ARENA’s role in fostering technology for the transition

Since its establishment in 2012, ARENA has committed over $2.3 billion to around 670 projects throughout Australia. 

We are perhaps best known for having established the large-scale solar industry in Australia, initially through the delivery of our nation’s first solar farms in Nyngan and Broken Hill, followed by the provision of $92 million in grant funding to 12 projects selected through a competitive process in our 2016 large-scale solar round. 

As a result of these initiatives, Australia’s large-scale solar industry became commercially self-sustaining and ARENA grants are no longer required for traditional solar deployments. 

We are seeing a similar pattern play out with large-scale batteries. ARENA first started supporting large-scale batteries in 2017. At that time grants of over 50% of the capital cost were required for projects to proceed. 

In our latest large-scale battery round, we awarded $176 million to 8 large batteries with grid-forming capabilities. The grant amount was only 7% of the $2.5 billion capital cost and we’re confident that future projects will take place without the need for any grant support. 

“This is what success looks like for ARENA – when a technology starts being deployed by the private sector without our further involvement.”

ARENA has also been instrumental in supporting some of our most important research initiatives through $127 million of committed funding to the Australian Centre for Advanced Photovoltaics (ACAP), almost $50 million to the Australian Solar Thermal Institute (ASTRI), and significant funding to R&D programs in hydrogen production, zero emissions iron and steel, and in the pursuit of higher efficiency solar cells. 

ARENA has also supported important work in the distributed energy space, electric vehicle charging networks, bioenergy, pumped hydro, new forms of storage, remote microgrids, alumina refining, green steel and green hydrogen. 

Supporting Australia’s carbon commitments

I should first acknowledge the important changes to ARENA’s legislation that the Government secured in 2022, confirming ARENA’s role in supporting Australia’s emissions reduction commitments. 

Around this time, ARENA set a bold new vision and strategy to support “global emissions reductions through technology innovation to the benefit of Australia.” 

The key word in this new strategy is “global” – recognising that Australia has a massive opportunity to support other countries with their energy needs in a net zero world. 

We have the potential to be a major global producer of zero emissions hydrogen, and derivates like ammonia and methanol; and low emissions metals like alumina and green iron. 

Investing in the ‘superpower’ vision

Two crucial technologies stand out as particularly important in the superpower vision. The first is hydrogen, and the other is solar. 

Hydrogen is particularly important because of its future role in steel-making. 

Steel-making is responsible for around 8% of global emissions and Australian iron ore is implicated in around 40% of this. Put another way, the process of converting Australia’s iron ore into steel emits over 1.5 billion tonnes of CO2 annually – that’s more than three times Australia’s domestic emissions from all sources. 

ARENA has invested almost $300 million to date in around 50 hydrogen projects from early-stage R&D through to first-of-a-kind commercial deployments. 

Building a green hydrogen industry 

ARENA is responsible for delivering the Government’s $2 billion Hydrogen Headstart program. We received over 60 applications late last year, and following a thorough screening process, we are now working with 6 selected projects ahead of their full application submissions which are expected later this year. 

The green hydrogen industry is at a very early stage and significant grant funding is going to be required to deliver the first few projects and see costs come down. We’ve been clear that Hydrogen Headstart will likely only support 2-3 projects, and the industry is eagerly awaiting further direction and support to see Australia be a long-term reliable producer of this important decarbonisation commodity. 

Ultra-low-cost solar 

The other critical technology that ARENA is supporting is solar PV. On the surface, this may seem strange given that ARENA’s large-scale solar funding round in 2016 saw the industry established and self-sustaining. 

The problem is that transitioning our heaviest emitters off fossil fuels and making green hydrogen for our domestic and export needs will require much, much, cheaper electricity. We’ll need to get the cost of renewable electricity down below $20 / MWh to be globally competitive – this is two-thirds lower than today’s solar and wind costs. 

ARENA has a significant focus on what we call “ultra-low-cost solar” and we’ve set an ambitious target that we have labelled “Solar 30-30-30”. We are aiming to achieve module efficiencies of 30% (up from 22% today); and have large-scale solar fully installed for 30c per Watt, down from $1 per Watt today; and we plan to achieve this by 2030. Hence “30-30-30” – 30% efficiency, at 30c per Watt, by 2030. 

If we can achieve this goal, we’ll have green electrons at a low enough cost to fully transition our heaviest emitters and we’ll be able to make millions of tonnes of low-cost green hydrogen every year to export as liquefied hydrogen, green ammonia, and green iron for export to Asia and Europe. 

Infrastructure and stakeholder buy-in

It’s not just about the availability and maturity of technology though. The superpower vision – enabled by ultra-low-cost solar and green hydrogen – will require vast amounts of land to locate the many hundreds of gigawatts of solar and wind farms required to generate the underlying electricity. 

To do this we need to spend the next few years planning the infrastructure and securing the equitable and respectful involvement of First Nations communities and landowners right across Australia. 

Governments have a critical role to play here. Without the necessary land and social licence, the superpower vision will not eventuate. We must work together to both improve the technologies and bring the whole of our society along with us so that everyone benefits. 

The new energy technology that we are developing is cleaner, better, more reliable, and increasingly cheaper than the old emissions intensive technology it is replacing. 

“The biggest challenge we face is one of coordination and alignment.”

We can’t be the best at everything, and other countries – notably China, the US and parts of the Middle East – are placing big bets to secure their role in the future net zero world. 

If we can agree on our future direction, develop our plans, and invest confidently over a sustained period then we’ll be on the track to net zero by 2050, or earlier, and we’ll set ourselves up to be a renewable energy superpower in a net zero world.