Keynote speech at Clean Energy Week—Greg Bourne, ARENA Chair
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Thank you for your welcome. I am delighted to be here today in my official capacity as ARENA’s inaugural Chair.
I would like to acknowledge the Gadigal People of the Eora Nation, on whose land we have the privilege of meeting today and to pay my respects to their Elders past and present.
I would also like to thank the Clean Energy Council for the opportunity to speak today and to welcome David Green to Australia and his new role. I have had the pleasure of working with David over many years in our various capacities and just know that he will really help galvanise the endeavour that the CEC and ARENA share—helping to bring about a Clean Energy Future.
I know many of you are interested to hear about what is happening at ARENA and how you can be involved.
I am also sure that many of you have views that you would like to share with us.
I welcome your keen interest in ARENA—it is positive and encouraging and will provide us with a solid foundation for working together.
As this is my maiden speech as ARENA’s Chair and, in fact, as this is ARENA’s first official public engagement, I am going to use this time to outline what direction the Board is looking to take ARENA in and what exciting opportunities this will provide for the renewable energy sector.
I am also going to pose questions to you, our stakeholders and partners.
Some may find these questions challenging, but I’d like to give you an indication of what we want in our working relationship.
Before I go on, I’d like to provide a brief introduction for those of you that may not have met me.
I am a long time crusader for renewable energy and I understand the challenges that new technologies face in moving from the lab bench to the market.
I have held a variety of positions, including as Special Adviser on Energy and Transport to the Prime Minister in the UK through to, more recently a director of Carnegie Wave Energy.
I spent many years with BP exploring and producing oil and quite a few years here in Australia where BP had a fantastic solar business.
I was also the CEO of the World Wildlife Fund Australia from 2004 to 2010.
One thing that I have observed during all of these positions is the passion and determination that the renewable energy sector has for its work and for delivering a sustainable energy future for everyone.
As ARENA is still in its infancy—in fact this is day 26 of our existence—there are still many details ‘under development’.
This should not be looked upon as a negative, but rather that, the Board is keen to hear the views of stakeholders prior to charting the direction for the agency.
We also want to take stock of lessons from previous programs and strategies.
There is plenty to take away from the work of the Australian Solar Institute and the Australian Centre for Renewable Energy, and the implementation of the large-scale Solar Flagships program, to name just a few examples.
We are also keen to reflect on the changes that the renewable energy sector has seen in the last couple of years, including changes to the broader policy and financial environment.
Recently, Bloomberg New Energy Finance reported that the cost of solar PV had fallen by nearly 75 per cent over the last four years.
A home owner can now have a 2 kilowatt PV system on their roof for less than $4000.
Solar PV is by no means the only technology that has seen technology cost reductions.
Our wind generators are setting the bar high by generating power with a market clearing wholesale price around $100 per Megawatt hour.
But at the same time, we’ve also experienced a tightening of available funds for investment globally due to financial uncertainty coming out of Europe.
Clean Energy Future
I am a great believer in the power of the market to drive innovation once provided with the proper incentives.
Government programs produce the best results when they are part of a supportive policy environment and I believe we now have the best policy environment for renewable energy in Australia we have ever had.
Many of us would have liked to have seen initiatives such as a price on carbon years ago, but it has been gratifying to see that when government has responded, it has done so as part of such a broad and far reaching package as the Clean Energy Future plan.
The Government recognised that a range of assistance was needed to drive and support innovation in clean energy.
As well as the support renewable energy will receive from ARENA, renewable energy technologies will have access to the Clean Energy Finance Corporation (CEFC) and the continued support of the Renewable Energy Target (RET).
The combination of ARENA and CEFC and the relationship that these two organisations will build over the coming years will encourage private investment in renewable energy by supporting new technologies through the whole innovation chain, from R&D through to commercialisation and deployment.
Jillian Broadbent, inaugural Chair of the CEFC, spoke to you yesterday, so I won’t linger on this point.
And why am I so confident ARENA can deliver?
There is a lot of experience, commitment and dare I say, energy, in this room and indeed, in this whole conference. If we can tap into this resource, we can build a strong and vibrant renewable energy sector in Australia.
ARENA’s mission is to drive innovation in renewable energy technologies and thereby improve the competitiveness of renewable energy in Australia and increase its role in our energy mix.
ARENA can cover all stages of the innovation chain up to commercialisation.
The Board may decide to focus on multiple projects across a variety of technologies over the coming years or it may decide that a more strategic focus on some areas of innovation is required.
We are looking to get your views on this important question.
I am confident that we can deliver, firstly, because we will be an independent organisation, operating with a commercial focus.
Noting the scale of public funding ARENA has been given and the importance of developing renewable energy, ARENA is subject to Ministerial oversight on its funding strategy and program, and rightly so.
But in essence; ARENA has a significant degree of autonomy to chart its own course.
As such, ARENA is looking to be innovative in the way it supports renewable energy technologies.
Although the funding ARENA provides must be in the form of a grant, there is scope to be more creative in how the grant is structured.
2. Significant resources, long-term commitment
Secondly, ARENA’s funding is guaranteed by legislation.
Of ARENA’s $3.2 billion, approximately $1.5 billion is committed to established initiatives, leaving approximately $1.7 billion in funding uncommitted and available for ARENA to allocate as it sees fit.
The legislation supporting ARENA provides financial support out to 2020, which gives us plenty of time to work with industry to drive solid outcomes.
Thirdly, we have a wealth of experience to draw upon in developing new renewable energy technologies.
As I indicated earlier, the Board is taking this initial period to draw on the experiences to date in designing funding programs to make some positive changes.
We can do this because ARENA has the flexibility to consider different approaches and different program designs.
The Grattan Institute’s recent report, No easy choices: which way to Australia’s energy future?, argued that there needs to be a greater focus on market mechanisms and less on the traditional government role of technology support, perhaps because of current market uncertainties.
We are interested in hearing stakeholders views on funding flexibility, while keeping in mind ARENA’s mandate.
Fourthly, ARENA will provide an opportunity to work more closely with stakeholders.
I want collaboration to be at the core of our business, not just ARENA reaching out to stakeholders, but stakeholders initiating and working closely together to form the best consortia possible and coming to us with the most viable projects.
I would like to move toward a model where cost efficient and effective funding processes are as much the responsibility of applicant as ARENA.
This may mean undertaking appropriate due diligence before applications are submitted.
We will be realistic in assessing the performance of projects and will redirect funding for stalled or unsuccessful projects toward new options.
I want to make sure that every dollar being ear marked can be used effectively and that we don’t have unproductive capital locked away.
I’d also like to mention that collaboration will extend to the international arena: Australia is only a small part of the global effort to develop new renewable energy technologies.
We need to continue developing strategic international partnerships, as has been demonstrated in the ASI’s work to date with the US and Germany.
5. Broad scope
The fifth reason I believe ARENA will deliver an increase in renewable energy is the broad scope we have been given which will allow us to work across the whole innovation chain.
ARENA’s mandate allows a great deal of flexibility to work across technologies, but also change our focus over the life of the agency as new opportunities emerge.
6. Getting on with business
The sixth reason, and perhaps the most important considering we are at day 26, is that we have hit the ground running.
So far we’ve announced a short, interim funding strategy which is up on the ARENA website.
We have also extended the Emerging Renewables Program and made some changes to the program.
ARENA is designing our business and operating model from the ground up and we are seeking your views on the way we can provide better services—for example—what should ARENA provide by way of online funding application process?
7. Knowledge sharing
Besides the traditional form of capital subsidy support of projects, we are looking at ways to improve knowledge sharing within the industry.
This is particularly important to me.
I don’t think anyone has found the secret formula for improving information flows across industry, especially in relation to finding the right balance between rewarding innovation and ensuring broad public benefits from public funding.
ARENA doesn’t want to reinvent the wheel—we want to use existing platforms and to this end I think the best steer can be found through you, the stakeholders—what have you found to be most successful to date?
Board and CEO
Finally, at the risk of not too subtle self-promotion, I think we have an outstanding, highly experienced Board with diverse skills and experience.
You will already be familiar with many of the names: Mark Twidell, Brian Spalding, Jane Sargison, Betsy Donaghey, Judith Smith and the Secretary of the Department of Resources, Energy and Tourism, Drew Clarke.
I am also delighted that Ivor Frischknecht was able to take the role of CEO.
Ivor will be familiar to many of you from his time in venture capital with Starfish Ventures and will bring a deep understanding of renewable energy finance and the problems facing new companies and technologies.
Importantly, he will drive a commercial focus for ARENA.
One look at the make up of the Board and CEO and you can see this is a group of individuals from industry who will understand the issues and the challenges confronting renewable energy in this country.
As such, I feel I can confidently say that ARENA will seek to work with you to harness the renewable energy that Australia will need for a sustainable future.
Australia’s renewable energy resources are the envy of the world: from wave energy, hot rocks, biomass and of course some of the best solar radiation anywhere, as well as an abundance of opportunities to harness the wind on land and on the sea.
While we can pay tribute to these natural assets, we need to work hard and collaboratively to realise the potential they offer.
Our approach at ARENA will be to take advantage of the maturing renewable energy sector and allow greater levels of direct engagement with stakeholders in designing and developing specific projects and programs.
For example, there will be opportunities to provide large, one- off grants to viable projects outside of the context of existing programs, if the Board considers it a value for money proposition.
This may be useful when investing in specialised projects, without needing to build the framework of a program to house such projects.
General funding strategy
I would like to spend the last few minutes talking through the consultation draft on ARENA’s general funding strategy that I am releasing today.
The strategy will be a central consideration for the ARENA Board, as well as the CEO and ARENA staff.
The strategy will be used to develop a range of initiatives to meet the needs of the industry.
This strategy is focussed on the coming year and will be updated every year, but contemplates a three year period to provide some insight for the renewable energy sector about the future direction for ARENA.
You will know what to expect from ARENA over a three year period, while we will be looking to industry to bring forward proposals that match the priorities we have identified.
In developing the consultation draft, we didn’t want to develop a lengthy document that just re-outlined the issues canvassed recently by CEFC, ASI and ACRE, as well as non government think tanks. Instead, we have taken the approach of outlining a number of principles to guide the expenditure of funding.
In providing feedback please let us know if these principles provide an appropriate framework to guide ARENA’s funding decisions.
The funding strategy also lists several priority activities and while I don’t want to go through this list today, I suspect this will be an area of significant focus for many of you.
The consultation draft of the general funding strategy will be online later this afternoon and I invite you to make submissions and indicate your interest.
I would appreciate short, targeted submissions.
Our key interest is how can we improve the competitiveness of renewable energy technologies and increase the supply of renewable energy in Australia.
We will be holding a one day national workshop—probably at Tullamarine, as attendees can get there mostly with only one flight.
In the interests of making the best use of the Board’s time, we are limiting presentations to key stakeholder groups.
We will list the date on the ARENA website once finalised.
ARENA will be what we all make it—that means working together in a mature, responsible manner using the best evidence available to us and ensuring the highest quality projects are developed that create the best possible outcomes for Australia.
It’s true the challenges are significant, especially in relation to finance, but I think we have made a huge step forward in the past couple of years and I look forward to working with you to take another big step with ARENA in the coming months and years.
That’s why I was so delighted to accept the role of Chair and why I look forward to developing and establishing ARENA’s strategy over the coming months.
Thank you for your time and please feel free to put forward any questions you may have.