Address by ARENA CEO Ivor Frischknecht at the Solar 2014 conference in Melbourne.
Thank you for the opportunity to speak today.
I would like to acknowledge the traditional owners of the land on which we meet, and pay my respects to their elders past and present.
Before I get to the substance of today’s speech, I’d like to acknowledge the long history of solar.
This is the Australian Solar Council’s 52nd annual conference, and just last month marked 60 years since the first solar cell was unveiled by Bell Laboratories.
It’s important to pause and remember those earlier times.
They are a reminder of how far we have come and help us to appreciate the significance of the technological and economic changes underway today.
They also reinforce the factors that have brought solar energy to this point: vision, perseverance, and prudent investment to ensure success over the longer term.
ARENA’s historical footprint is much smaller, but no less focused on the future than Bell Laboratories was last century.
ARENA was created two years ago with bipartisan support as an independent government agency. Our mandate – to improve the competitiveness of renewable energy technologies and their uptake – is spelt out in the ARENA Act.
Our agency was provided with $3.2 billion to carry out this mandate, although governments past and present have since signaled their intention to reduce that funding to around $2.5 billion.
The current fiscal environment is tight, and the Government has made it clear that it will deliver a tough Budget next week.
ARENA will no doubt be expected to do its share of the heavy lifting and we anticipate next week’s federal budget will bring further cuts.
It’s important to note however that none of the cuts will take effect until the ARENA Act is amended by Parliament.
These announcements do not affect ARENA’s funding for the current year, or funding for the 181 projects already underway.
ARENA’s funding and scope extends to 2022, which makes us unique in Australia and possibly the world.
The Government has made clear why it is vital that Australia looks to the future when making today’s policy and investment decisions. And that is to ensure we make the investments that will best equip Australia to be economically prosperous and globally competitive in the future.
That is exactly what ARENA is positioned to do.
In particular ARENA is set up to help technology proponents secure financial backing over timeframes that are longer than usually acceptable in the commercial market.
We are helping to address this market failure by strengthening investor confidence and the bankability of the most promising technologies.
Commission of Audit
Earlier this month, the Commission of Audit’s report to the Government was released.
While I recognise the Audit is a report to the Government and not from it, the commissioners’ rcommendations will undoubtedly inform government decision-making.
On this basis I feel it’s important to correct the Audit’s observation that ARENA duplicates the work of other organisations or programs.
No other agency supports projects along the commercialisation pathway from basic laboratory research to large-scale pre-commercial activities.
No other agency generates both the technology push and market pull that will ultimately deliver the most prospective renewable energy technologies to market.
And while ARENA aims to increase the use of renewables in Australia, we do not subsidise the use of commercial renewable energy technologies like the Renewable Energy Target.
ARENA makes commercially rigorous investments
Instead we make commercially rigorous investments using technology readiness levels developed by NASA 30 years ago to hasten the renewable technologies of tomorrow – more affordably and over shorter timeframes.
We’ve also developed a commercial readiness index (or CRIs), which are used to assess the projects that we consider funding. This means a project must demonstrate a viable commercial endpoint to be eligible for ARENA support.
This rigorous approach ensures we select only the projects that will deliver the affordable renewable energy technologies that can help make Australia’s future energy supply mix diverse, flexible, reliable and secure.
Solar industry must not rest on its laurels
Solar technologies are a large part of ARENA’s work. Around 60% of our $1 billion of committed funds support 140 solar energy projects, research fellowships and PhDs out of our total 181 projects.
Looking at the impressive gains that solar has made over the past few years, we must nevertheless resist the temptation to assume the hardest work has been done.
In the past six years 1.2 million solar PV connections have been made to the network, representing 14%of all households. This brings Australia’s solar PV capacity to 3.4GW, surpassing the total capacity of wind which is 3.2GW.
Combined with 800,000 solar water systems and heat pumps, this amounts to two million solar installations.
Household solar is literally changing the shape of electricity demand in Australia, with lower income households and regional communities being the most keen to take it up.
These households and communities have been attracted by the technology’s capacity to help reduce power costs, provide control over energy use, and lower greenhouse gas emissions.
Giving households greater energy-autonomy adds to the benefits that solar brings to the nation.
On a larger scale, the increased uptake of solar helps to create the diverse energy mix that underpins any responsive, reliable and secure energy supply.
Even so, solar has some way to go.
Australian researchers hold the world record for solar cell efficiency but this needs further refinement if solar energy is going to become cost-competitive with fossil energy.
Solar solutions that meet baseload demand must be proven, and ways found to overcome grid integration challenges.
Perhaps most importantly, affordable storage technologies must be brought to market as soon as possible.
It’s also important to remember that solar’s challenges are not just about technology and cost.
Solar energy systems can be applied at the business level today, yet some of the business community still treats the technology with scepticism. Without uptake by business and industry, renewables will remain a niche energy provider.
ARENA is helping to address these hurdles.
At the most basic level, solar’s future depends on increasingly efficient ways of harvesting the sun’s energy.
ARENA’s portfolio of investments at the R&D stage demonstrates the technological breadth – and creative depth – of the solutions being explored.
Here are a few examples.
One of the R&D projects we’re supporting is developing a new way to increase light absorption in solar cells using a technology called plasmonics.
This project by the Australian National University uses nanoscale (or microscopic) metal particles on the plasmonic cell’s surface to act like tiny antennas, collecting and directing solar radiation into the cell.
It aims to increase the efficiency and therefore the cost of thin solar cells, which make up the most rapidly growing section of the solar cell market.
We’re also supporting a University of Newcastle project that is creating a thermionic energy converter from materials used to propel spacecraft, allowing it to operate at 1400 degrees Celsius.
This ability to operate at very high temperatures increases the amount of energy available for conversion to electricity, making thermionic energy conversion ideal for CST applications.
At the demonstration level, we’re supporting BT Imaging’s development of inline inspection tools that detect micro-cracks in silicon wafers and cells during the manufacturing process.
The tools aim to reduce the variable yields and product quality that cost the PV manufacturing industry around $2 billion each year.
On a much larger scale, the sharing of knowledge gained through the construction and operation of utility-scale, grid-connected solar power is an essential step towards overcoming early mover disadvantages. For solar farms, these include:
- higher development costs;
- higher contingency margins, which lead to higher construction costs; and
- higher borrowing costs.
Collectively, these additional costs can easily add 30% to a project, making a subsidy essential if large scale solar solutions are to be compete with wind or fossil fuels.
The knowledge sharing and demonstration by AGL will lower costs for those who come later. The project is receiving support from ARENA as well as the NSW Government.
The facility at Nyngan is expected to create more than 300 construction jobs, deliver 102 MW of renewable power and span 250 hectares. The Broken Hill plant will generate 53 MW and occupy approximately 140 hectares.
On completion in 2015, the two facilities will be the largest solar power stations in Australia.
This project will not only generate valuable know-how in deploying large-scale solar PV and help support job creation in regional NSW.
Jobs are also being created elsewhere in Australia, with the IXL Group of companies – based in Geelong – being awarded the contract to deliver the large-scale framing system.
AGL has already learned valuable lessons during the planning stages of the project, which ARENA has shared with the industry in a guide to gaining regulatory approvals.
Sharing knowledge in this way helps build investor confidence, reduce risk and costs on future projects, and paves the way for more solar energy plants to be built across the country.
The AGL project is one way to demonstrate commercial viability and overcome first mover disadvantage.
Another way to establish large-scale renewables, but at less cost and with shorter timeframes, is the hybridisation of renewables with existing fossil-generation capacity.
Hybridisation provides the opportunity to leverage existing infrastructure and establish renewable energy on a large scale without the attendant costs.
It’s a lower-cost, reduced-risk way to demonstrate renewables.
CS Energy’s Kogan Creek Solar Boost Project involves a 44 MW solar thermal addition to the existing 750 MW Kogan Creek Power Station in south west Queensland.
The project, which has received support from ARENA, will augment the feedwater heating system to increase the station’s electricity output and fuel efficiency, allowing it to produce more electricity with the same amount of coal and further reduce greenhouse emissions.
In another project that has support from ARENA, RATCH-Australia is assessing the viability of converting the existing 180 MW coal-fired Collinsville Power Station in Queensland to a 30 MW hybrid solar thermal/gas power station.
ARENA has also been driving exciting work to help address challenges integrating renewables into the grid. We have identified an increasingly urgent need to coordinate the work that has already been done, or is in the pipeline.
Advice from industry indicates organisations tend to work in isolation, rather than draw on others’ experiences, because that information isn’t readily available.
In response to this feedback, in coming months, ARENA will compile a centralised repository of information that will provide industry with easy access to all applicable work and results.
Without proven and affordable storage technologies, solar energy will remain exposed to simplistic criticisms about its availability.
We’re supporting CSIRO to develop a solar thermal energy storage system that can operate at up to 750 degrees Celsius, which will increase its efficiency and lower its cost.
The project involves identifying the most suitable materials, designing and creating the system, and integrating it with the CST facility at CSIRO’s National Solar Energy Centre.
The Barbara Hardy Institute at the University of South Australia is also working on solar energy storage, with ARENA’s help, in a project that will establish a world-class facility to test newly developed high-temperature storage systems and technologies operating at up to 900 degrees Celsius.
It will also design, construct and test two thermal storage systems using new materials (called phase change materials or PCMs) and heat transfer techniques with the aim of reducing the cost of storage.
ARENA’s activities go beyond supporting the development of renewable technologies.
For Australia to get the greatest benefit from its renewable resources and technologies, we must also have effective forecasting tools.
ARENA has helped Geoscience Australia develop its Australian Solar Energy Information System by funding the development of better satellite models for depicting solar radiation as well as the reprocessing of historical data with these improved model processes.
The project also involved the purchase, installation and operation by the Bureau of Meteorology of eight additional solar radiation ground monitoring stations to provide additional data with which to validate and improve satellite solar exposure models.
Australian National University: Forecasting distributed solar energy production Another project that we are supporting, from the ANU, is conducting real-time analysis of some of the 1.2 million residential PV systems widely distributed around Australia.
The output of these systems, when mapped in real time, is expected to provide accurate estimations of cloud characteristics such as location, motion and opacity, when matched to the PV systems.
The project will also help to develop an experimental network of low-cost all-sky cameras that will increase the number of cloud detection methods available for analysis.
These will provide power utilities with their first tools for managing the technical issues associated with large amounts of rooftop PV feeding into the grid.
ARENA has supported development of the APVI’s live solar PV map, which tracks the uptake and impact of PV across Australia to help inform research and investment decisions.
The map incorporates information on how much PV is installed in Australia, including estimated electricity generated each year and in which locations (identified by postcode).
It uses market data and trends, historical and live performance data covering all main climate regions, and the contribution to Australia’s load by electricity market region.
Future enhancements will include the addition of a geographic information system (or GIS)-based tool for assessing PV potential in urban environments, accounting for roof area, tilt, orientation and shading.
These projects are just a taste of the nearly 200 projects and research scholarships ARENA has supported since its inception almost two years ago.
It is impossible to do justice to all of them in one speech but you can find out more about ARENA’s projects on our website.
Around 150 of these were inherited from the Australian Solar Institute at the beginning of last year.
Since then we have taken on complementary new projects, in accordance with our strategic priorities.
And we have established a strong portfolio of prospective solar energy technologies that are large and small, static and transportable, thermal and PV, and have grid as well as non-grid applications.
We know that not every technology will make it through to commercialisation, but there are valuable lessons to be learned from those that do not. That’s a normal and acceptable part of the innovation process.
Back in 1962, the first newsletter of the Australian Solar Council’s predecessor explained the organisation’s role as bringing “researchers together, and in touch with industry, so each could learn from the others’ experiences and better address emerging needs.”
That commendable objective aligns neatly with what ARENA does today, and will continue to do in the future.
The lessons learned, skills developed and experience gained through ARENA’s projects will help position Australia to exploit its excellent solar resources using affordable technologies.
This will keep us at the leading edge, not only in solar research, development and deployment but also in being one of the world’s most productive and successful economies.