This section provides reports from the ARENA Chair and CEO on our performance for 2017-18, as well as an overview of our highlights for the year.
This year ARENA has broadened and deepened its work across the renewable energy sector and our efforts are helping to forge pathways for Australia’s energy transformation.
Over the past 12 months, ARENA’s financial assistance to a range of projects has unlocked value through smarter, more efficient ways of producing and using energy. This is helping to reduce costs, boost efficiency and increase the uptake of renewable energy.
Accompanying this, there has been unprecedented interest in co-investing with ARENA to keep pushing the frontiers of innovation and test new markets and technologies.
Since its inception, ARENA has provided $1.2 billion of targeted financial assistance, which has helped unlock almost $3 billion in additional private and public sector investment. This partnership approach has helped accelerate Australian innovation and provided the means by which the benefits and outcomes of ARENA’s work are being felt across the economy.
Australia’s energy transformation is dynamic and gathering pace. Solar and wind are the cheapest forms of new generation available, rapidly bringing renewable capacity online and with it a wave of other technological advances. As the private sector’s appetite for investment in the sector accelerates, ARENA is supporting innovations that connect the elements of this new energy system to make our energy transition stable and affordable. We have also broadened our work to inform the regulatory and market reforms necessary for Australia to benefit most from these new technologies.
For example, ARENA has continued to focus on the transition of grid-scale generation and storage like big batteries and pumped hydro. At the same time we have increased our support for projects that meet the new challenges and opportunities of distributed energy, which is the other major shift underway as Australian households and businesses rapidly change the way they source and use energy.
Large numbers of Australian households and businesses continue to invest in their own solar systems and, in increasing numbers, battery systems. This collection of small-scale energy assets known as distributed energy resources (DER) creates unique opportunities and challenges. If these consumer energy assets can be orchestrated and optimised to work harmoniously, DER could save consumers money on their power bills.
ARENA is playing a critical role in ensuring this part of the energy system delivers secure and reliable supply, and the DER ‘revolution’ is successful for consumers and producers by delivering a full range of economic benefits. Our work in the DER space has been at the cutting edge, including the program of work we commenced this year in collaboration with the Australian Energy Market Operator, the Australian Energy Market Commission and the distributed energy sector to overcome technical, economic and regulatory challenges for DER.
As part of the Board’s ongoing review and recalibration of the Agency, our priorities have evolved to better anticipate and address the needs of Australia’s changing energy system. We launched a new Investment Plan in 2017, which sets out four investment priorities and outlines the fundamental characteristics that ARENA seeks in the projects we support. These are:
ARENA-supported projects are developing a range of technologies, including batteries and pumped hydro, to store renewable energy for later use or to help stabilise a renewables-powered grid. We have continued our important work in examining the expansion of some of Australia’s existing pumped hydro assets including the Snowy and Tasmanian schemes. This year ARENA supported world-leading efforts to identify and develop off-river pumped hydro storage such as using old mine pits or the ocean as reservoirs, identifying some 22,000 potential pumped hydro sites across Australia.
As the global economy becomes increasingly focused on low emissions energy, it is important that Australia is well-positioned to export renewable energy as primary energy (e.g. as hydrogen or ammonia) or embodied in processed raw materials. With the right investment and innovation, Australia will be able to satisfy demand for low emissions energy in countries with limited renewable resources of their own. Through our investment approach, ARENA is helping to drive innovation in Australia’s renewable export industry and position it for long-term growth.
In 2018 we said farewell to our CEO Ivor Frischknecht. Ivor had led ARENA since it began in 2012, building a strong, successful and commercially-driven government investment organisation that is helping to shape Australia’s energy future. I would like to take this opportunity to thank him on behalf of the Board for his leadership, counsel and hard work and wish him every success in the future. We also look forward to continuing this work with ARENA’s new CEO, Darren Miller, who commenced in August.
I wish to thank those members of the ARENA Board whose terms concluded this year – Maria Atkinson AM, Jonathan Jutsen and Dr Katherine Woodthorpe AO – for their valuable contribution to ARENA’s strategic direction and work. We also welcomed the appointment of three new Board members – Samantha Hogg, Dougal McOmish and Stephanie Unwin – who bring with them experience and knowledge from across the energy sector.
Thank you to our Minister during the reporting period, the Hon Josh Frydenberg, for his support throughout the year and his strong interest in ARENA projects and initiatives. We look forward to working with our new Minister, the Hon Angus Taylor.
Finally, I would like to acknowledge the contribution of ARENA workers and that of the large number of individuals, businesses and organisations that have worked with ARENA during the past 12 months. Their enthusiasm, innovation and commitment is critical to the success of Australia’s exciting energy transformation.
On behalf of the Australian Government, ARENA collaborates with the research community, business, energy market bodies and state and territory governments to identify and unlock the benefits of renewable energy for the Australian people and economy. It is a unique role as we help to deliver what renewable energy developers cannot do on their own, due to the early stage of the technology, the high cost of pilot projects, a lack of local know-how or immature supply chains.
ARENA’s most high-profile achievement to date has been to help reduce the cost of utility-scale solar so rapidly that it is now commercially competitive with wind energy. We did this by running a competitive auction to establish 12 Australian large-scale solar (LSS) farms in just two years.
The LSS funding round was one of the primary factors that drove the cost of solar so low that more than 20 gigawatts of capacity is in advanced development, which at peak output will be about half the existing capacity of the national electricity market. Most of the 12 LSS projects will be operational by the end of 2018, tripling the amount of large-scale solar electricity generation in Australia.
At the small end of the spectrum, record solar panel installations on the rooftops of Australian households and businesses is propelling Australia’s transition not only to a more renewable energy system, but a more distributed one.
To assist policy-makers along with the developers and users of distributed energy resources (DER) with this transition, ARENA has expanded its range of DER projects accordingly. These now include projects that use rooftop solar, batteries in homes, smart inverters and even an ‘intelligent’ pool pump to help make the electricity system more reliable while saving households money.
The grid could get substantial amounts of energy from DER, although more demonstrations and trials are needed to overcome technical, commercial and regulatory barriers. For example, two ARENA projects involve linking households that have rooftop solar and battery storage to create virtual power plants that can not only power individual homes but could also send power into the grid during periods of high demand.
ARENA also collaborated with the Australian Energy Market Operator (AEMO), the Australian Energy Market Commission and network companies this year to launch a $12.5 million funding round to support pilot projects and studies focused on integrating DER into Australia’s electricity system. Last summer we worked with AEMO on a demand response trial to take pressure off the electricity grid during times of peak demand.
We also worked with the market operator to determine whether wind farms can provide the grid stability services typically provided by traditional sources of electricity. We also supported projects that use smart devices to better integrate renewables into the grid.
ARENA continued its long-standing work demonstrating the value of renewables to communities and businesses in regional and remote Australia. As a result, it is now normal practice for off-grid energy projects to consider and use renewables as part of their energy mix, albeit often at low levels to begin with.
Waste-to-energy is another opportunity that ARENA has been helping to realise. During the year we worked on a number of proposals that use waste otherwise destined for landfill as feedstock for energy projects. We funded a feasibility study into an energy from waste facility at EnergyAustralia’s Mount Piper power station. We also completed a project that converts effluent and organic waste at an abattoir into biogas that is being used to produce electricity for the facility.
ARENA continued to foster innovative research and development during 2017-18, providing $29.2 million to support 20 new solar research projects and approving $22.1 million for 16 hydrogen projects that could pave the way for Australia to be one of the world’s leading renewable energy exporters.
We used knowledge and projects to identify regulatory challenges to the increased uptake of renewables and help energy market regulators update the rules. Learnings from the demand response program, for example, helped AEMO develop rule change requests to enable the creation of reserves to ensure greater system reliability. ARENA’s support also directly contributed to the final design of the Australian Energy Regulator’s Demand Management Incentive Scheme.
In partnership with the Clean Energy Finance Corporation (CEFC), we also continued to jointly manage the Clean Energy Innovation Fund, making nine investments to date in groundbreaking clean energy projects to help them reach the next stage of commercialisation.
Finally, I am honoured to join ARENA as the new Chief Executive Officer to continue the groundbreaking work started by the inaugural CEO, Ivor Frischknecht. This year ARENA delivered an outstanding range of renewable energy projects, which has only been possible due to Ivor’s entrepreneurial leadership and drive, the hard work, passion and talent of the ARENA team, and the input of our advisory panel.
I look forward to continuing ARENA’s work, bringing Australia’s nascent renewable energy industry closer to the economic and environmental powerhouse that it is destined to become.
$26.0m Australian Capital Territory
$508.9m New South Wales
$35.4m Northern Territory
$60.9m South Australia
$79.6m Western Australia
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