$1.3b funding cut looms for Australia's renewable energy projects

Experts warn move will jeopardise country's leadership in solar power sector and cost jobs

Australia is planning to abolish a A$1.3 billion (S$1.3 billion) scheme to support renewable energy projects despite warnings that the move will jeopardise world-leading efforts to develop solar and wave power technology.

Prime Minister Malcolm Turnbull has proposed stripping future grant funding from the Australian Renewable Energy Agency.

The agency, founded in 2012, gives grants for emerging renewable energy projects  and has funded and managed more than 260 initiatives so far.  These projects include ground-breaking research such as a solar cell that in May set a world record for the rate of converting sunlight into electricity of 34.5 per cent. Other projects include plans for the largest-ever network of solar batteries, involving 1,000 homes and businesses, and a wave energy system in the Indian Ocean that has operated for a world record 14,000 hours.  

Analysts say the agency has helped to develop technology that has attracted significant investment from Australia and around the world. 

A former leader of Mr Turnbull's ruling coalition, Dr John Hewson, now a professor at the Australian National University, said the proposed cuts were short-sighted and would limit Australia's ability to meet its long- term carbon emission and renewable energy targets.

"Cutting this funding is a king hit - it leaves technology developers with very little money," he told The Straits Times.

MASSIVE BLOW

Cutting this funding is a king hit  - it leaves technology developers with very little money. It will have an impact on Australia getting a lot of projects off the ground.

DR JOHN HEWSON, professor at the Australian National University.

"It will have an impact on Australia getting a lot of projects off the ground. When those projects hit commercial scale they would potentially employ a lot of people."

The agency is due to announce today the next 12 recipients of A$100 million in funding for  large-scale solar energy projects which will significantly boost Australia's solar capacity. But such grants will no longer be available in the future if the government succeeds in scrapping the funding. 

The proposed cuts prompted an open letter to all Australian MPs from 190 solar power researchers and experts across the country.

The letter warned that the cuts threaten Australia's global leadership in the solar power sector and would also cost jobs.

Australia is a world leader in solar technology and has the world's highest uptake of solar panels on home rooftops.

"The worldwide industry (in photovoltaics, which converts solar energy directly into electricity) owes its existence in large measure to Australians who were supported by grants from government renewable energy agencies," the letter says.

Experts say the agency's grants are crucial in providing funding during the early phases of development of new technologies when projects are still being piloted.

The federal government has insisted the cuts - effectively amounting to A$1.3 billion over six years - are necessary as part of its A$6 billion budget-savings measures. The savings were introduced in a Bill to Parliament last week but will still need to pass through the Senate, where no party has a majority.  

The government says it will no longer make grants - if the savings Bill is passed - but still plans to make loans to renewable technology developers under a A$1 billion clean energy fund.

"They will help emerging clean energy technologies make the leap from demonstration to commercial deployment," Minister for the Environment and Energy Josh Frydenberg told The Straits Times.

In Australia, renewable energy output has almost doubled in the past decade to 15 per cent of electricity generation and is due to rise to 23.5 per cent by 2020. But solar energy is still only about 2 per cent of total output, with 7 per cent from hydropower and 4 per cent from wind and the remainder from bioenergy and geothermal.

Most experts say Australia will need to significantly boost its renewable energy generation to meet its pledge under the Paris climate agreement to cut carbon emissions to 26 to 28 per cent below 2005 levels by 2030.

A version of this article appeared in the print edition of The Straits Times on September 08, 2016, with the headline '$1.3b funding cut looms for Aussie renewable energy projects'. Print Edition | Subscribe