Is ARENA about to be made-over or done-over?

The Federal Government has signalled changes are coming to the operation and direction of how new low emissions technologies are to be developed with sweeping changes to the Board of the Australian Renewable Energy Agency (ARENA).

Four of the seven person Board were replaced on Friday including the chair, Martijn Wilder, in a reshuffle that was signalled in March, along with discussion about how and how much it would be funded beyond 2022, including talk of using profits from the Clean Energy Finance Corporation (CEFC) to fund it. But more on that later.

Significantly, the release of the Federal Government’s National Hydrogen Strategy in late 2019 involved the creation of the new departmental team to roll the strategy out. It was not run through ARENA, although it has contributed to the funding with $70 million to be spent on new hydrogen electrolysed technologies.

ARENA is also running the Federal Government’s Bioenergy Roadmap, although this is expected to be completed by the end of the year. All up, ARENA is estimated to have around $70 million left in funding for renewable projects. None of these activities suggest the Federal Government has committed to the agency’s long term future.

There has been long-standing conservative antipathy towards ARENA, and to a lesser degree the CEFC, since they were created by the Gillard Government in 2012. The hostility appears to have been more ideological than technical, a disquiet with the efficiency and effectiveness of a government agency writing large cheques for “green” technology development on top of subsidies via the Renewable Energy Target. Fervent campaigning to save ARENA by left-leaning activists and vested interests probably hasn’t helped either.

The original objective of ARENA was broad: research and development, demonstration and commercialisation of renewable energy projects, the idea being that interesting ideas needed help to discover if they could deliver a commercially viable product.

The CEFC would then work as a co-banker with commercial banks to take the best of these ideas to market. Given the higher risks associated with emerging technologies, its support was seen as critical to enable finance.

In practice the flow of wonder renewable technologies was thin: geothermal and wave technologies tried but failed, solar thermal couldn’t compete with solar PV. Much of the most useful work done by ARENA has been is supporting field applications of renewables to prove how they might work, like in off-grid mining sites, or technologies and techniques to manage integration of higher levels of renewables.

The falling cost of renewables – wind and solar PV – had little to do with ARENA or any other Australian agency, but understanding how they could be used was just as important.

The real technology challenge is not renewables, but technologies to support them: battery storage, hydrogen, pumped hydro and development of controllable loads. A 21st century grid will need to find uses for intermittent surpluses of electricity and fill growing gaps left by hours or even days of dunkelflaute: dark and still conditions when renewable generation is nearly non-existent.

If it can put aside its long standing unease with the nature of ARENA, the question facing the Federal Government is whether it’s better to evolve ARENA into an organisation to solve this new suite of problems, or whether it wants to start with a clean sheet.

We should get some indication of their direction when the Federal Budget is handed down in October.