New Energy Insights: Delivering Something for Nothing… Expanding ARENA’s mandate

This article is part of our New Energy Insights series from our Energy, Infrastructure and Resources team. Stay tuned for regular updates and commentary on topical issues across the sector.

What has happened?

The release of the 2021-22 Federal Budget on 11 May aimed to fix the damage caused by the COVID-19 pandemic through the course of 2020. 

New regulations have been introduced which enable ARENA to fund a broader range of clean energy technologies. A Government spokesman has described these changes are getting “more horses into the race”. 

Guiding this will be last year’s investment of $1.6 billion over the next 10 years to stabilise ARENA’s future and create an affordable deployment of priority-low emission technologies identified in the Annual Low Emissions Technology Statements (LETS) and Technology Investment Roadmap. These include supporting more carbon capture storage projects and “clean” hydrogen produced from coal and gas.1

What does this mean?

Since its inception in 2012, ARENA has played a critical factor in funding and raising the profile of renewable energy technologies such as grid-scale batteries, pumped hydro, and large-scale solar. The new regulations confirm the overhaul of ARENA’s purpose indicated 7 months prior by the Morrison government, indicating a move away from wind and solar projects and more focus placed towards hydrogen-based projects. 

ARENA have spent approximately $300m supporting early stage broad scale solar projects during its initial mandate (including through the solar flagships program).

ARENA CEO Darren Miller has highlighted the need to move forward from supporting “pure renewable energy generation technologies” and now assist in integrating those technologies towards variable renewable energy. 

What next?

Increasing the scope of ARENA broadens the government’s ability to financially source both renewable and non-renewable low emission projects. The changes are encouraging, solidifying ARENA as a key agent of change for a Federal Government now positioned to build a more functioning renewable future. However, there should be considerable industry concern regarding the feasibility of expanding the mandate, on a nationwide investment of $1.6 billion over the next 10 years. You cannot expect something for nothing – where is the additional funding to meet this broadened mandate?

If Australia is serious about its investment into various technologies to reduce emissions, there needs to be more direct and specified funding towards ensuring the successful transition of expanding ARENA’s mandate. Australia cannot continue to project a desire to become a renewable energy powerhouse, without adequate funding and appropriate planning. 

The current investment pales in comparison to countries like Canada, which will invest $10 billion over the next 3 years to concentrate on infrastructure projects that will prioritise investment in clean power, zero-emission buses, and energy-efficient building retrofits. 

It’s great to get ‘more horses into the race’ but the horses need feed, trainers and paddocks to play in.

Veno Panicker is the lead Construction and Infrastructure partner within Hamilton Locke’s Energy Infrastructure and Resources team and has a strong track record in EPC contracting and the delivery of EPC projects across Australasia, including adjudication, litigation and arbitration.

Rahul Tijoriwala is a paralegal specializing in Construction and Infrastructure within Hamilton Locke’s Energy Infrastructure and Resources team.