By Alison Ebbage

The recently elected federal government plans to repeal the carbon tax by 1 July 2014, which will have the effect of lowering the price attraction of renewables. The government is also reviewing the renewable target which had previously been set at 20% of electricity generation by 2020.

ARENA budget cuts

Funding to ARENA, the Australian Renewable Energy Agency, has also been cut for the next financial year. The entity was established in July 2012 as part of the clean energy package to coordinate around AU$ 3.2 billion in existing grant funding programs supporting research, development and demonstration of new renewable energy technologies.

For the next financial year, ARENA’s budget has been reduced by 22%, or AU$ 700 million with the new budget set at AU$ 2.5 billion. A bill to defer a further $370 million to nearly a decade, flagged by the previous Labour government, is also included in the new proposed legislation.

Andrew Want, CEO of Vast Solar, an Australian designer and developer of utility-scale solar power plants, comments: “Although the new Government, when in opposition, had indicated cuts would be made across the Federal budget, it also confirmed its support for ARENA, its work and strategy. Any semblance of stability has been undermined, first by the previous Labour Government’s 'rephasing' (or deferring) some ARENA funding, and now much more severely by the new government changing the legislation to cut funding.”

ARENA currently supports 171 renewable energy projects and industry capacity building programs, including 26 CSP projects. It is still accepting applications for the Accelerated Step Change Initiative, which is open until 2018, as well as the expanded Emerging Renewables Program, for which ARENA claims it has received an “influx of applications”.

New doors open

Although the Regional Australia’s Renewables - Industry Program, and the Community and Regional Renewable Energy Program both closed on 31 December 2013, the first round of the Research and Development Program recently launched and will provide up to $20 million to promote solar research. It will be closing for applications on February 14, 2014.

Ivor Frischknecht, CEO of ARENA comments: “Through this round, we will build on Australia’s reputation for delivering world-leading photovoltaic and concentrating solar thermal technologies. This investment will further enhance Australia’s R&D capability and increase the knowledge base required to make these technologies more competitive with conventional energy sources”.

Furthermore, in January 2014, ARENA announced a new partnership with natural gas and electricity provider Alinta, and the South Australian Government, to undertake an AU$ 2.3 million feasibility study into solar thermal power generation at Port Augusta. ARENA is contributing $1 million, Alinta $1.2 million, and the South Australian Government $132,000, with a target completion date set for April 2016.

Frischknecht said that the study would look into hybridised and standalone solar thermal power generation options for Port Augusta’s three power stations – Northern Power Stations 1 and 2, and Playford B Power Station.

“Many of our coal-fired power stations are nearing the end of their life cycle, presenting a clear opportunity for renewable hybrid options,” he stated.

Impact of funding cuts

The Commonwealth Scientific and Industrial Research Organisation (CSIRO) will also be facing cuts, although whether its world-leading solar research plant in Newcastle will be affected is not yet known. It was initially funded with AU$ 87 million to drive down the cost of CSP from about 25 to 10-12 cents per kWh.

Currently, Australia has about 7 MW of CSP installed in the Liddell Power Station and Lake Cargelligo demonstration plant. Another 44 MW is being constructed at the Kogan Creek Solar Boost, which will use AREVA Solar’s Compact Linear Fresnel Reflector technology to supply additional steam to the turbine and will be the largest of its kind when operational in 2014.

Kogan Creek’s completion will be unaffected. It is owned by CS energy which is government owned, and is guaranteed by the state of Queensland. The project is also not reliant upon commercial funding and will go ahead as showcase of hybridisation.

“As an existing project in ARENA’s portfolio, Kogan Creek will not be impacted by a change to ARENA’s funding. It will be the largest solar integration with a coal-fired power station in the world. Hybrid power stations represent the most cost-effective means of deploying renewable thermal technologies,” says Frischknecht.

Little more will be known until the next budget, due next May, when the government is expected to give more details about where it is to invest and take ‘direct action’. More certainty over governmental support for a long-term energy policy will lessen uncertainty and provide comfort for investors and developers alike.

Long-term prospects

Indeed, international developers have yet to desert the country entirely and the long-term prospects still appear to be good. “Despite the uncertain local policy environment, CSP investors continue to believe Australia holds promise, and the Australian CSP industry has deep capabilities. The major CSP companies remain engaged in Australia seeking to develop projects. Solar Reserve, for example, is if anything more active now in the Australian market than ever,” explains Want.

“In addition, Brightsource has the benefit of a strategic shareholder in Alstom, which has a major presence in Australia. Abengoa has recently appointed a highly experienced CSP executive, previously with Ferrostaal in Australia, as its local executive,” he says.

CSP power generation has significant advantages, and a major role to play, in Australia's power system. A report published last year for the former Australian Solar Institute, written by IT Power in collaboration with the CSP industry, found that CSP could provide up to 15 GW in the near to mid-term – about 30 per cent of Australia’s total current electricity generation capacity. It pointed out the various advantages of CSP, including storage.

According to Want, “CSP's versatility (thermal/steam generation as well as electricity, mature energy storage, hybridisation with gas, biomass or other thermal fuel sources) means CSP has potential in mining and other industries, not only electricity generation. Cost reductions in CSP will expand market opportunities.”

In the long-term then, prospects are indeed positive for CSP in Australia, provided sensible, long-term policy stability is achieved. CSP may currently be facing constraints because of broader economic circumstances but as a strategic technology its inherent worth is already recognised. Its worth as regards storage and dispatchability now needs to come to the fore.

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