity
  • work health and safety
  • governance and compliance in ARENA
  • employment, learning and development, and other mandatory departmental procedures.

Public interest disclosure

There were no disclosures under the Public Interest Disclosure Act 2013 for 2014-15.

Fraud control

The ARENA Fraud Control Plan 2014-16 was approved by the Board in July 2014 and adherence to the Plan continues. The Plan outlines ARENA’s key activities to ensure fraudulent activity is minimised.

ARENA participated in the annual fraud survey conducted by the Australian Institute of Criminology and the Attorney-General’s Department. There were no known cases of fraud at ARENA during the year.

All of ARENA’s employees are provided with fraud awareness training. Fraud awareness refresher training was also provided to staff during the year using a mandatory online training module.

Freedom of information and Information Publication Scheme

Australian Government entities that are subject to the Freedom of Information Act 1982 (FOI Act) are required to publish information to the public as part of the Information Publication Scheme.

ARENA’s publications covered by the scheme are accessible from the ARENA website at arena.gov.au. Consistent with its knowledge management agenda, ARENA publishes information relating to the renewable energy sector, including information from financial assistance recipients.

Information on how to make a request under the FOI Act is available on the Department of Industry and Science’s website. Contact details are:

FOI Coordinator
Legal Branch
Department of Industry and Science
GPO Box 9839
CANBERRA ACT 2601

Email: FOI@industry.gov.au
Phone: +61 2 6102 8104

Two requests for information under the FOI Act were received by ARENA in 2014–15.

Indemnities and insurance premiums of officers

ARENA’s insurance cover was included under the portfolio Department’s policy for 2014-15.

Internal audit and quality assurance

The ARENA Risk and Audit Committee provides independent advice to the Board on ARENA’s financial reporting, performance reporting, system of risk oversight and management and system of internal control. The committee also provides a forum for communication between the Board and the internal auditor (Synergy) as well as the external auditor (Australian National Audit Office).

Judicial decisions and reviews by outside bodies

In 2014-15, ARENA was not affected by judicial decisions or reviews by administrative tribunals, the Auditor-General, the Commonwealth Ombudsman or the Office of the Australian Information Commissioner. The Senate Economics and Legislation Committee reviewed the ARENA Repeal Bill.

ARENA received an unqualified audit report on its financial statements for 2014-15. The Auditor-General’s independent report is presented in the financial statements section of this annual report.

Key activities and changes affecting ARENA

See page 18 for key activities and potential changes affecting ARENA.

Legal expenditure

During 2014–15, ARENA incurred $2,267,621 (excluding GST) in external legal service expenditure.

ARENA has reported the expenditure to the Office of Legal Services Coordination as required under the Legal Services Directions 2005.

Related entity transactions

Details of related entity transactions are covered in Note 13 of the financial statements section of this report.

Subsidiaries

ARENA did not have any subsidiaries during 2014-15.

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Appendix 1: Appointments

ARENA Board

Section 17 of the Australian Renewable Energy Agency Act 2011 (ARENA Act) provides that there is to be a Board of ARENA.

Responsibilities

The ARENA Board is a skills-based board. The functions of the Board involve:

  • developing general funding strategies, financial assistance guidelines and work plans (Division 2 of Part 3 of the ARENA Act)
  • determining other strategies, objectives and policies to be followed by ARENA
  • ensuring that ARENA complies with the ARENA Act.

Pursuant to sections 71(1) and 72(1) of the ARENA Act, ARENA and the ARENA Board may delegate to the CEO specific powers or functions, subject to any directions specified by the Board and any applicable ARENA policies and legislation.

Membership

Section 29 of the ARENA Act provides that the Board consists of:

  • up to six members, appointed on a part-time basis by the portfolio Minister
  • the Secretary of the Department.

A person is eligible for appointment if the Minister is satisfied that the person has experience or knowledge in at least one of the following fields:

  • renewable energy technology
  • commercialisation
  • business investment
  • corporate governance.

Appointed Board members are initially appointed for a term of up to two years, and may be reappointed for a total of up to six continuous years.

Figure 9: ARENA Board membership 2014-15

Greg Bourne

Chair / Non-executive director

Appointed:
July 2012

Term expiring:
January 2016

Mr Bourne studied chemistry at the University of Western Australia via a scholarship from BP Refinery (Kwinana). After graduating with honours in 1971, he carried out research into refinery processes before joining BP Exploration. As a drilling engineer, he worked and lived in the United Kingdom, North America, South America, the Middle East, China and Australia.

In 1988, Mr Bourne was seconded to the Prime Minister’s Policy Unit in the United Kingdom, where he was the Special Adviser on Energy and Transport. Mr Bourne returned to Australia in 1992 to be in charge of BP Exploration’s activities in Australia’s North West Shelf region and Papua New Guinea.

After working overseas as Director, BP Scotland, and then Regional Director, Latin America, based in Caracas, he returned to Australia in 1999 to become Regional President, BP Australasia, the position from which he retired from BP in 2003.

In 2004, Mr Bourne was appointed Chief Executive Officer of WWF Australia, a position he held until 2010. Mr Bourne is a member of a number of government and business advisory groups primarily concerned with energy, climate change and sustainability.

He was awarded the Centenary Medal for services to the environment and an Honorary Doctorate from the University of Western Australia for services to international business.

Glenys Beauchamp

Ex-officio director

Commenced:
September 2013

Ms Beauchamp was appointed Secretary of the Department of Industry and Science on 18 September 2013. She has had an extensive career in the Australian Public Service at senior levels with responsibility for a number of significant government programmes. Ms Beauchamp has more than 25 years’ experience in the public sector and began her career as a graduate in the Industry Commission.

Prior to her current role, Ms Beauchamp was Secretary of the Department of Regional Australia, Local Government, Arts and Sport. She has served as Deputy Secretary of the Department of the Prime Minister and Cabinet, and the Department of Families, Housing, Community Services and Indigenous Affairs.

Ms Beauchamp has held a number of executive positions in the Australian Capital Territory Government, including Deputy Chief Executive of the Department of Disability, Housing and Community Services, and Deputy Chief Executive Officer of the Department of Health.

In 2010, Ms Beauchamp was awarded a Public Service Medal for coordinating Australian Government support during the 2009 Victorian bushfires.

Ms Beauchamp has an economics degree from the Australian National University and an MBA from the University of Canberra.

Judith Smith

Non-executive director

Appointed:
July 2012

Term expiring:
January 2016

Until 2013, Ms Smith was the Head of Private Equity, Industry Funds Management (IFM) (now known as IFM Investors), and Chair of the IFM Risk Committee. She was also Deputy Chair of the IFM Investments and Strategy Committee. Post retirement from the firm she remains a member of the IFM Investors Investment Committee. Prior to joining IFM, Ms Smith held various investment management roles.

During more than a decade at National Mutual Funds Management, she managed Australian equity portfolios (including large capitalisation portfolios, specialist small company portfolios and private equity investments) and Australian equity research and strategy. Ms Smith has been involved with private equity in the Australian market since 1990. She was a board member of Australian Private Equity and Venture Capital Association Limited, and participated on a number of fund advisory boards. At IFM she ran a multi-billion dollar private equity portfolio with Australian and global investments.

Ms Smith is on the board of the Acorn Capital Investment Fund, LUCRF and Universal BioSenses Inc.

Ms Smith holds a Master of Applied Finance from the University of Melbourne and a Bachelor of Economics (Honours) from Monash University. She is a Fellow of the Financial Services Institute of Australasia and Graduate of the Australian Institute of Company Directors.

Danny Broad

Non-executive director

Appointed:
November 2014

Term expiring:
January 2016

Mr Broad has more than 25 years’ experience in senior executive roles in the rail, civil and construction industries in Australia. He has extensive experience in company management, leadership, stakeholder engagement and business development within dynamic marketplaces, with recent expertise in growing customer and partner relationships as well as business strategic planning.

Mr Broad’s career developed from commencing as a civil/structural design engineer, through project management, construction management and operations management to company management. He project managed the construction of the coal handling plant at Tarong Power Station, the construction of the coal wash plant at Meandu Mine in Queensland, the Australia Telescope Project in Narrabri and the construction of the steel structure of Chifley Tower in Sydney.

In 1997, Mr Broad was appointed as Group General Manager of Walkers Maryborough and moved to Sydney in 2000 to merge the Walkers business and Clyde Engineering into EDI Rail. Following the acquisition by Downer, Mr Broad has held various senior executive roles in Downer Rail. He recently joined engineering consulting group Ranbury in Brisbane in an executive role.

Mr Broad has a Bachelor of Engineering (Civil) from the University of Queensland, a Graduate Diploma in Business Administration from the Queensland University of Technology and has held board roles on the Australasian Railway Association board and the NSW council of the Australian Industry Group.

Martin Hoffman

Non-executive director

Appointed:
July 2014

Term expired:
July 2015

Mr Hoffman has been the Deputy Secretary of the Department of Industry and Science (and its predecessors) since 2010, with particular responsibilities for the resources and energy sector. He joined the Australian Public Service in March 2009 in the Department of the Prime Minister and Cabinet.

Mr Hoffman previously had a lengthy private sector career primarily in digital media and technology, including as CEO of NineMSN, Australia’s largest internet media company.

Mr Hoffman holds an MBA (Hons) from IMD in Lausanne, Switzerland, Master of Applied Finance (Macquarie), and Bachelor of Economics (Sydney). He completed the Executive Fellows programme at the Australia New Zealand School of Government in 2009, and was awarded the James Wolfensohn Public Service Scholarship to study at the Harvard Kennedy School in 2013.

Meetings

The Board formally met eight times during 2014-15.

Reporting

Following each Board meeting, the Chair provided the Minister with a report on the key outcomes of that meeting.

Subcommittees

The Board has established a Risk and Audit Committee (RAC), in compliance with section
45 of the PGPA Act and as authorised by section
48 of the ARENA Act.

ARENA Risk and Audit Committee

The RAC provides independent assurance and advice to the Board on ARENA’s risk, control and compliance, internal audit and its external accountability responsibilities including its financial statement responsibilities.

The Board has authorised the RAC, within the scope of its responsibilities, to:

  • obtain any information that it requires from any employee or external party (subject to any legal obligation to protect information)
  • discuss any matters with the external auditor or other external parties (subject to confidentiality considerations)
  • request the attendance of any Board member or ARENA staff member, including the CEO, at RAC meetings
  • obtain legal or other professional advice, as considered necessary to meet its responsibilities, at ARENA’s expense and in accordance with ARENA’s procurement policy.

Table 7: ARENA Board meetings 2014-15

Date Meeting Location Attendance
(In person & via
teleconference)
9 July 2014 23rd Board meeting Canberra, ACT

All Board members

Secretary’s alternate for part of
meeting:
Mr Greg Divall (Secretary attended part
meeting)

9 September 2014 24th Board meeting Canberra, ACT All Board members
9 October 2014 25th Board meeting Perth, WA All Board members
4 December 2014 26th Board meeting Canberra, ACT All Board members
18 February 2015 27th Board meeting Canberra, ACT All Board members
31 March 2015 28th Board meeting Canberra, ACT All Board members
7 May 2015 29th Board meeting Canberra, ACT

All Board members

Secretary’s alternate for part of
meeting:
Mr Chris Locke (Secretary attended part
meeting)

25 June 2015 30th Board meeting Canberra, ACT

All Board members

Secretary’s alternate: Mr Chris
Locke

Responsibilities

RAC members are expected to understand and observe the legal requirements of the PGPA Act and PGPA Rules. Members are also expected to:

  • act in the interests of ARENA
  • apply good analytical skills, objectivity and good judgment
  • express opinions constructively and openly
  • raise issues that relate to the committee’s responsibilities and pursue independent lines of enquiry.

Membership

In 2014-15 the RAC was made up of two Board members and two independent members. The RAC members were:

  • Ms Judith Smith (RAC Chair and Board member)
  • Mr Martin Hoffman (Board member)
  • Ms Jenny Morison
  • Mr Peter Thomas.

Meetings

The RAC formally met three times during 2014-15.

Reporting

Following each RAC meeting, the RAC Chair provided the Board with a report on the key outcomes of that meeting.

Subcommittees

No subcommittees were established under the RAC.

Table 8: ARENA Risk and Audit Committee meetings 2014-15

Date Meeting Location Attendance
(In person & via
teleconference)
15 September 2014 9th RAC meeting Canberra, ACT All members
5 March 2015 10th RAC meeting Canberra, ACT

Judith Smith, Jenny Morison, Peter Thomas

Apology: Martin Hoffman

27 May 2015 11th RAC meeting Canberra, ACT

Judith Smith, Jenny Morison

Apology: Peter Thomas, Martin Hoffman

ARENA Chief Executive Officer

Section 50 of the ARENA Act provides that there is to be a Chief Executive Officer (CEO) of ARENA. Under section 52 of the ARENA Act, the CEO is appointed by the portfolio Minister on the recommendation of the Board for a period of up to three years. A CEO is eligible for re-appointment.

The CEO has responsibility for the day-to-day business of ARENA, including:

  • executing directions of the Board
  • overseeing administration of existing projects
  • supporting the Board to develop and execute its funding strategy, forward work plan and initiatives
  • representing ARENA at public events and managing stakeholder engagement
  • analysing and sharing knowledge and information about renewable energy technologies
  • developing advice to the Minister on renewable energy technology innovation.
  • Mr Ivor Frischknecht continued as CEO of ARENA for 2014-15.

ARENA Chief Financial Officer

Section 61 of the ARENA Act provides that ARENA may employ a person to perform Chief Financial Officer (CFO) functions. The CFO for 2014-15 was Mr Ian Kay.

Figure 10: ARENA Chief Executive Officer 2014-15

Ivor Frischknecht

Appointed:
6 August 2012

Term expiring:
5 August 2018

Mr Frischknecht is a former Investment Director of Starfish Ventures Pty Ltd, a venture capital firm that manages $400 million, primarily on behalf of Australian superannuation funds. He was responsible for the firm’s clean tech investment activities in areas such as alternative energy, water and environmental technologies.

Mr Frischknecht was previously Director, New Ventures, of Idealab, a company involved in developing and investing in technology start-up companies, including renewable energy companies. He was also previously the CEO or other senior executive of a number of venture funded energy and technology companies.

Mr Frischknecht started his career with the strategy consulting firm Bain & Co. He holds a Bachelor of Laws and Bachelor of Economics (Honours) from the University of Sydney, and a Master of Business Administration and Public Management Certificate from the Stanford University Graduate School of Business.

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Appendix 2: Financial assistance

Section 70(c) of the ARENA Act requires ARENA to publish details of financial assistance agreements and progress. In addition, section 28 of the Australian Renewable Energy Agency (Consequential Amendments and Transitional Provisions) Act 2011 requires ARENA to report details of people to whom financial assistance is provided under a transferred Commonwealth funding agreement or ASI Limited agreement.

Table 9: Financial assistance 2014-15

Research and Development
Proponent name Project description Location **Funding provided/ committed
(GST exclusive)
Primary technology
*ANU Advanced surface and contact technologies for industrial silicon photovoltaics ACT $4,102,000 Solar PV
*ANU Bladed receivers with active airflow control ACT $1,361,327 Solar thermal
*ANU Eliminating material quality barriers to low cost, very
high efficiency silicon solar cells and modules
ACT $2,023,407 Solar PV
ANU High quality laser doping for solar cells through improved characterisation ACT $446,582 Solar PV
*ANU High-temperature solar thermal energy storage via
manganese-oxide based redox cycling
ACT $1,193,534 Solar thermal
ANU Improved high-temperature receivers for dish
concentrators
ACT $1,486,210 Solar thermal
ANU Industry ready n-type silicon solar cells ACT $3,335,254 Solar PV
ANU Local doping using Laser Chemical Processing (LCP) ACT $352,365 Solar PV
ANU Machine-learning-based forecasting of distributed solar energy ACT $799,522 Enabling
ANU Next generation SLIVER solar cells ACT $4,953,473 Solar PV
*ANU PV Modules for the Australian environment (PV-MATE) ACT $502,977 Solar PV
Barbara Hardy Institute Development of high temperature phase change storage system and test facility SA $689,500 Enabling
CSIRO A novel thermoelectric topping cycle receiver for CST
applications
NSW $2,200,912 Solar thermal
CSIRO Advanced solar thermal energy storage NSW $3,538,846 Solar thermal
CSIRO Advanced steam-generating receivers NSW $2,821,976 Solar thermal
CSIRO Australian Solar Thermal Research Initiative (ASTRI) NSW $35,000,500 Solar thermal
CSIRO Development of combined cycle using solar reformed gas NSW $351,453 Solar thermal
*CSIRO High efficiency solar Allam cycle NSW $2,749,748 Solar thermal
*CSIRO Novel concepts for low cost small heliostats in remote
installations
NSW $1,000,000 Solar thermal
CSIRO Optimisation of central receivers for advanced power
cycles
NSW $1,150,880 Solar thermal
CSIRO Plug and Play Solar Power: Integration of solar in
hybrids
NSW $1,292,725 Enabling
CSIRO Solar Energy Management (SEM) system for utilities QLD $225,715 Enabling
CSIRO Solar Hybrid Fuels NSW $1,637,853 Solar thermal
CSIRO Solar-driven supercritical CO2 Brayton
Cycle
NSW $2,496,835 Solar thermal
*CSIRO Virtual Power Station 2 NSW $850,000 Enabling
*IT Power Testing the performance of lithium-ion batteries ACT $450,000 Enabling
RayGen Resources Central receiver CPV pilot project – Stage 2 VIC $1,750,000 Solar PV
RMIT MUSIC: Micro-urban solar integrated concentrators VIC $4,521,191 Solar thermal
Solar Systems High-efficiency multi-junction solar cells on low-cost,
large-area
NSW $2,000,000 Solar PV
Suntech Novel texture processes for the latest industrial
wafer
NSW $475,000 Solar PV
Sydney University Up conversion of the solar spectrum for improved PV energy conversion NSW $487,584 Solar PV
University of
NSW/ Suntech
Next generation crystalline silicon on glass NSW $1,178,000 Solar PV
University of Melbourne Enhancing efficiencies in printed solar cells VIC $500,000 Solar PV
University of Melbourne Printing solar cells – A manufacturing proposition for
Australia
VIC $1,762,500 Solar PV
University of South Australia New photocathodes for solar hydrogen production SA $500,000 Solar thermal
*University of Technology Sydney Develop lithium-sulfur batteries for large-scale electrical energy storage NSW $750,000 Enabling
UNSW 40% Efficient photovoltaic “Power Cube” power tower receiver NSW $1,000,000 Solar PV
*UNSW Advanced recombination-based loss analysis methods for silicon wafer and silicon solar cells NSW $381,328 Solar PV
UNSW Australia-US Institute for Advanced Photovoltaics
(ACAP)
NSW $33,174,000 Solar PV
UNSW Cost-effective GaAsP top solar cell on high
performance
NSW $2,480,000 Solar PV
UNSW Develop and commercialise high efficiency silicon solar
cell tech
NSW $3,972,980 Solar PV
*UNSW High-efficiency silicon/perovskite tandem cells and
modules: Demonstration and commercial evaluation
NSW $3,599,459 Solar PV
UNSW Low-cost, high-efficiency Copper-Zinc-Tin-Sulphide (CZTS)
silicon
NSW $1,511,828 Solar PV
UNSW Multi-Junction c-Si solar cells based on virtual Ge
substrates
NSW $1,265,000 Solar PV
UNSW Overcoming performance limitations of commercial solar cells NSW $4,400,000 Solar PV
UNSW Si nanocrystals embedded in silicon oxide and nitride NSW $500,000 Solar PV
UNSW Tandem Quantum Dot Solar Cells NSW $1,375,000 Solar PV
UNSW The Hot Carrier Solar Cell NSW $563,906 Solar PV
UNSW Time-and-spectrally resolved Photoluminescents for silicon solar NSW $490,166 Solar PV
UNSW Tools for design and scale‐up of solar thermo-chemical
reactors
NSW $1,083,320 Solar thermal
*UNSW Towards ultimate performance commercial silicon solar
cells
NSW $2,970,702 Solar PV
Vast Solar P/L Validation of performance modelling for 1.2MWth solar
array
NSW $437,243 Solar thermal
Total 52 $150,142,801
International Research Exchange
University/ Institution Scholar Type of funding **Funding provided/ committed (GST exclusive) Primary technology
CSIRO Benjamin Duck International Research Exchange $109,081 Solar
Total 1 $109,081
Research and Development: Postgraduate
scholarships and fellowships
University/ Institution Scholar Type of funding **Funding provided/ committed (GST exclusive) Primary technology
ANU Andreas Fell Fellowship $420,271 Solar
ANU Andrew Thomson Fellowship $347,054 Solar
ANU Elizabeth Thomsen Fellowship $357,993 Solar
ANU Fiacre Rougieux Fellowship $338,351 Solar
ANU James Bullock Scholarship $49,402 Solar
ANU Jose Zapata Fellowship $359,654 Solar
ANU Katherine Booker Fellowship $356,749 Solar
ANU Keith Sue Scholarship $120,000 Solar
ANU Ngwe Soe Josh Zin Fellowship $378,154 Solar
ANU Nicholas Grant Fellowship $355,525 Solar
ANU Niraj Lal Fellowship $325,585 Solar
ANU Qunyu Bi Fellowship $356,749 Solar
ANU Xinbo Yang Fellowship $370,622 Solar
Charles Darwin Wai Kean Yap Fellowship $333,049 Solar
CSIRO Hasitha Weerasinghe Fellowship $332,039 Solar
CSIRO Kallista Sears Fellowship $301,530 Solar
CSIRO Krishna Feron Fellowship $333,081 Solar
CSIRO Tianshi Qin Fellowship $329,231 Solar
CSIRO Timothy Jones Fellowship $329,231 Solar
Monash Alex Pascoe Scholarship $49,426 Solar
Murdoch Tobias Prosin Scholarship $120,000 Solar
RMIT Ahmad Mojiri Scholarship $39,816 Solar
Swinburne University Ben Ekman Scholarship $96,667 Solar
Swinburne University Benjamin Mashford Fellowship $347,055 Solar
Sydney University Bjorn Sturmberg Scholarship $48,455 Solar
Sydney University Miroslav Dvorak Fellowship $352,321 Solar
University of Wollongong Andrew Nattestad Fellowship $374,511 Solar
University of Adelaide Martin Belusko Fellowship $394,585 Solar
University of Adelaide Philip van Eyk Fellowship $273,856 Solar
University of Melbourne Kyra Schwarz Scholarship $52,941 Solar
University of Melbourne Shuhua Peng Fellowship $324,612 Solar
University of Melbourne Viktoras Dryza Fellowship $339,446 Solar
University of Newcastle Natalie Holmes Scholarship $36,178 Solar
University of Queensland Ajay K Pandey Fellowship $349,864 Solar
University of Queensland Yuan Fang Fellowship $349,864 Solar
University of South Australia Ming Liu Fellowship $278,136 Solar
University of South Australia Nguan Hwee Steven Tay Fellowship $289,930 Solar
University of Western Sydney Guodong Du Fellowship $107,256 Solar
University of Western Sydney Wenxian Li Fellowship $284,482 Solar
UNSW Nicholas Boerema Scholarship $19,678 Solar
UNSW Alexander To Scholarship $46,041 Solar
UNSW Bernard Mitchell Fellowship $330,195 Solar
UNSW Binesh Puthen Veettil Fellowship $330,195 Solar
UNSW Chao Shen Scholarship $37,968 Solar
UNSW Clare Disney Scholarship $106,667 Solar
UNSW Craig Johnson Fellowship $216,241 Solar
UNSW Gough Lui Scholarship $27,816 Solar
UNSW Hangtao Cui Bi Fellowship $330,195 Solar
UNSW Henner Kampwerth Fellowship $403,315 Solar
UNSW Jae Sung Yun Scholarship $53,334 Solar
UNSW Jianshu Han/Allen Barnett Scholarship $80,000 Solar
UNSW Matthew Edwards Fellowship $422,138 Solar
UNSW Murad Tayebjee Fellowship $330,195 Solar
UNSW Robert Patterson Fellowship $327,240 Solar
UNSW Sammy Lee Fellowship $330,195 Solar
UNSW Sisi Wang Scholarship $31,041 Solar
UNSW Supriya Pillai Fellowship $370,288 Solar
UNSW Thilini Ishwara Fellowship $356,965 Solar
UNSW Vincent Allen Scholarship $120,000 Solar
UNSW Xi Wang Fellowship $396,843 Solar
UNSW Xiaojing Hao Fellowship $315,015 Solar
UNSW Yang Yang Fellowship $330,195 Solar
UNSW Zi Ouyang Fellowship $391,717 Solar
Total 63 $16,307,148
Demonstration
Proponent name Project description Location **Funding provided/ committed (GST exclusive) Primary technology
Abengoa Solar Power Australia Pty Ltd Perenjori Dispatchable Solar Thermal Power Project WA $449,718 Solar thermal
*AGL Energy storage for commercial renewable integration in
South Australia
SA $445,847 Enabling
Alinta Energy Port Augusta Solar Thermal Generation Measure SA $1,000,000 Hybrid
*Australian PV Institute Asia-Pacific Solar Research Conference 2014 NSW $50,000 Enabling
Australian PV Institute Active participation in distributed energy market NSW $173,550 Enabling
Australian PV Institute Climate-based PV module rating scheme NSW $268,320 Enabling
Australian PV Institute Development of an interactive Australian Solar Map NSW $443,238 Enabling
*Balfour Beatty Project Harvest: 31.5MW biomass power plant VIC $28,000,000 Bioenergy
*Barcaldine Barcaldine remote community solar farm project QLD $27,800,000 Solar PV
*Bioenergy Australia Participation and management of tasks for the IEA Bioenergy
Taskforce
NSW $360,000 Bioenergy
BioPower Systems P/L bioWAVE ocean pilot at Port Fairy VIC $11,000,000 Ocean
*Biosystems Engineering Full-scale woody crop harvester prototype and commercial
biomass supply chain demonstration
NSW $1,940,000 Bioenergy
BlueScope Steel Expanding the value proposition for Building Integrated
PV
NSW $477,320 Solar PV
Brisbane Materials Technology A pilot-scale plant for the production of solar
anti-reflection coatings
QLD $1,262,000 Solar PV
C2K Feasibility study for an off-grid renewable energy island
in the Pilbara
WA $300,000 Bioenergy
Carnegie Wave Energy Ltd Perth Wave Energy Project – CETO6 expansion WA $13,000,000 Ocean
Carnegie Wave Energy Ltd Perth Wave Energy Project WA $13,095,381 Ocean
CAT Projects Analysis of variations in instantaneous weather effects
across the geographic boundaries of an electricity grid
NT $242,625 Enabling
*CITIC Pacific Mining Pty Ltd Eramurra Village Solar Photovoltaic Project WA $1,920,000 Solar PV
*Clean Energy Council Clean Energy Australia: annual renewable energy industry
analysis
VIC $129,100 Enabling
*Clean Energy Council Future Proofing Australia’s Electricity Industry –
Stage 2
VIC $425,050 Enabling
Clean Energy Council Future Proofing Australia’s Electricity Industry –
Stage 1
VIC $452,850 Enabling
CSIRO Integrated solar radiation data sources over Australia ACT $712,581 Enabling
CSIRO Improving translation models for predicting energy yield of
PV
NSW $1,318,721 Enabling
*CSIRO The Australian Wave Energy Atlas WA $1,352,755 Ocean
CSIRO Australian Solar Energy Forecasting System (ASEFS) – Phase
1
ACT $3,089,000 Enabling
*Energy Developments
Ltd (EDL)
5MW renewable diesel hybrid SA $18,500,000 Hybrid
*Ergon Energy Doomadgee Solar Farm Project QLD $4,649,998 Hybrid
First Solar Weipa Solar PV Project QLD $11,300,000 Solar PV
*First Solar/CuDECO CuDECO / Rocklands Solar Farm QLD $13,000,000 Solar PV
*Frontier Carbon Toolkit for renewable energy funding and financing VIC $296,000 Enabling
*Fulcrum 3D Cloud detection and prediction for maximising solar PV
utilisation in off-grid hybrid power systems
NSW $452,000 Enabling
*Hydro Tasmania Rottnest Island: Addressing the Energy and Water Nexus WA $4,800,000 Hybrid
*Hydro Tasmania Flinders Island Renewable Energy Integration Project TAS $5,500,000 Hybrid
Ipsos Institute Social license to operate large-scale solar NSW $153,388 Enabling
James Cook University High energy algal fuels project QLD $5,000,000 Bioenergy
*Jemalong JSS 30MW utility scale solar thermal energy storage NSW $39,500,000 Solar thermal
*Degrussa Solar Project
Pty Ltd
10.5MW off-grid solar PV/storage project WA $20,900,000 Solar PV
*Karratha Solar Power Karratha Airport Solar Project WA $2,300,000 Solar PV
Laing O’Rourke Australia Pty Ltd Redeployable hybrid power generation NSW $410,329 Hybrid
*Laing O’Rourke Australia Pty Ltd Redeployable solar first deployment NSW $451,986 Hybrid
Licella P/L Biomass to Bio-Crude: Producing Advanced Drop-in Fuels for
Australia
NSW $4,864,414 Bioenergy
*Lord Howe Island Board Lord Howe Island Renewable Project NSW $4,500,000 Hybrid
*Monash University Australia’s prosperity in a low carbon world: UN SDSN
2050 Deep Decarbonisation Pathways Project
VIC $305,893 Enabling
Muradel P/L Advancing established marine microalgae biofuel to
commercialisation
SA $4,415,500 Bioenergy
National ICT Australia Data fusion and machine learning for geo exploration and
characterisation
NSW $1,902,000 Geothermal
*National ICT Australia Australian Renewable Energy Mapping Infrastructure
(AREMI)
NSW $2,099,350 Enabling
Power and Water Corp Daly River Load Optmisation NT $500,000 Enabling
*Power and Water Corp Solar Energy Transformation Project NT $35,000,000 Hybrid
RATCH-Australia Corp Ltd Feasibility of converting Collinsville Coal Power Station
to solar thermal
QLD $2,150,682 Solar thermal
*Regional Development Australia ACT Renewable energy region of collaborative industry and
research excellence in the south-east region of NSW
ACT $305,000 Enabling
*Renergi Pty Ltd A low emission biofuel technology WA $5,173,000 Bioenergy
*Reposit Power A commercially viable application of electricity storage
for Australia’s national electricity grid
ACT $445,666 Enabling
Smart Storage P/L (Ecoult) UltraBattery distributed Solar PV support and UltraBattery
for RAPS
NSW $583,780 Enabling
Southern Cross Venture Partners Southern Cross Renewable Energy Fund $100,000,000 REVC
*Swinburne University Towards an Australian capability in arrays of ocean
wave-power machines
VIC $770,728 Ocean
*Synergy Alkimos Beach Energy Storage WA $3,310,000 Enabling
University of Adelaide Reservoir quality in sedimentary geothermal resources SA $1,250,000 Geothermal
*University of Adelaide Establishing the Australian Energy Storage Knowledge
Bank
SA $1,441,811 Enabling
University of Melbourne Achieving cost-effective abatement from Australian
electricity generation
VIC $931,207 Enabling
University of Technology Sydney Community Energy Strategy: catalysing community renewables
in Australia
NSW $330,280 Enabling
*University of Technology Sydney Using DANCE model, extend maps of network constraints,
planned investment and the potential value of distributed
energy in electricity networks across the NEM
NSW $425,000 Enabling
*University of Technology Sydney Facilitating local use of system charging and virtual net
metering
NSW $250,000 Enabling
University of NSW Forecasting and characterising grid-connected solar
energy
NSW $470,284 Enabling
Vast Solar P/L Vast Solar 6MWth grid-connected multi-module CST plant with
thermal storage
NSW $5,896,960 Solar thermal
*Voyages Indigenous Tourism Australia Yulara 1.8 MW Dispersed PV NT $447,525 Solar PV
Waratah Power P/L Developing fish friendly design criteria for small hydro
facilities
NSW $613,377 Enabling
Total 67 $415,304,214
Deployment
Proponent name Project description Location **Funding provided/ committed (GST exclusive) Primary technology
AGL Fixed angle PV power stations at Broken Hill (53MW) and
Nyngan (102MW)
NSW $166,699,000 Solar PV
*Greenough River Solar Farm Greenough River Solar Farm Stage 2 WA $30,000,000 Solar PV
*Gullen Solar Gullen Range Solar Farm NSW $12,400,000 Solar PV
Moree Solar Farm Design, construction and build 56MWAC PV NSW $101,700,000 Solar PV
Total 4 $310,799,000
*ARENA entered into these agreements for the provision of financial assistance during the year. These agreements will each contribute to the continued progress of ARENA’s principal objectives and priorities under its GFS, including by improving the competitiveness of renewable energy technologies and by increasing the supply of renewable energy in Australia.**Funds committed to ongoing projects or total funds paid to complete or discontinued projects.

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Financial Statements

Independent Audit Report 79

Statement by Officers 82

Statement of Comprehensive Income 84

Statement of Financial Position 85

Statement of Changes in Equity 86

Cash Flow Statement 87

Schedule of Commitments 88

Note 1: Summary of Significant Accounting Policies 90

Note 2: Events After the Reporting Period 93

Note 3: Expenses 94

Note 4: Own-Source Income 96

Note 5: Financial Assets 97

Note 6: Fair Value Measurements 98

Note 7: Non-Financial Assets 100

Note 8: Payables 102

Note 9: Provisions 102

Note 10: Cash Flow Reconciliation 103

Note 11: Contingent Assets and Liabilities 104

Note 12: Senior Management Personnel Remuneration 104

Note 13: Related Party Disclosures 105

Note 14: Financial Instruments 106

Note 15: Financial Assets Reconciliation 107

Note 16: Reporting of Outcomes 108

Note 17: Remuneration of Auditors 108

Note 18: Assets Held In Trust 109

Financial statements (PDF 549KB)

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Statement of Comprehensive Income
for the period ended 30 June 2015

2015 2014
Notes $’000 $’000
NET COST OF SERVICES
Expenses
Employee benefits 3A 909 884
Suppliers 3B 19,318 24,375
Grants 3C 216,204 239,339
Depreciation and amortisation 7C 86 54
Write down and impairment of property, plant and
equipment
9
Total expenses 236,517 264,661
 
Own-Source Income  
Own-source revenue  
Interest received 4A 145 25
Return of grant 5,099
Resources received free of charge from Portfolio
Department
10,363 14,282
Total own-source revenue 15,607 14,307
 
Gains  
Other Gains 4B 214
Total gains 214
Total own-source income 15,821 14,307
Net cost of services 220,696 250,354
Revenue from Government  
Payment from Portfolio Department 244,424 261,942
Surplus on continuing operations 23,728 11,588
OTHER COMPREHENSIVE INCOME
Item not subject to subsequent reclassification to net cost
of services.
Decrease in the value of investment 3D 860 1,915
Total comprehensive income 22,868 9,673

The above statement should be read in conjunction with the accompanying notes.

Statement of Financial Position
as at 30 June 2015

2015 2014
Notes $’000 $’000
ASSETS
Financial Assets
Cash and cash equivalents 10 469 26
Trade and other receivables 5A 4,067 6,407
Other investments 5B,6 13,058 11,131
Total financial assets 17,594 17,564
 
Non-Financial Assets  
Property, plant and equipment 7A,C 5 6
Intangibles 7B,C 718 798
Prepayments 20,934 36
Total non-financial assets 21,657 840
Total assets 39,251 18,404
 
LIABILITIES  
Payables  
Suppliers 8A 1,036 2,114
Grants 8B 3,186 4,197
Accrued Expenses 55 49
Total payables 4,277 6,360
 
Provisions  
Employee provisions 9A 136 74
Total provisions 136 74
 
Total liabilities 4,413 6,434
Net assets 34,838 11,970
 
EQUITY  
Retained surplus 34,838 11,970
Total equity 34,838 11,970

The above statement should be read in conjunction with the accompanying notes.

Statement of Changes in Equity
for the period ended 30 June 2015

Retained earnings Total equity
2015 2014 2015 2014
$’000 $’000 $’000 $’000
Opening balance 11,970 2,297 11,970 2,297
   
Comprehensive income    
Other comprehensive income (860) (1,915) (860) (1,915)
Surplus for the period 23,728 11,588 23,728 11,588
Total comprehensive income 22,868 9,673 22,868 9,673
   
Closing balance as at 30 June 34,838 11,970 34,838 11,970

The above statement should be read in conjunction with the accompanying notes.

Cash Flow Statement
for the period ended 30 June 2015

2015 2014
Notes $’000 $’000
OPERATING ACTIVITIES
Cash received
Receipts from Government 244,301 265,150
Interest 145 25
Net GST received 26,662 19,284
Return of Grant Funds from prior years 5,099
Total cash received 276,207 284,459
 
Cash used  
Employees (839) (912)
Suppliers (11,275) (8,821)
Grants (260,958) (263,306)
Total cash used (273,072) (273,038)
Net cash from operating activities 10 3,135 11,420
 
INVESTING ACTIVITIES  
Cash received  
Return of investment 3,038
Total cash received 3,038
 
Cash used  
Purchase of property, plant and equipment (18)
Purchase of intangibles (6) (481)
Investments (5,724) (11,120)
Total cash used (5,730) (11,619)
Net cash used by investing activities (2,692) (11,619)
 
FINANCING ACTIVITIES  
Cash received  
Refund of deposits held 3
Net cash from financing activities 3
 
Net increase in cash held 443 (195)
Cash and cash equivalents at the beginning of the reporting
period
26 221
Cash and cash equivalents at the end of the reporting
period
10 469 26

The above statement should be read in conjunction with the accompanying notes.

Schedule of Commitments
as at 30 June 2015

2015 2014
$’000 $’000
BY TYPE
Commitments receivable
Net GST recoverable on commitments1 (40,680) (49,427)
Total commitments receivable (40,680) (49,427)
 
Commitments payable  
Other commitments  
Project commitments2 417,584 518,984
Research and development commitments2 92,435 104,359
Other commitments3 16,215 16,352
Total commitments payable 526,234 639,695
Net commitments by type 485,554 590,268
 
BY MATURITY  
Commitments receivable  
Net GST recoverable on commitments1  
One year or less (27,104) (33,075)
From one to five years (12,891) (14,970)
Over five years (685) (1,382)
Total commitments receivable (40,680) (49,427)
 
Commitments payable  
Project commitments2  
One year or less 275,433 337,647
From one to five years 110,298 172,337
Over five years 31,853 9,000
Total project commitments 417,584 518,984
 
Research and development commitments2  
One year or less 35,760 44,088
From one to five years 53,100 45,069
Over five years 3,575 15,202
Total research and development commitments 92,435 104,359
 
Other Commitments3  
One year or less 13,350 8,075
From one to five years 2,865 7,967
Over five years 310
Total other commitments 16,215 16,352
Total commitments payable 526,234 639,695
Net commitments by maturity 485,554 590,268
1. Commitments are GST inclusive where relevant.2. The Australian Renewable Energy Agency is currently providing financial assistance to a broad portfolio of projects and measures across the various stages of renewable energy commercialisation including R&D. Project commitments, R&D commitments, scholarships and fellowships are in accordance with signed funding agreements, as varied, or in the case of scholarships, in accordance with the grant offer letter.3. Other commitments comprise obligations and liabilities associated with operational requirements.The above statement should be read in conjunction with Note 1.

 

Note 1: Summary of Significant Accounting Policies

1.1 Objectives of the Australian Renewable Energy Agency

The Australian Renewable Energy Agency (ARENA) is an Australian Government controlled entity. It is a not-forprofit entity. The objective of ARENA is to improve the competitiveness of renewable energy technologies and increase the supply of renewable energy in Australia.

ARENA is structured to meet the following outcome:

Outcome 1: To support improvements in the competitiveness of renewable energy and related technologies and the supply of renewable energy by administering financial assistance, developing analysis and advice about and sharing information and knowledge with regard to, renewable energy and related technologies.

ARENA operates under the following legislation:

  • Australian Renewable Energy Agency Act 2011 (as amended);
  • Australian Renewable Energy Agency (Consequential Amendments and Transitional Provisions) Act 2011;
  • Australian Renewable Energy Agency (Consequential Amendments and Transitional Provisions) Act 2012; and
  • Australian Renewable Energy Agency Determination No 1 of 2013 .

ARENA is governed by an independent, decision-making Board. The members of the Board draw together skills in renewable energy technology, commercialisation, business investment and corporate governance to provide expert administration of ARENA funds.

ARENA is a portfolio agency of the Department of Industry and Science (the Portfolio Department). Under the Australian Renewable Energy Agency Act 2011 (the Act) the Secretary of the Portfolio Department is required to make staff available to ARENA and pay associated costs.

The continued existence of ARENA in its present form and with its present programs is dependent on:

  • Government policy and the continuation of its Act;
  • continued funding under the legislation for ARENA’s administration and programs; and
  • the Secretary of the Portfolio Department making sufficient staff available.

The Government declared, in the 2014-15 Budget Measures, its intention to abolish ARENA. This will require the repealing of the Act. If the repeal is successful, signed funding agreements, assets and liabilities at the time of repeal will transfer to the Portfolio Department.

On the 19th of June 2014, the Australian Government tabled the Australian Renewable Energy Agency (Repeal) Bill 2014. This Bill, if enacted would abolish ARENA as a statutory entity. The Bill passed through the House of Representatives on the 1st of September 2014, and was introduced to the Senate on the 2nd of September 2014. At the date of signing these financial statements, the Bill has not been passed by the Senate.

1.2 Basis of Preparation of the Financial Statements

The financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013.

The financial statements have been prepared in accordance with:

  1. Financial Reporting Rule (FRR) for reporting periods ending on or after 1 July 2014; and
  2. Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities held at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.

1.3 Significant Accounting Judgements and Estimates

No accounting assumptions and estimates have been identified that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period.

1.4 New Australian Accounting Standards

Adoption of New Australian Accounting Standard Requirements
No accounting standard has been adopted earlier than the application date as stated in the standard.

All other standards and interpretations that were issued prior to the sign-off date and are applicable to the current reporting period had no material effect, and are not expected to have a future material effect, on the ARENA’s financial statements. AASB 1055 (Budget Reporting) is not applicable as the budget for ARENA has not been required to be presented as ARENA is not reported as a separate entity in the Portfolio Budget Statements of the Portfolio Department.

Future Australian Accounting Standard Requirements
All other new, revised, amending standards and/or interpretations that were issued prior to the sign-off date and are applicable to future reporting period(s) are not expected to have a future material impact on the ARENA’s financial statements.

1.5 Revenue

Revenue from Government
Funding received or receivable from the Department of Industry and Science, appropriated to the Portfolio Department, is classified as Revenue From Government.

Resources Received Free of Charge
Resources received free of charge are recognised as gains when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.

Resources received free of charge are recorded as either revenue or gains depending on their nature.

1.6 Employee Benefits

Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits expected within twelve months of the end of reporting period are measured at their nominal amounts.

The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.

Other long-term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.

Leave
The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including the entity’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave has been determined by reference to the “Short Hand Method” as per the FRR. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Superannuation
ARENA’s staff are members of defined contribution schemes. The liability for superannuation recognised as at 30 June represents outstanding contributions for the final fortnight of the year.

1.7 Leases

Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets. The lessor effectively retains substantially all such risks and benefits of ownership.

1.8 Fair value measurement

ARENA deems transfers between levels of the fair value hierarchy to have occurred at the end of the reporting period.

1.9 Cash and Cash Equivalents

Cash is recognised at its nominal amount. Cash and cash equivalents includes:

  1. cash on hand; and
  2. demand deposits in bank accounts with an original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

1.10 Financial Assets

ARENA classifies its financial assets in the following categories:

  1. available-for-sale financial assets; and
  2. loans and receivables.

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial assets are recognised and derecognised upon trade date.

Available-for-Sale Financial Assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories.

Available-for-sale financial assets are recorded at fair value. Gains and losses arising from changes in fair value are recognised as a “below the line item” in the Statement of Comprehensive Income with the exception of impairment losses. Interest is calculated using the effective interest method. Where the asset is disposed of or is determined to be impaired, part (or all) of the cumulative gain or loss previously recognised in the reserve is included in surplus and deficit for the period.

Loans and Receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate.

Effective Interest Method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.

Impairment of Financial Assets
Financial assets are assessed for impairment at the end of each reporting period.

1.11 Financial Liabilities

Other Financial Liabilities
Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced). Supplier and other payables are derecognised on payment.

1.12 Contingent Liabilities and Contingent Assets

Contingent liabilities and contingent assets are not recognised in the statement of financial position but are reported in the notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.

1.13 Acquisition of Assets

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

1.14 Property, Plant and Equipment

Property, plant and equipment are valued at cost in accordance with the Financial Reporting Rule.

1.15 Intangibles

ARENA’s intangibles comprise internally developed software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses. The threshold for the recognition is $200,000.

Software is amortised on a straight-line basis over its anticipated useful life. The useful life for ARENA software is 3 to 10 years (2013-14: 3 to 10 years).

All software assets were assessed for indications of impairment as at 30 June 2015.

1.16 Grants

Grants are recognised to the extent that services required to be performed by the grantee have been performed or the grant eligibility criteria have been satisfied. A commitment is recorded when ARENA has a binding agreement to make these grants but services have not been performed or criteria satisfied. Where grant monies are paid in advance of performance or eligibility, a prepayment is recognised.

Grants payable are settled within twelve months of recognition.

Locked Box Arrangements
During 2014-15, ARENA entered into Locked Box funding arrangements for a small number of grant funding contracts. The Locked Box arrangement requires ARENA to deposit the total amount of the grant into a prescribed bank account, in the recipient’s name, after the execution of a legally binding funding agreement.

At the time of payment, the transaction is recorded as a Prepayment in the Statement of Financial Position. (Prepayments are expected to be expensed within twelve months with no expectation of impairment). Upon the recipient satisfying certain conditions, the Prepayment is transferred to Grant Expenses in the Statement of Comprehensive Income. That is, when control of a grant passes to the grantee upon the necessary grant conditions having been met.

ARENA continues to be responsible and accountable for ensuring that the funds are only released from the Locked Box when conditions specified in the grant funding contract have been met. Accordingly, the value of Locked Boxes at balance date is disclosed under Note 18: Assets Held in Trust.

1.17 Taxation

ARENA is exempt from all forms of taxation except Fringe Benefits Tax and the Goods and Services Tax (GST).

Revenues, expenses and assets are recognised net of GST except:

  1. where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
  2. for receivables and payables.

 

Note 2: Events After the Reporting Period

ARENA is not aware of any subsequent Adjusting Events that have the potential to significantly affect its ongoing structure or financial activities.

Note 3: Expenses

2015 2014
$’000 $’000
Note 3A: Employee Benefits
Board remuneration fees 95 137
Wages and salaries 556 540
Superannuation:  
Defined contribution plans 129 111
Leave and other entitlements 129 96
Total employee benefits 909 884
 
Note 3B: Suppliers  
Goods and services supplied or rendered  
Audit fees 93 90
Consultants 5,740 6,283
Insurance1 268
Travel 177 260
Legal fees 2,197 1,599
Service level agreement2 192
Department support costs (resources received free of
charge)3
10,363 14,282
Other 549 1,235
Total goods and services supplied or rendered 19,119 24,209
 
Goods and Services rendered and supplied in connection
with:
 
Related parties3 10,842 15,915
External parties 8,277 8,294
Total goods and services supplied or rendered 19,119 24,209
Other suppliers
Operating lease rentals in connection with
Operating lease rentals – external parties:
Minimum lease payments 194 157
Workers compensation expenses 5 9
Total other suppliers 199 166
Total suppliers 19,318 24,375
1. From 1 July 2014, insurance is paid by the Portfolio Department on ARENA’s behalf.2. The Portfolio Department is reviewing the arrangements under the Service Level Agreement.3. Department support costs represent the cost of staff and associated costs made available by the Secretary of the Portfolio Department (also refer to Statement of Comprehensive Income – own source revenue). This forms a majority of the total related party transactions above.
2015 2014
$’000 $’000
Note 3C: Grants
Public sector
Australian Government entities (related entities) 11,968 14,388
State and Territory Governments 420 187
Private sector  
Australian private companies 153,745 27,883
Australian public companies 27,265 158,793
Individual/sole traders 3
International organisations1 589 1,105
Other incorporated entities2 22,217 36,980
Total grants 216,204 239,339
1. This represents the Australian Government’s contribution to the Clean Energy Solutions Center and the International Renewable Energy Agency.2. This represents the level of Grants payments made to Australian Universities.
Note 3D: Other Comprehensive Income
Decrease in the value of investment1 860 1,915
Total other comprehensive income items 860 1,915
1. This represents the change in value of the Renewable Energy Venture Capital Fund Commonwealth Participation Trust, the investment is shown in the Statement of Financial Position (refer to Note 5B).

Note 4: Own-Source Income

2015 2014
$’000 $’000
OWN-SOURCE REVENUE
Note 4A: Interest received
Deposits 36 25
Repayment of interest earned on returned grant funds 109
145 25
 
GAINS  
Note 4B: Other Gains  
PAYG receivable from prior year 85
Gain on sale of assets (Investments) 129
214

Note 5: Financial Assets

2015 2014
$’000 $’000
Note 5A: Trade and Other Receivables
Receivable from Portfolio Department 301 178
GST receivable from the Australian Taxation Office 3,653 6,225
PAYG receivable from the Australian Taxation Office 85
Other receivables 28 4
Total trade and other receivables (gross) 4,067 6,407
All receivables are expected to be recovered in less than 12 months and are not overdue.
Note 5B: Other Investments
REVC Fund Commonwealth Participation Trust 13,058 11,131
Total other investments 13,058 11,131
Other investments are expected to be recovered in more than 12 months.ARENA holds 18,555,156 (2014: 15,767,998) fully paid “A” class units in the Renewable Energy Venture Capital Fund Commonwealth Participation Trust (Trust). The fair value of this investment is ARENA’s share of the net assets of the audited Trust. The change in the value of the investment is shown against Other Comprehensive Income. (Refer to Note 3D).The principal activity of the Trust is to invest in the commercialisation of renewable energy companies.ARENA’s return from the Trust is initially limited to the capital committed plus interest at the long term bond rate. Any additional return from the Trust is split amongst the unit holders, including ARENA, on an agreed basis.

 

Note 6: Fair Value Measurements

The following tables provide an analysis of assets and liabilities that are measured at fair value. The different levels of the fair value hierarchy are defined below.

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

Note 6A: Fair Value Measurements, Valuation Techniques and Inputs Used

Fair value measurements
at the end of the reporting period
For Levels 2 and 3 fair value measurements
2015
$’000
2014
$’000
Category (Level 1, 2 or 33)* Valuation technique(s)2 Inputs used Sensitivity of the fair value measurement to changes in
unobservable inputs4
Financial assets1
Other investments 13,058 11,131 Level 3 Cost approach Net assets of Southern Cross REVC Fund Commonwealth
Participation Trust at the end of the financial year.
The significant unobservable inputs used in the fair value
measurement of ARENA’s Other investments are the cost of the
investments disclosed in the co-investment arrangement’s
audited financial statements. The cost of these investments is
the basis of the fair valuation. Significant increases
(decreases) in those inputs in isolation would result in a
significantly higher (lower) fair value measurement. Generally,
a change in the assumption used for the cost of investments
within the co-investment arrangement’s audited financial
statements is accompanied by a directionally similar change in
the calculation of net assets of the co-investment
arrangement.
Total financial assets 13,058 11,131
1. The highest and best use of all financial assets are the same as their current use.2. No change in valuation techniques were made during the period.3. Recurring and non-recurring Level 3 fair value measurements – valuation processes
The valuation of Other investments as at 30 June 2015, being ARENA’s holding in the Southern Cross REVC Commonwealth Participation Trust, is based on the annual audited financial statements of the co-investment arrangement. The co-investment financial statements are relied upon in the absence of an active market to determine a fair value. This approach provides an accurate and reasonable valuation as the financial statements are prepared in accordance with the Australian Accounting Standards and are independently audited to ensure the statements are a true and fair representation. ARENA’s policy for determining when transfers between levels are deemed to have occurred can be found in Note 1.
4. Recurring Level 3 fair value measurements – sensitivity analysis for financial assets and liabilities
The use of alternative valuation methodologies for Other investments will not significantly impact the fair value.

Note 6B: Reconciliation for Recurring Level 3 Fair Value Measurements

Financial assets
Other Investments
2015 2014
$’000 $’000
As at 1 July 11,131 1,926
Total gains/(losses) recognised in net cost of
services1
129
Total gains/(losses) recognised in other comprehensive
income2
(860) (1,915)
Purchases of investments 5,724 11,120
Returns of investments (3,066)
Total as at 30 June 13,058 11,131
1. These gains/(losses) relate to the realisation of investments and are presented in the Statement of Comprehensive Income under Net Cost of Services.2. These gains/(losses) relate to the change in fair value and are presented in the Statement of Comprehensive Income under Other Comprehensive Income.

 

Note 7: Non-Financial Assets

2015 2014
$’000 $’000
Note 7A: Property, Plant and Equipment
Property, plant and equipment
Cost 9 9
Accumulated impairment (3) (3)
Accumulated depreciation (1)
Total property, plant and equipment 5 6
No indicators of impairment were found for property, plant and equipment.No property, plant and equipment is expected to be sold or disposed of within the next 12 months.

 

Note 7B: Intangibles
Computer software
Internally developed – in progress 22
Internally developed – in use 854 827
Accumulated amortisation (136) (51)
Total computer software 718 798
 
Total intangibles 718 798
No indicators of impairment were found for intangible assets.No intangibles are expected to be sold or disposed of within the next 12 months.

Note 7C: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment and intangibles

Reconciliation of the opening and closing
balances for 2015
Property, plant and equipment Computer software internally developed
$’000 $’000
As at 1 July 2014
Gross book value 9 849
Accumulated depreciation and impairment (3) (51)
Total as at 1 July 2014 6 798
Additions    
Purchase or internally developed 5
Depreciation/Amortisation (1) (85)
Total as at 30 June 2015 5 718
Total as at 30 June 2015 represented by    
Gross book value 9 854
Accumulated depreciation and impairment (4) (136)
Total as at 30 June 2015 5 718
Reconciliation of the opening and closing
balances for 2014
Property, plant and equipment Computer software internally developed
$’000 $’000
As at 1 July 2013
Gross book value 368
Accumulated depreciation and impairment
Total as at 1 July 2013 368
Additions
Purchase or internally developed 18 481
Depreciation/Amortisation (3) (51)
Other movements
Assets written off (9)
Total as at 30 June 2014 6 798
Total as at 30 June 2014 represented by
Gross book value 9 849
Accumulated depreciation and impairment (3) (51)
Total as at 30 June 2014 represented by 6 798

Note 8: Payables

2015 2014
$’000 $’000
Note 8A: Suppliers
Supplier payables expected to be settled next 12
months
Trade creditors and accruals – related 130 999
Trade creditors and accruals – external 906 1,115
Total suppliers 1,036 2,114
Settlement is usually made within 30 days.
Note 8B: Grants
Public sector
Australian Government entities (related entities) 2,450 779
Private sector  
Australian private companies 736 2,727
Other incorporated entities1 692
Total grant payables 3,186 4,197
1. Relates mainly to funding provided by ARENA to Australian universities for scholarships and fellowships.Settlement is usually made within 30 days.

 

Note 9: Provisions

2015 2014
$’000 $’000
Note 9A: Employee Provisions
Leave 136 74
Total employee provisions 136 74
 
Employee provisions expected to be settled  
No more than 12 months 95 59
More than 12 months 41 15
Total employee provisions 136 74

Note 10: Cash Flow Reconciliation

2015 2014
$’000 $’000
Reconciliation of cash and cash equivalents as per
Statement of Financial Position to Cash Flow Statement
Cash and cash equivalents as per:
Cash flow statement 469 26
Statement of financial position 469 26
Difference
Reconciliation of net cost of services to net cash from
operating activities:
Net cost of services (220,696) (250,354)
Add revenue from Government 244,424 261,942
Adjustments for non-cash items
Depreciation/amortisation 86 54
Write down of assets 9
Gain on Sale of Investment (129)
Movements in assets/liabilities
Assets
(Increase)/Decrease in net receivables 2,367 (660)
(Increase)/Decrease in prepayments (20,897) (36)
Liabilities  
Increase/(Decrease) in employee provisions 62 40
Increase/(Decrease) in suppliers payables (1,077) 839
Increase/(Decrease) in grant payables (1,011) (348)
Increase/(Decrease) in other payable 6 (65)
Net cash from operating activities 3,135 11,420

Note 11: Contingent Assets and Liabilities

2015 2014
$’000 $’000
Claims for damages or costs
Contingent liabilities recognised 500 500
Net contingent assets/(liabilities) (500) (500)
Contingencies

There is one quantifiable contingent liability of $500,000 in respect of a letter of demand received in relation to an ARENA project.

As at 30 June 2015, ARENA was not aware of any unquantifiable or significant remote contingencies.

Note 12: Senior Management Personnel Remuneration

2015 2014
$’000 $’000
Short-term employee benefits:
Salary 570,703 555,087
Board remuneration fees 94,664 137,068
Total short-term employee benefits 665,367 692,155
Post-employment benefits:
Superannuation 68,485 69,440
Total post-employment benefits 68,485 69,440
Other long-term employee benefits:
Annual leave 57,956 57,956
Long-service leave 15,376 15,376
Total other long-term employee benefits 73,332 73,332
Total senior executive remuneration expenses 807,184 834,927
The total number of senior management personnel of 7 individuals (2013-14: 9) includes 5 ARENA Directors (2013-14: 7). Two Directors are personnel from the Portfolio Department and are not remunerated.

 

Note 13: Related Party Disclosures

2015 2014
$’000 $’000
Other transactions with Directors or Director-related
entities
32
Payments to directors/director-related entities 32
There were no related party transactions in 2014-15.In 2013-14, ARENA had a contract for the provision of services in place with SolarFuture Pty Ltd, a director-related entity of Mark Twidell. The contract was to provide high-level advice to assist ARENA to prepare and implement its strategy, manage relationships with key stakeholders, integration of programmes and improving business processes. Mr Twidell ceased as a director in October 2013.

 

Note 14: Financial Instruments

2015 2014
$’000 $’000
Note 14A: Categories of Financial Instruments
Financial Assets
Loans and receivables
Cash and cash equivalents 469 26
Trade and other receivables 28 4
Total loans and receivables 497 30
Available-for-sale financial assets  
Investments 13,058 11,131
Total available-for-sale financial assets 13,058 11,131
Total financial assets 13,555 11,161
 
Financial Liabilities  
Financial liabilities measured at amortised cost  
Trade creditors 1,036 2,114
Grant payables 3,186 4,197
Total financial liabilities measured at amortised cost 4,222 6,311
Total financial liabilities 4,222 6,311
The net fair value of the financial assets and liabilities are at their carrying amounts.
2015 2014
$’000 $’000
Note 14B: Net Gains or Losses on Financial Assets
Loans and receivables
Interest revenue 145 25
Net gains/(losses) on loans and receivables 145 25
Available-for-sale financial assets  
Fair value changes (860) (1,915)
Net gains/(losses) on available-for-sale financial
assets
(860) (1,915)
Net gains/(losses) on financial assets (715) (1,890)
Note 14C: Credit Risk

ARENA was exposed to minimal credit risk as loans and receivables were cash and trade receivables. The maximum exposure to credit risk was the risk that arises from potential default of a debtor. This amount was equal to the total amount of other receivables of $0.028m (2013-14 $0.004m).

The entity held no collateral to mitigate against credit risk. The risk of interest rate movements is deemed to be immaterial due to the way ARENA manages its cash requirements.

Note 14D: Liquidity Risk

ARENA’s financial liabilities were payables. The exposure to liquidity risk was based on the notion that ARENA will encounter difficulty in meeting its obligations associated with financial liabilities. This was highly unlikely due to government funding mechanisms available to ARENA and internal policies and procedures in place to ensure there were appropriate resources to meet its financial obligations.

Note 14E: Market Risk

ARENA held basic financial instruments that did not expose the entity to certain market risks, such as Currency risk, Interest risk and Other price risks.

Note 15: Financial Assets Reconciliation

2015 2014
Notes $’000 $’000
Financial Assets
Total financial assets as per Statement of Financial
Position
17,594 17,564
Less: non-financial instrument components  
Statutory receivables 5A (3,738) (6,225)
Receivable from Portfolio Department 5A (301) (178)
Total non-financial instrument components (4,039) (6,403)
Total financial assets as per financial instruments Note
14A
13,555 11,161

Note 16: Reporting of Outcomes

Outcome 1
2015 2014
$’000 $’000
Note 16: Net Cost of Outcome Delivery
Departmental
Expenses 236,517 264,661
Own-source income (15,821) (14,307)
Net cost of outcome delivery 220,696 250,354

ARENA has a single Outcome which is described in Note 1.1. Net costs shown included intra-government costs that were eliminated in calculating the actual Budget Outcome. Refer to Outcome 1 Resourcing Table of this Annual Report.

The face statements of these financial statements represent the major classes of departmental expense, income, assets and liabilities by outcome and as such they are not repeated in Note 16.

Note 17: Remuneration of Auditors

2015 2014
$’000 $’000
The auditor of ARENA is the Australian National Audit Office (ANAO).
Amounts received or due and receivable by the ANAO for
Financial statement audit services for ARENA 93 90
Total 93 90

No other services were provided by the ANAO.

Note 18: Assets Held In Trust

2015 2014
Monetary assets $’000 $’000
As at 1 July
Receipts 157,749
Payments (59,343)
Total as at 30 June 98,406

Whilst this note should be read in conjunction with Note 1.16 – Grants, the transaction values mentioned above are not linked to any other Statement or Note within these documents.

This note has been primarily added to the Statement set for information purposes only. It provides the reader/user with an indication of Locked Box funding levels.

Statement Key:

Receipts of $157.749m was the amount paid into Locked Boxes by ARENA during 2014-15. This amount includes $2.4m in accrued interest.

Payments of $59.343m are those amounts which have been withdrawn by the project from Locked Boxes in accordance with agreed milestones.

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Acronyms and initialisms

ABIR Advanced Biofuels Investment Readiness
ANAO Australian National Audit Office
ARENA Australian Renewable Energy Agency
ASCI Accelerated Step Change Initiative
ASI Australian Solar Institute
ASTRI Australian Solar Thermal Research Initiative
CARRE Community and Regional Renewable Energy Programme
CEFC Clean Energy Finance Corporation
CEO Chief Executive Officer
CFO Chief Financial Officer
CRI Commercial Readiness Index
CSP/CST concentrated solar power/concentrated solar thermal
EIF Education Investment Fund
ERP Emerging Renewables Programme
EOI expression of interest
FTE full-time equivalent
GFS General Funding Strategy
GST goods and services tax
GW gigawatt
I-RAR Regional Australia’s Renewables Industry Programme
IP Investment Plan
MW megawatt
PGPA Public Governance, Performance and Accountability
PV photovoltaic
RAC Risk and Audit Committee
RAR Regional Australia’s Renewables
RET Renewable Energy Target
REVC Renewable Energy Venture Capital
SHARE Supporting High-value Australian Renewable Energy
Knowledge
TRL Technical Readiness Level
WHS work health and safety

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List of figures and tables

Figures
Fig 1: ARENA, the CEFC and RET 13
Fig 2: ARENA organisational structure at 30 June 2015 21
Fig 3: ARENA’s innovation impact 27
Fig 4: ARENA funding across the innovation chain 29
Fig 5: ARENA programmes across the innovation chain 31
Fig 6: Technical Readiness Level and Commercial Readiness Index
on the innovation chain
32
Fig 7: Indicative ARENA application assessment process 33
Fig 8: ARENA investment portfolio 45
Fig 9: ARENA Board membership 2014-15 56
Fig 10: ARENA Chief Executive Officer 2014-15 60
Tables
Table 1: Amendments to ARENA Act s64 17
Table 2: Planning and reporting framework 2014-15 21
Table 3: Results against ARENA performance measures 2014-15 (at
30 June 2015)
22
Table 4: Agency resource statement 2014-15 23
Table 5: Expenses by outcome 2014-15 23
Table 6: Contribution to Ecologically Sustainable Development
2014-15
51
Table 7: ARENA Board meetings 2014-15 58
Table 8: ARENA Risk and Audit Committee meetings 2014-15 59
Table 9: Financial assistance 2014-15 64

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Index of compliance with annual report requirements

Australian Renewable Energy Agency Act 2011 (section
70)
For each person to whom financial assistance has been
provided, particulars of:

  • name of the person
  • nature and amount of the financial assistance
    provided or committed
  • renewable energy technology or technologies to
    which the assistance relates
64-75
Assessment of the extent to which agreements for the
provision of financial assistance entered into during the
year have progressed, or are expected to progress, the
principle objectives and priorities as stated in the
general funding strategy in force for the year
64-75
Ministerial directions under s. 13 (Minister directs
ARENA to provide advice)
18
Ministerial requests under s. 11 (Minister requests
ARENA to consider funding for specified projects)
18
Australian Renewable Energy Agency (Consequential
Amendments and Transitional Provisions) Act 2011(Schedule 2, Part 2, section 28)
In respect of financial assistance provided under a
transferred Commonwealth funding agreement or ASI Limited
agreement:

  • name of the person
  • nature and amount of the financial assistance
    provided or committed
  • renewable energy technology or technologies to
    which the assistance relates
64-75
Public Governance, Performance and Accountability Act
2013 (section 22), Public Governance, Performance and
Accountability (Financial Reporting) Rule 2015

Annual report content requirements:

Financial
statements prepared by the directors in accordance with
the:

  • Government Policy Orders—which contain the
    requirements for the content of the report of operations of
    a Commonwealth authority for financial years ending on or
    after 30 June 2005
  • Public Governance, Performance and Accountability
    (Financial Reporting) Rule 2015 —which outlines the
    requirements for the preparation of annual financial
    statements by Commonwealth authorities

Auditor General’s report to the Minister on those
financial statements, prepared under the Public Governance,
Performance and Accountability (Financial Reporting) Rule
2015 in relation to ARENA’s operations as required by the
Finance Minister, including but not limited to annual PGPA
Act compliance reporting under the PGPA Framework

76-109
Commonwealth Authorities (Annual Reporting) Orders 2011
(Public Governance, Performance and Accountability
(Consequential and Transitional Provisions) Rule)
Directors (para 13)

  • names, qualifications and experience
  • executive director or non-executive director
  • meeting attendance
  • approval and preparation of report of operations (para 6)
5, 18-20, 56-59
Disclosure requirements for government business
enterprises (para 20)
NA
Exemption from the Orders (para 7) NA
Indemnities and insurance premiums for officers (para
19)
53
Index of requirements (para 21) Yes
Judicial decisions and reviews by outside bodies (para
17)

  • decisions of administrative tribunals
  • reports by the Auditor-General, a parliamentary
    committee, the Commonwealth Ombudsman or the Office of the
    Australian Information Commissioner
53
Enabling legislation (para 10)

  • enabling legislation, including a summary of agency’s objectives and functions
16
Ministerial directions and other statutory requirements
(para 12)

  • directions
  • General Policy Orders
  • other legislation
18
Organisational structure (para 14)

  • structure
  • location/s of operations
  • statement on governance, including
    • board committees and responsibilities
    • education and performance review processes for
      directors
    • ethics and risk management policies
18-19, 20-21, 51
Related entity transactions (para 15) 53
Responsible minister (para 11) 18
Key activities and changes (para 16)

  • significant events decisions or issues which may
    affect the entity or any of its subsidiaries (section 19 of
    the PGPA Act)
  • operational and financial results
  • state of affairs or principle activities
  • amendments to enabling or other legislation
18, 24-47, 76-109
Standards of presentation and language and design (paras
8–9)
Yes
Subsidiaries (paras 14 and 18) NA
Environment Protection and Biodiversity Conservation Act
1999 (section 516A)
Accord between activities and ecologically sustainable
development (ESD) principles
51
Contribution of outcomes to ESD 51
Effects of activities on the environment 51
Measures to review and minimise effects on the
environment
51
Freedom of Information Act 1982 (Part II) Information Publication Scheme statement 53
Work Health and Safety Act 2011 (Schedule 2, part 4) Initiatives 50
Investigations 50
Notifiable incidents 50
Other matters 50
Outcomes 50

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