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The Australian government has formally announced a major initiative to boost renewable energy deployment in remote areas where settlements and mining projects have no connection to the grid, and which have relied almost entirely on fossil fuels to date.
The Australian Renewable Energy Agency, as foreshadowed on RenewEconomy last month, will allocate $400 million to a new program Regional Australia’s Renewables (IRAR) that aims to build 150MW of renewable projects within five years.
At least two plants of 10MW or more are expected to be built, with a host of smaller installations, with a minimum size of 1MW.
It is one of a number of initiatives announced by ARENA on Friday, including funding up to six separate stand-alone projects – with a minimum cost of more than $20 million – as long as the projects have the promise of introducing “game changing” technologies.
This initiative – designed for projects that do not necessarily fit other programs – has been dubbed the Accelerated Step Change Initiative, and ARENA says will give it the maximum amount of flexibility in its funding choices. A doubling of the Emerging Renewables Fund, and focus on off-grid community energy initiatives and knowledge sharing have also been announced.
The overall target for IRAR is a big upgrade from an original discussion paper that canvassed just 50MW of large-scale renewables out to 2020. The agency was urged by the renewables industry to come up with a more ambitious plan.
Federal Resources and Energy Minister Gary Gray said in a statement that the cost of wind energy can be half that of diesel in the Pilbara region, but it was in these regions that energy demand was growing the fastest.
“It’s no secret that in Western Australia we have a lot of remote areas and meeting our growing energy demand is a big issue,” Mr Gray said. “Where there is no grid-connected electricity, many communities and industries truck-in fuels to generate energy.”
In fact, the cost of diesel generation – sometimes more than $400/MWh – is probably closer to four times the cost of wind energy than two times, and is well above the cost of solar PV. Many developers of solar plants – be it solar PV or new technologies such as solar thermal or graphite blocks – are targeting remote regions because of the high costs of diesel, although new technologies can still face significant cultural, regulatory and financing barriers.
It is estimated that Australia has around 2GW of diesel generation in remote and off-grid areas around the country. Earlier this year, the Australian Photovoltaic Association said Australia should set a yearly target of 50MW of renewables deployment in these areas to reduce the dependence on expensive and polluting diesel.
Countries such as Chile and South Africa are looking to renewables to supply off-grid and mining areas and a 10MW solar thermal plant built for a mining company was opened earlier this year in Chile. In Australia, miners such as Fortescue Metals are thought to be looking seriously at renewable energy options.
Gray said on Friday the IRAR funds would be used specifically for renewable energy solutions, including hybrid and integrated systems in off-grid and fringe-of-grid locations across Australia.
This will include a “community component” will direct funds to demonstrate technologies that can feed more renewable energy into community electricity grids – such as innovative energy storage systems. It envisages one or more commercial-scale renewable energy systems of at least 100kW at a mini-grid scale that test the business case for key renewable energy solutions and/or innovative business models across a community or region.
ARENA has also doubled its allocation to the Emerging Renewables Program to $215 million (from $126 million) to help prove the commercial potential of the technologies – to remove roadblocks and share critical knowledge that can advance the industry.
“Hybrid and integrated systems can add to the reliability of a renewable system by providing energy for a full 24-hour period, not just when the sun shines or the wind blows,” Gray said.
ARENA expects most of the funding for such projects to be between $2 million and $30 million.
The increase in the Emerging Renewables component will include $60 million allocated to a “knowledge sharing” program under the SHARE (Supporting High-value Australian Renewable Energy) initiative, which included an analysis of the barriers to grid connection and the development of an inaugural Australian Liquid Fuel Technology Assessment.
Industry applications will be sought from July 1 through the expanded Emerging Renewables Program for projects to close knowledge gaps in three priority areas for 2013/14:
“I encourage the industry to start preparing proposals that aim to overcome key challenges to building renewable energy plants, and bring the Australian community with them towards our clean energy future,” Gray said.
The announcements do not represent new funds for ARENA, but a specific allocation of monies. ARENA had its overall funding cut from $3.2 billion to $3 billion in the recent budget, and some $370 million in funding deferred and its program extended beyond 2020.