Australian Government Policy Drivers for Renewable Energy Development

Australian Government Policy Drivers for Renewable Energy Development 11 June 2010 Presented by John Rooney Manager – Industry, Energy and Environmental Policy Section Industry and Small Business Policy Division Department of Innovation, Industry, Science and Research 1

The government’s approach • In June 2009 the government signed the OECD’s declaration on Green Growth • Mandates the development of a Green Growth Strategy intended to “achieve economic recovery and environmentally and socially sustainable economic growth” • Believes a Carbon Pollution Reduction System(CPRS) with a price on carbon is the cheapest and most effective way • Committed to bipartisan support so will not move to legislate until at least 2013 • Greenhouse gas reduction targets remain unchanged • Boosting investments in clean and renewable energy as well as energy efficiency 2

Renewable Energy Target Department of Climate Change and Energy Efficiency • Designed to ensure 20% of our electricity supply comes from renewable sources by 2020 • Split into small-scale and large-scale • Small-scale renewable energy scheme – designed to deliver households, small business and community groups $40 for each Renewable Energy Certificate created by small-scale technologies • Large-scale renewable energy scheme – ensures the market for large-scale projects so they can grow free from uncertainty 3

Renewable energy in Australia Source: AERA, 2010 4

Role of the Department of Innovation, Industry, Science and Research • The government believes that the best approach is through innovation, research and development • DIISR participates in areas such as clean technology, enabling technology, green skills, ‘green’ research and development and eco-innovation • Australia is a leading innovator in renewable energy technology: CSIRO’s Energy Transformed Flagship • The challenge for Industry Policy is to ensure that more of these innovations are commercialised in Australia – to grow Australian Renewable Energy manufacturing Industries 5

Energy Transformed Flagship CSIRO • • • Responding to environmental and efficiency challenges facing the energy sector Virtual Power Station – linking dispersed renewable energy generation and storage systems to create a single ‘virtual’ power station to feed into the electricity grid Mini Grids – developing advanced control techniques for electricity networks allowing greater penetration of renewable and low emission energy Second Generation Biofuels – developing second generation biofuels obtained from lignocellulose with a particular focus on conversion processes. Solar Brayton Cycle demonstration field – world’s largest solar tower Brayton Cycle system Ultrabattery – hybrid energy storage device made up of a supercapacitor integrated with a lead–acid battery cell provides a solution for future energy 6 storage needs

Renewable Energy Equity Fund Department of Innovation, Industry, Science and Research • Provides venture capital and managerial advice to small, innovative renewable energy companies • Includes companies commercialising direct or enabling renewable energy technologies and services • Sources of renewable energy include sun, wind, geothermal sources, biomass not derived from fossil fuels, mini- or micro- hydro systems, waves, tides and the ocean 7

R&D Tax Concession/Credit Department of Innovation, Industry, Science and Research • Encourages Australian industry to undertake R&D activities • Aims to increase international competitiveness by encouraging innovative products and services • From 2010 -11 the R&D Tax concession will be simplified to the R&D Tax Credit • Provides a 45% refundable credit for firms with turnover of <$20 million, 40% for firms >$20 million 8

Clean Business Australia Department of Innovation, Industry, Science and Research • Climate Ready Program – Competitive grants program – $50, 000 to $5 million on a matching fund basis – Supports early stage commercialisation activities to develop solutions to climate change challenges • Re-Tooling for Climate Change – Grants of $10, 000 to $500, 000, up to half the project cost – Helping manufacturers reduce their environmental footprint, improving energy or water efficiency • Green Building Fund – Grants of $50, 000 to $500, 000, up to half the project cost – Aims to reduce greenhouse emissions by reducing the energy consumed in operations of existing commercial office buildings 9

Green Car Fund Department of Innovation, Industry, Science and Research • $1. 1 billion fund • For projects that enhance the research and development and commercialisation of technologies that significantly reduce fuel consumption and/or greenhouse gas emissions • $1 government funding for $3 of private funding 10

Transport Fuel Grants Department of Innovation, Industry, Science and Research • Ethanol Production Grant – Eligibility-based to encourage the use of biofuels in transport – Producers are paid 38. 143 cents per litre – Eligible ethanol must be made entirely in Australia from biomass feedstock • LPG Vehicle Scheme – Grants scheme for LPG conversion of a motor vehicle or purchase of a new vehicle fitted with LPG – Grant amount starts at $1, 750 for conversions completed by 30 June 2010 11

Clean Energy Innovation Centre Department of Innovation, Industry, Science and Research • Part of the Enterprise Connect Network • Eligible businesses receive a business review at no charge • Tailored Advisory Services Grants with $1 government funding for every $1 of eligible expenditure by the business • Eligible business may be involved in – Generation of renewable and low carbon energy sources – Solar hot water, desalination and water efficiency – Equipment and technologies to increase energy efficiency 12

Further policies of the Department of Innovation, Industry, Science and Research • • • Clean Technology Supplier Advocates – provide leadership to Australian businesses that manufacture and produce environmentally-friendly technologies – Professor Andrew Parratt Innovation Investment Fund – a venture capital program that supports new innovation funds and fund managers with expertise in early stage venture capital investing – Clean Tech Australia Fund Management Partnership in Sydney and One. Ventures in Melbourne Future Manufacturing Industry Innovation Council – leaders in innovation from business, the science and research communities, unions, professional associations and the Australian Government – focus is manufacturers using advanced processes, materials and technologies 13

Clean Energy Trade and Investment Strategy Austrade • Connect Australia’s clean energy and technology sector with commercial opportunities • Contribute to industry development through trade and investment • Target markets with advanced technology and capital, especially North America, Western Europe and North East Asia • Export and outward investment will grow as domestic capability expands 14

Renewable Energy Future Fund Department of Climate Change and Energy Efficiency • On 11 May 2010 the government announced they will commit a further $652. 5 million over four years to establish a Renewable Energy Future Fund • Brings total investments in renewable and clean energy and energy efficiency to over $10 billion • Delivered through a number of departments and agencies • Priorities and progress is coordinated through Department of Climate Change and Energy Efficiency 15

CCS Flagships (and associated support) Overall funding $2. 4 billion Components Flagships: $2000 million NLECI: $400 million Australian Centre for Renewable Energy (and associated support) $0. 56 billion ACRE funding: $567 million Solar Flagships (and associated support) $1. 6 billion Flagships: $1, 500 million Solar Institute: $100 million 16

Australian Centre for Renewable Energy (ACRE) Department of Resources, Energy and Tourism • Objectives: promote the development, commercialisation and deployment of renewable energy and enabling technologies to improve competitiveness in Australia • Central contact for the government • Focus on building on the research and development funded through other bodies 17

ACRE’s Renewable Energy Demonstration Program Department of Resources, Energy and Tourism • • MNGI Pty Ltd - $62. 762 million – engineered geothermal system project, based on Petratherm's 'Heat Exchanger Within Insulator' model – will provide a sound foundation upon which to underpin the largescale development geothermal energy Geodynamics Limited - $90. 000 million – demonstrate the potential for hot-rock geothermal energy to be a major generator of zero-emission, base-load power – world's first multi-well hot fractured rock power project Victorian Wave Partners Pty Ltd - $66. 465 million – first commercial scale ocean energy project in Australia The Hydro-Electric Corporation (Hydro Tasmania) - $15. 280 million – demonstrate the potential for enabling technologies to help integrate renewable technologies into established electricity networks and mini-grid systems in remote areas – integrate wind, solar and storage with a biodiesel generator to provide baseload and peak power for the King Island mini grid system 18

ACRE’s Advanced Electricity Storage Technologies Program Department of Resources, Energy and Tourism • • • Wizard Power (ACT) – $7. 4 million to demonstrate a solar energy storage system based on ammonia dissociation and reassociation into hydrogen and nitrogen Lloyd Energy Systems (NSW) – $5 million to demonstrate a solar thermal energy storage system involving concentrated solar energy and graphite blocks ZBB Technologies (NSW) – $3. 1 million to demonstrate an integrated zinc-bromine flow battery at CSIRO’s National Solar Energy Centre in Newcastle Red. Flow Pty Ltd (QLD) – $1. 113 million to demonstrate the viability of zinc bromine batteries in maximising on grid and fringe of grid solar photovoltaic systems Smart Storage Pty Ltd trading as Ecoult (NSW) – $1. 82 million to demonstrate an Ultra. Battery system located at the end of an 11 k. V rural grid attached to a 660 k. W wind turbine at 19 Hampton NSW

ACRE’s Second Generation Biofuels Research and Development Department of Resources, Energy and Tourism • • The University of Melbourne ($1. 24 million) – biofuel from Micro algae involving the efficient separation, processing and utilisation of algal biomass Algal Fuels Consortium ($2. 724 million) – pilot-scale second generation biorefinery for sustainable micro algal biofuels and value added products Curtin University of Technology ($2. 5 million) – sustainable production of high quality second generation transport biofuels from Mallee biomass by pyrolysis and utilising the biorefinery concept Bureau of Sugar Experiment Stations ($1. 326 million) – an optimised and sustainable sugarcane biomass input system for the production of second generation biofuels Monash University ($1. 383 million) – develop a pyrolysis biorefinery Microbiogen Pty Ltd ($2. 539 million) – produce commercial volumes of ethanol from bagasse using patented yeast strains Licella Pty Ltd ($2. 288 million) 20 – commercial demonstration of Lignocellulosics to stable bio-crude

Other programs of the Australian Centre for Renewable Energy • Geothermal Drilling Program Department of Resources, Energy and Tourism – $50 million program provides assistance to develop geothermal energy projects, drilling geothermal wells – Seven firms were announced to receive funding in 2009 • Wind Energy Forecasting Capability Program Department of Resources, Energy and Tourism – $14 million to support the development and installation of software and systems for effect forecasting on wind energy generation – Funding concluded on 30 June 2009, some work continues into 2010 – Developed the Australian Wind Energy Forecasting System 21

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Solar Flagships Program Department of Resources, Energy and Tourism • • Solar photovoltaic – AGL Energy - a multi-site project using thin film cadmium telluride solar photovoltaic technology generating up to 150 MW – TRUenergy - single site using thin film cadmium telluride solar photovoltaic technology to generate up to 180 MW – Infigen/Suntech - crystalline silicon solar photovoltaic technology would be deployed at up to three sites to generate up to 195 MW – BPSolar - a single axis tracking photovoltaic system to generate 150 MW from plants constructed at several locations Solar thermal – ACCIONA Energy Oceania - generate 200 MW using solar thermal parabolic trough technology at a single site – Parsons Brinckerhoff - construct a 150 MW solar thermal parabolic trough power station – Wind Prospect CWP - linear fresnel technology to construct a 250 MW power plant – Transfield – convert a coal-fired power station into a 150 MW solar 23 thermal linear fresnel power plant

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Carbon Capture and Storage Flagships Program Department of Resources, Energy and Tourism • Wandoan power project located north-west of Brisbane, Queensland, an Integrated Gasification Combined Cycle (IGCC) coal fired power project. • Zero. Gen project located west of Gladstone in Queensland; also an IGCC project. • Collie South West Hub located south of Perth in Western Australia in close proximity to the industrial centres of Kwinana and Collie and based around an integrated multi-user capture, transport and storage infrastructure project. • Carbon. Net proposal in Victoria’s La Trobe valley, another integrated multi-user capture, transport and storage infrastructure project, with sources of CO 2 from electricity generating plans in that area. 25

Department of Innovation, Industry, Science and Research Industry House 10 Binara Street Canberra City, ACT 2607, Australia Telephone +61 2 6213 6000 26