Despite a strong track record on renewables innovation, Australia may be running out of time to become a clean energy export powerhouse — and further funding for homegrown innovation is now in jeopardy.
The budget for the Australian Renewable Energy Agency (ARENA), Australia’s flagship energy innovation funding body, is set to run out this year, and the current administration has yet to confirm that more cash will be allocated.
Australia’s ruling Liberal Party has tried to do away with ARENA in the recent past. While the energy agency appears to enjoy broad cross-party support, it remains to be seen where the coal-friendly Liberals’ priorities will lie in a post-COVID-19 economy. Concern over the future of ARENA led progressive think tank The Australia Institute to issue a paper in January calling for the urgent approval of legislation to extend the agency’s funding.
While ARENA’s grant-making funding officially ends in mid-2022, the nature of energy project planning means the agency will effectively cease making new investments this year, said the Australia Institute’s paper.
ARENA’s supporters say continued funding will be key to helping Australia decarbonize its grid during the Paris climate agreement period, to say nothing of cashing in on the growing global market for clean energy technologies. Companies in Australia are pursuing a series of big bets in emerging energy markets such as long-duration storage and green hydrogen.
Cynics might counter that fostering clean energy innovation hasn’t been Australia’s problem; rather, the challenge is getting those ideas to market. So far, ARENA has supported 538 projects with AUD $1.58 billion (USD $1.08 billion) in grant funding since 2012.
Alongside the agency, a body called the Clean Energy Finance Corporation is responsible for investing AUD $10 billion (USD $6.9 billion) in clean energy projects, and as of the end of last year, it had mobilized a further AUD $26 billion (USD $18 billion) in private capital.
The CEFC has backed a range of technologies, including electric vehicle charging infrastructure, battery storage, lightweight carbon fiber wheels that reduce emissions and smart energy systems, Executive Director Monique Miller said in an email.
Yet while Australia has produced a number of novel energy technologies, the country has been notably unsuccessful at building an export industry out of them, industry figures say. And it’s a problem with a long history.
Overcoming “cultural cringe” factor
Two commonly cited examples of Australian energy innovation came out of the University of New South Wales in the 1980s: the vanadium redox flow battery and passivated emitter and rear cell (PERC) solar technology. Both have been commercialized around the world — just not by Australian companies. Australia’s promising UltraBattery technology was bought by a U.S. company in 2010, and Australian concentrated solar power (CSP) technology developer Ausra was sold to French energy giant Areva the same year.
“The challenge for Australia, which has been well documented, is the transition from successful [research and development] to successful commercial business,” said Will Mosley, head of business development at Victoria-based RayGen Resources, which has developed a novel solar generation technology.
“Though we have a strong R&D pipeline, there is a breakdown — driven by investor risk appetite and lack of available capital — to supporting commercialization of the R&D breakthroughs,” Mosley told Greentech Media.
RayGen is an example of an innovative Australian clean energy company. Its technology borrows elements of concentrated PV, power-tower CSP and steam-based thermal storage, and it has a manufacturing facility that can produce 25 megawatts of capacity per year.
ARENA-backed RayGen says its system can deliver 750 kilowatts of power per square meter of plant space, with a 32 percent system efficiency and 10 hours of storage. The company has a 3-megawatt plant in operation and a 4-megawatt project in the works.
But Mosley said winning business in Australia isn’t easy for homegrown companies. “It is actually easier to raise money in Australia as a foreign company,” he said. “The joke is, ‘You should tell us you’re a German technology firm.’”
This “cultural cringe” factor puts Australian energy innovators at a disadvantage, even as foreign companies such as Fluence, Hydrostor and Tesla proudly announce reference projects in the country.
Mixed signals on the road ahead
The question now is how much Australian companies will benefit as the country sets its sights on a decarbonized energy sector.
Last month, the federal government opened consultation on a technology investment roadmap featuring more than 140 potential decarbonization technologies. The administration hopes to reduce this list down to five or six leading contenders, said Jill Cainey, general manager of networks at Energy Networks Australia, an industry body representing electricity and gas network operators.
“During the discussions on the roadmap, Australia was described by one participant — not the government — as a ‘technology taker’ rather than a technology maker,” Cainey said in an email interview. “I think that’s broadly true.”
The good news for ARENA is that the role of the agency is highlighted throughout the government document. Observers feel it would be politically challenging to ax the body. The analysis by The Australia Institute suggests that real animosity toward ARENA was confined to the brief leadership of former Liberal prime minister and climate skeptic Tony Abbott.
Against this backdrop, however, Australian investment into large-scale renewable energy fell 60 percent from 2018 to 2019, dampening the outlook for technology commercialization. And although the government has pledged to review funding for ARENA based on the outcome of the technology roadmap consultation, time is running out for the agency.
“Effectively from the end of this month, ARENA won’t be able to provide any further grants,” said Cainey.
That’s a worry for companies such as RayGen and thermal storage innovator 1414 Degrees, which this month acknowledged challenges in scaling up.
Getting Australian cleantech into the wider world will likely require a mindset shift away from cultural cringe, but without basic funding, the country won’t even be in the race. “This is a challenging moment for the innovation ecosystem,” said Mosley.