Australia’s RET is designed to ensure that 20 percent of Australia’s electricity comes from renewable sources by 2020. The RET continues to act as the principle driver of new renewable energy investment across Australia and will achieve a target of 33,000 GWh of renewable electricity by 2020. The renewable energy sector has received increased certainty this year with the Australian Parliament passing renewed legislation committing to the target after a review process.1
No further reviews of the scheme are to occur until it ends in 2020.
In addition to the RET there are also a number of policies, programs and incentives, with key initiatives specifically related to renewable energy which are described below.
ARENA is an independent agency established by the Australian Government on 1 July 2012 and operates under the ARENA Act 2011. It has two key objectives: to improve the competitiveness of renewable energy technologies, and to increase the supply of renewable energy in Australia. It has approximately AUD2.5 billion in funding for renewable energy projects and research and development activities.2 To date, it has committed AUD1.1 billion to 230 projects across a range of technologies.3
Listed below are ARENA’s current initiatives.
Emerging Renewables Program (ERP)
The ERP is focused on supporting renewable energy technology at the development, demonstration and supported commercial stages of the innovation chain. Ultimately the aim is to lower the cost of energy produced by renewable energy technologies to a point where they are better able to compete with traditional fossil-fuel technologies. Funding is available under two categories:
Supporting High value Australian Renewable Energy Knowledge (SHARE) initiative is in addition to these two categories and seeks to build on the store of publicly-available knowledge about renewable energy technologies and approaches that are best suited to Australia. The SHARE imitative can support the direct commissioning research, studies or knowledge products that meet knowledge gaps within the industry or help overcome barriers to its growth in priority areas including understanding renewable energy potential, grid integration and international engagement.
Research and Development Program (RDP)
The RDP is focused on supporting R&D activities that will contribute to increasing the commercial deployment of renewable energy.
Up to AUD300 million in grants has been allocated to develop ARENA’s R&D portfolio.4 This initiative has had two funding rounds to date which have focused on solar excellence and industry collaboration respectively.
Accelerated Step Change Initiative (ASCI)
ASCI supports exceptional, breakthrough projects that are not otherwise eligible under existing ARENA programs. Expressions of interest from Australian and international companies and research institutions will be accepted until 2018. Eligible projects must require an ARENA contribution of AUD5 million or more, with the overall project cost expected to be more than AUD20 million. Projects that are at the research and development (R&D) phase of a renewable energy technology or include a technology that has yet to be proven at the pilot scale are not eligible. Projects can, however, include R&D components where they assist in the demonstration, commercialisation or deployment of a renewable energy technology.
The CEFC was established by the Australian Government under the Clean Energy Finance Corporation Act 2012 and is a commercially oriented financier which aims to make a positive return on its investment. The CEFC co-finances and invests, both directly and indirectly, in clean energy projects using a range of financial instruments but does not issue grants. After its first 2 years in operation the CEFC has committed over AUD1 billion in investments across 70 projects with a total value of AUD3 billion.5 The CEFC focuses on technologies and projects that are in the later stage of development and those that can produce a positive rate of return and an ability to repay capital.
The Southern Cross Renewable Energy Fund is a 13-year, AUD200 million venture capital fund, operated by Southern Cross Venture Partners. The fund was initially established under the Australian government’s AUD100 million Renewable Energy Venture Capital Fund (REVC) with the Government’s contribution matched by an additional AUD100 million contributed by Softbank China Venture Capital.
The R&D Tax Incentive scheme is a broad-based program accessible to all industry sectors. In many instances, activities conducted as a part of renewable energy development may be eligible for the R&D tax incentive. Currently the program offers two tiers of incentive based on the turnover of the company in question:
Smaller companies (those with an aggregated turnover less than AUD20 million) can access a refundable 45 percent R&D tax offset, provided they are not controlled by income tax exempt entities; and
Larger companies (those with an aggregated turnover of AUD20 million of more) can access a non-refundable 40 percent R&D tax offset.
Only the first AUD100 million of R&D expenditure per income year receives R&D tax offsets above the corporate tax rate, and unused non-refundable offset amounts may be able to be carried forward to future income years.
There are no national-based FITs. However, a number of state-based initiatives exist for small-scale generation. The Australian Capital Territory (ACT) previously ran a Large Scale FIT Scheme which provided the ACT government with power to grant FIT entitlements up to 210 MW of generation capacity.
20 percent reduction by 2020.
In addition to the funding initiatives described above, the government also has a number of policy levers and numerous other programs.