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Funding

A photo of a researcher dressed in a white hair net, face mask and labcoat, with green gloves. He is from the UNSW Solar Industrial Research Facility and is working on a machine that deposits nitride layers onto silicon solar cell wafersImage credit: UNSW

ARENA has robust processes for working with proponents as project proposals are being developed, to ensure that the Government funding the Agency is responsible for administering is used as effectively as possible.

When making funding decisions, we ask:

  • Is the project innovative or novel?
  • Is there a pathway to commercialisation?
  • Will the project help unlock future investment?

In addition to ARENA’s in-house expertise, the Agency draws on the technical expertise of the ARENA Advisory Panel. The Panel’s expert members provide advice to support the development and selection of projects and initiatives for funding by ARENA.

Activity performance measures

Provide financial assistance and leverage private investment

PERFORMANCE MEASURE

Provide financial assistance to new projects in accordance with the principles and priorities outlined in the Agency’s General Funding Strategy and Investment Plan

Target: Provide financial assistance to one or more new projects in each of the Agency’s priority areas.

SOURCE

Portfolio Budget Statements

RATIONALE FOR MEASURE

ARENA's ability to provide financial assistance and fully utilise its appropriation is seen by key stakeholders including Parliament, Minister and Department as a key indicator of effectiveness.

RESULT

Achieved - ARENA provided funding to a total of 79 new projects in 2018-19. Funding was provided to one or more new projects in each of ARENA’s investment priority areas.

Provision of funding is reported on the basis of the number of projects for which a contract was executed in 2018-19.

TABLE 23: LOCATION OF NEW PROJECTS FUNDED IN 2018-19*

STATE

NUMBER

%

NSW

26

32.9

VIC

24

30.4

QLD

10

12.7

SA

6

7.6

WA

5

6.3

ACT

4

5.1

TAS

4

5.1

*Totals may exceed 100% due to rounding

TABLE 24: DISTRIBUTION OF NEW PROJECTS FUNDED IN 2018-19 BY INVESTMENT PRIORITY*

ARENA INVESTMENT PRIORITY

NUMBER

%

Delivering secure and reliable electricity

39

49.4

Exporting renewable energy

13

16.5

Improving energy productivity

13

16.5

Other

11

13.9

Accelerating solar PV innovation

3

3.8

*Totals may exceed 100% due to rounding

TABLE 25: DISTRIBUTION OF NEW PROJECTS FUNDED IN 2018-19 BY INNOVATION STAGE*

INNOVATION STAGE

NUMBER

%

Demonstration

36

45.6

R&D

17

21.5

Other study

16

20.3

Deployment

6

7.6

Feasibility study

4

5.1

*Totals may exceed 100% due to rounding

TABLE 26: DISTRIBUTION OF NEW PROJECTS FUNDED IN 2018-19 BY PRIMARY TECHNOLOGY

PRIMARY TECHNOLOGY

NUMBER

Hydrogen

20

Enabling

12

DER integration

12

Market data and information

11

Solar PV

5

Bioenergy

4

Other

4

Pumped hydro energy storage

3

Battery storage

2

Industrial heating and cooling

1

System security

1

Marine

1

Off grid

1

Demand response

1

Geothermal

1

PERFORMANCE MEASURE

$m ARENA funds approved*

*The value of ARENA funds that the Board or CEO has approved to be offered to an applicant subject to successful negotiation of a contract, or subject to a final assessment process.

Target: $281 million in 2018-19

SOURCE

Corporate Plan 2018-19 p14-15

RATIONALE FOR MEASURE

Approval of a request for funding represents an important milestone in ARENA’s rigorous business development, application and assessment process. The amount of funding approved is an indicator of the strength of ARENA’s project pipeline and of ARENA’s effectiveness in progressing applications.

RESULT

In 2018-19 ARENA approved a total of more than $292.6 million, exceeding its target by more than $11 million. This figure includes funds that were approved to be offered to an applicant subject to negotiation of a contract, approval of variations greater than $1 million, as well as those that were approved to be made available to projects subject to a final assessment process. Adoption of more innovative ways of selecting projects has resulted in incorporation of a small number of projects that were approved subject to a final assessment process. This updated methodology is intended to more completely reflect progress towards funds being contractually committed and then spent.

A wide range of companies and innovators bring proposals to ARENA, which employs a highly-skilled team of business specialists to help proponents bring the best ideas to life. The Business Development and Transactions team works with proponents from the concept stage to a fully developed proposal, with the best projects receiving a commitment of funding from ARENA.

We undertake robust financial and technical due diligence. The ARENA Advisory Panel (AAP) provides independent merit assessment. This year, the AAP considered 52 expressions of interest (EOIs) and 90 full applications.

Consistent with ARENA’s risk-based approach, our due diligence activities were commensurate with the value, size and complexity of each proposal. Due diligence activities may include the commissioning of independent research, feasibility assessment, analysis and modelling to support ARENA’s assessment and facilitate consultation with our stakeholders. Table 26 below sets out the number of proposals considered by ARENA during the reporting period, from EOI, consideration by the AAP, through to full application and funding approval.

Proposals may pass through a two-stage process (EOI and full application), or single-stage process (full application only), depending on a number of factors. Single-stage applications include feasibility studies, projects where the ARENA grant funding sought is less than $500,000, or where ARENA has waived the requirement to submit an EOI (for instance, in the case of well-developed projects).

TABLE 27: PROJECT PIPELINE DATA FOR 2018-19

EOIs SUBMITTED

EOIs CONSIDERED BY AAP

FULL APPLICATIONS SUBMITTED

FULL APPLICATIONS CONSIDERED BY AAP

Number

60

52

94

90

PERFORMANCE MEASURE

Number of projects approved*

*Projects that the Board or CEO has approved to be offered ARENA funds subject to successful negotiation of a contract.

SOURCE

Corporate Plan 2018-19 p14-15

RATIONALE FOR MEASURE

ARENA's ability to provide financial assistance and fully utilise its appropriation is seen by key stakeholders including the Parliament (via PBS), Minister and Department as a key indicator of effectiveness.

RESULT

In 2018-19 ARENA approved funding for a total of 68 new projects. The majority of these led to contractual commitments in 2018-19. Twenty-two were still subject to commercial negotiations on 30 June 2019, and are likely to lead to contractual commitments in 2019-20.

PERFORMANCE MEASURE

Investment leverage by innovation stage

SOURCE

Corporate Plan 2018-19 p14-15

RATIONALE FOR MEASURE

ARENA's investment approach is to provide the minimum viable grant to enable high-quality projects to proceed.

The ratio of ARENA to third party funding is an indicator of how well we select projects and negotiate funding arrangements.

RESULT

Across all projects contractually committed in 2018-19, $5.89 of third party funding is expected to be provided for every ARENA dollar.

This overall result is significantly driven by a small number of projects at the deployment stage, where commercial funders are underwriting more than 90 per cent of the total project cost. The investment leverage by innovation stage is shown in Table 28 below.

TABLE 28: INVESTMENT LEVERAGE BY INNOVATION STAGE

INNOVATION STAGE

NUMBER OF PROJECTS

ARENA FUNDING ($M)

TOTAL PROJECT COST ($M)

INVESTMENT LEVERAGE

R&D

17

22.4

59.8

1.67

Demonstration

36

95.3

316.3

2.32

Deployment

6

48.5

864.6

16.84

Feasibility

4

3.0

7.2

1.41

Other

16

19.0

48.5

1.55

All projects

79

188.1*

1296.4

5.89

*Totals may vary due to rounding

PERFORMANCE MEASURE

Total third party funds invested

SOURCE

Corporate Plan 2018-19 p14-15

RATIONALE FOR MEASURE

An important part of ARENA’s role is to unlock third party funding and increase total investment in renewable energy innovation.

RESULT

In 2018-19 a total of $1.1 billion of third party funds were invested in new projects funded by ARENA. Table 29 below shows the amount of third party funds invested by innovation stage.

TABLE 29: TOTAL THIRD PARTY INVESTMENT BY INNOVATION STAGE

INNOVATION STAGE

$M

%

Deployment

816

73.8

Demonstration

220

19.9

R&D

37

3.3

Other study

29

2.6

Feasibility study

4

0.4

​​

PERFORMANCE MEASURE

Commitments to contribute to Australia’s Mission Innovation target

Target: ARENA 2020-21 R&D expenditure at least doubled from 2015-16

SOURCE

Corporate Plan 2018-19 p14-15

RATIONALE FOR MEASURE

Australia has pledged to double government clean energy research and development expenditure by 2020-21. ARENA’s expenditure on R&D in 2015-16 was $26.6 million and our target is to achieve expenditure of at least $53.1 million in 2020-21. This performance measure tracks annual funds spent by ARENA on R&D and the trajectory to the target amount in 2020-21, which is the year that the Mission Innovation commitment relates to.

RESULT

In 2018-19 ARENA committed $29.7 million to 24 new Mission Innovation eligible projects. ARENA expenditure in 2018-19 (milestones paid) for Mission Innovation R&D projects was $39.1 million.

ARENA is on track to meet the target for doubling R&D expenditure in 2020-21 subject to funding initiatives proposed for 2019-20 proceeding.

Administer financial assistance

ARENA maximises the impact of its portfolio of renewable energy projects through contract and risk management, performance monitoring, stakeholder engagement and knowledge sharing. ARENA takes a flexible, agile approach to respond to contingency events so that innovation projects can meet their objectives within a fast paced technological and market environment.

ARENA seeks to ensure that all projects deliver value for money.

PERFORMANCE MEASURE

Effectively manage projects in accordance with agreement terms to deliver intended outcomes, learn and improve

Target: Significant project outcomes and lessons learned disseminated

SOURCE

Portfolio Budget Statement

RATIONALE FOR MEASURE

The dissemination of significant project outcomes and lessons learned is an indicator of the success of ARENA’s contract management processes and capabilities. It shows that projects have been managed so that they can succeed, generate and share knowledge.

RESULT

Achieved. Significant project outcomes and lessons learned were disseminated through a large number of knowledge sharing activities undertaken by funding recipients and ARENA.

Evidence that ARENA has achieved results against this criterion is presented in the Performance case studies and in the reporting for Knowledge sharing and Collaboration sections.

PERFORMANCE MEASURE

Number of projects managed

SOURCE

Corporate Plan 2018-19 p14-15

RATIONALE FOR MEASURE

This measure is an indicator of the strength of ARENA’s project portfolio. The number of projects managed is a key workforce driver for the agency.

RESULT

During 2018-19, 254 active projects were managed by ARENA, which is greater than the forecast number and the largest number of active projects managed over the course of a financial year to date.

​​

PERFORMANCE MEASURE

Number of projects closed

SOURCE

Corporate Plan 2018-19 p14-15

RATIONALE FOR MEASURE

This measure is an indicator of ARENA’s ability to successfully manage projects to completion.

RESULT

Twenty-eight ARENA-funded projects reached completion in 2018-19. ARENA seeks to ensure that all projects deliver value for money. Five projects were terminated during 2018-19.

The decision to terminate projects reflects a judgment that a project is not meeting, or is unlikely to meet, its intended outcomes, or has achieved its objectives prior to completion of all milestones for the project. Unspent funds from terminated projects were returned to ARENA or released for other commitments.

TABLE 30: NUMBER OF PROJECTS COMPLETED AND TERMINATED IN 2018-19 BY PRIMARY TECHNOLOGY

PRIMARY TECHNOLOGY

COMPLETED

TERMINATED

Solar PV

8

3

Bioenergy

4

0

Enabling

4

0

Pumped hydro energy storage

4

0

Marine

3

1

Large-scale solar

2

0

Solar thermal

2

0

Wind

1

0

Hybrid

0

1

PERFORMANCE MEASURE

$m payments made

SOURCE

Corporate Plan 2018-19 p14-15

RATIONALE FOR MEASURE

Payments made to funding recipients based on full or partial completion of a milestone under the terms of a funding contract is an indicator of the effectiveness of ARENA’s contract management.

RESULT

The Agency paid $127.8 million* to 155 projects for the achievement of milestones according to funding agreements.

While ARENA did not set a specific target as part of its performance framework, this result is below ARENA’s budget forecast for the year.

A number of large projects under negotiation or in the approval process during 2018-19 experienced delays in reaching financial close due to commercial and market issues. The impact of the delays is reflected in the reduction in grant expenses in 2018-19 compared to budget and previous years.

*Excluding GST and accruals

Jointly manage Clean Energy Innovation Fund with Clean Energy Finance Corporation

During 2018-19, ARENA and the CEFC worked collaboratively on the Clean Energy Innovation Fund. The ARENA CEO and CFO were members of the Fund’s Joint Investment Committee (JIC), which made recommendations on investment decisions to the CEFC Board.

ARENA assisted with developing investment proposals and advising on the technical and commercial feasibility of technologies, including by making available members of the ARENA Advisory Panel to assist the Fund on technical assessments of investment opportunities.

PERFORMANCE MEASURE

1. Number of projects funded by Clean Energy Innovation Fund, number originating from ARENA

2. $ value of projects funded

3. Investment leverage

SOURCE

Corporate Plan 2018-19 p14-15

RATIONALE FOR MEASURE

These measures provide an indicator of the value of ARENA’s contribution to the operation of the Clean Energy Innovation Fund.

RESULT

1. In 2018-19 the Fund made two new investments and five follow-on investments. One follow-on investment originated from ARENA.

2. The Fund invested $11.6 million.

3. The $11.6 million Fund investment was matched by $106.3 million from co-investors. For each dollar of Clean Energy Investment Fund investment, third parties invested $9.20.

2018-19 saw the largest number of investments, the highest amount of co-investment and the highest leverage ratio since the Fund was established in 2016-17.

Further information is reported by the CEFC in its annual report.

TABLE 31: PROJECTS FUNDED BY CLEAN ENERGY INNOVATION FUND AND ORIGINATING FROM ARENA

2018-19

2017-18

2016-17

Number of investments made by Fund, number originating from ARENA

2 new investments

5 follow-on investments, 1 originating from ARENA

6

4

$value of investments made by Fund in 2018-19

$11.6 million

$26.2 million

$30 million

Total investment leverage ($m from co-investors)

$106.3 million

$23.6 million

$64.8 million

$ of co-investment for every dollar of Fund investment

$9.20

$0.90

$2.16

Outcome performance measures

More solutions for delivering secure, reliable and affordable energy and increasing the value provided by renewable energy

Research and development creates new knowledge that provides the foundation for new products and services. The demonstration stage of the innovation chain, including studies, pilots and proof-of-concept projects, is where innovators validate or refute the viability of a product, service, market design or other potential solution.

A successful demonstration results in a new solution ready for commercialisation and adoption at scale. With more solutions available, Australia will be better placed to adopt the right mix of technologies and approaches to deliver secure, reliable and affordable energy, realising more value from our renewable energy resources.

PERFORMANCE MEASURE

Number of completed proofs of concept, pilots and demonstrations

SOURCE

Corporate Plan 2018-19 p14-15

RATIONALE FOR MEASURE

Completed proofs of concept, pilots and demonstrations provide a means of validating or refuting the viability of an idea, technology, business model, market design or other proposed solution. The demonstration effect and lessons learned from such projects support innovation and the eventual adoption of viable solutions.

RESULT

Seven demonstration projects (which include proofs of concept and pilots) were completed in 2018-19. These comprised three solar PV projects, one large-scale solar, one marine, one wind and one enabling project.

CASE STUDY: NSW SCHOOLS ENERGY PRODUCTIVITY PROGRAM

The NSW Schools Energy Productivity Program (SEPP) produced tangible benefits in terms of reduced costs and greenhouse gas emissions and increased energy literacy.

The SEPP program ran from April 2018 to June 2019 and demonstrated the benefits of

integrating energy productivity improvements and renewable energy across NSW schools. When the project began, Schools Infrastructure NSW’s (SINSW) resource efficiency program was limited to procuring and installing LED lighting and large-scale solar PV systems. SINSW and ERM Power agreed the pilot achieved the following tangible outcomes:

  • estimated $651,700 (60 per cent) reduction in annual electricity spend
    • solar accounted for 29 per cent
    • lighting consumption savings accounted for 50 per cent
    • lighting demand savings accounted for 21 per cent
  • additional $64,750 in maintenance savings due to LED lighting
  • estimated 3.55 GWh (61 per cent) reduction in annual electricity consumption
    • solar accounted for 38 per cent or 1.35 GWh
    • lighting consumption savings accounted for 62 per cent or 2.20 GWh
  • estimated reduction in greenhouse gas emissions by 3475 metric tonnes of CO2.

A pre-engagement and post-engagement survey measured a strong increase in energy literacy among students and staff. Respondents’ understanding of bill charges increased threefold and their understanding of the concept of demand doubled.

PERFORMANCE MEASURE

Improvements in technological readiness of R&D

SOURCE

Corporate Plan 2018-19 p14-15

RATIONALE FOR MEASURE

This measure provides an indicator of how ARENA-supported R&D is enabling ideas to advance along the innovation pathway. The TRL index is a globally accepted benchmarking tool for tracking progress and supporting the development of a specific technology through the early stages of the innovation chain, from blue sky research (TRL 1) to actual system demonstration over the full range of expected conditions (TRL 9).

RESULT

TABLE 32: ADVANCES IN TRL ACHIEVED BY R&D PROJECTS

PROGRESS

GUIDE TO TRL

  • 1 project advanced from TRL 1 to TRL 3
  • 1 project advanced from TRL 2 to TRL 3
  • 3 projects advanced from TRL 2 to TRL 5
  • 1 project advanced from TRL 2 to TRL 6
  • 1 project advanced from TRL 3 to TRL 6

1

Transition from scientific research to applied research

2

Applied research

3

Proof of concept validation

4

Standalone prototyping implementation and test

5

Thorough testing of prototyping in representative environment

6

Prototyping implementations on full-scale realistic problems

7

System prototyping demonstration in operational environment

8

End of system development

9

Actual system has been thoroughly demonstrated and tested in its operational environment

Seven research and development projects were substantially completed in 2018-19, with final reports available. The Network Aware Coordination software (NAC) technology was successfully used in the CONSORT Bruny Island battery trial, which won the 2018 Energy Networks Industry Innovation Award. The technology is now ready for wider implementation.

The other projects covered: advanced imaging and materials science to improve solar PV cells efficiency and durability; a novel receiver for concentrating solar thermal; rooftop solar with storage; and novel battery chemistry. Two projects moved the technology from the research stage to the stage where they are ready for demonstration in an operational environment, representing significant progress along the innovation pathway.

Improved competitiveness of renewable energy technologies

This performance measure is reported against in the Performance Case Studies section.