As pressure mounts for grid innovation, the government has invested AU$1 billion in renewable projects and solutions.
On Wednesday (October 30), the Australian government announced it will contribute AU$1 billion to form the Grid Reliability Fund, unlocking investment in private sector clean energy projects.
The fund, which will be administered by the Clean Energy Finance Corporation (CEFC), comes at an interesting time. The country's coalition government had previously tried to scrap the green bank, which manages AU$10 billion in funds specifically for clean energy developments.
This marks the first injection of capital into the fund since its inception in 2012.
“Targeted government funding has a role to play in kick-starting urgent investment in a future-ready network," Kane Thornton, clean energy chief at Clean Energy Council, said in a press release.
Central to the fund's mandate are capital prudence and creating profitability for taxpayers. Between 2018 and 2019, the fund has created AU$6.3 billion in private investment commitments alone.
“We recognise that investment in new generation, storage, transmission and infrastructure is critical to support the security and reliability of Australia's energy grid," Ian Learmonth, CEO of CEFC, said in a Wednesday press release. “We look forward to working with governments and potential investors in accelerating the development of these opportunities."
The current government has expressed interest in continuing coal-mining operations, and this week's move marks a recent shift in its rhetoric.
“This demonstrates (it) is making a very public acknowledgment of where the future lies for the electricity system," Frank Jotzo, director for the Australian National University Centre for Climate and Energy Policy, told ABC.net earlier this week.
Jotzo said the fund could support projects such as renewable energy hubs and grid stabilisation tech. South Australia's Hornsdale Power Reserve, which had a capital cost of AU$90, is an example. Developed by Tesla (NASDAQ:TSLA) Founder Elon Musk, it is the largest lithium-ion battery in the world.
Dylan McConnell, chemical engineer at the Australian-German Climate and Energy College, said that the Hornsdale battery could also be replicated across the country. Similar projects would have a strong uptake among residents due to the associated cost efficiencies.
The Australian Energy Market Operator released a report showing that the Hornsdale plant is more efficient than coal and gas generators across a number of variables.
In a further sign of commitment to renewable energy, CEFC has developed a Clean Futures Team that is focused specifically on long-term innovation in sustainability. The types of projects it is working on include hydro, grid augmentation and battery storage solutions.
On a wider scale, along with the CEFC milestone investment, the federal government is investing in the Underwriting New Generation Investments (UNGI) program, which was established in June.
UNGI is explicitly designed to reduce electricity costs by increasing the number of power suppliers, including clean energy alternatives. Among its shortlisted recipients are six renewable hydro applicants, five gas projects and one coal-related project.
As more urgency builds around the development of clean energy projects, demand for alternative solutions is projected to rise dramatically over the next 20 years.
In fact, according to the Australia Clean Energy Council, installed renewable energy projects in Australia are forecast to triple in capacity by 2040, reaching over 60,000 megawatts to meet peak demand.
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Securities Disclosure: I, Dorothy Neufeld, hold no direct investment interest in any company mentioned in this article.