These days most companies are cutting costs and pulling back on major capital projects. Banks are reluctant to lend and investment dollars are shifting to low-risk safe havens.
Australian companies have bucked this trend. The government’s Renewable Energy Demonstration Program (REDP) has elicited a staggering number of large-scale renewable energy applications. The REDP set out to provide $435 million in funding, at a ratio of $2 private investment for every $1 provided by the REDP.
The REDP guidelines required renewable technologies that are one step away from full commercialisation. The ideal applicant would have financing secured, network access agreements in place, and front-end engineering design (FEED) activities underway. Applicants were instructed to seek funding grants of $50 - 100 million (resulting in a $150 to $300 million project), because the government clearly stated that it wanted to fund a few large projects rather than many small projects.
How many Australian companies could possibly meet these specific requirements? How many companies could possibly have renewable energy projects on the drawing board, and hundreds of millions ready to invest?
Only a handful of eligible projects were expected.
Today the energy minister Martin Ferguson announced that 61 REDP applications were received, seeking $3.9 billion for projects totalling $15.4 billion.
These are all real projects with real private dollars behind them, hoping for government approval so they can go ahead. The application process was no easy task. Competitive grant-writing is an iterative process, requiring substantial in-depth analysis and careful wordsmithing.
The services of HAC were secured by one applicant for a baseload concentrating solar power project. Our analysis shows that this particular project measures up very strongly against the merit criteria.
The $435 million that is earmarked for the REDP program is a significant sum, but it is relatively small in comparison to the investment needed to meet Australia’s 20% Renewable Energy Target. To put it in perspective, that amount wouldn’t even buy you a single conventional coal-fired power plant.
Consider that the government has already spent $21 billion on cash handouts over the last six months.
One can only imagine the transformative power this vast portfolio of 61 projects could have on Australia’s energy industry and job market.
It’s impossible to overstate the significance of the signal that private industry has communicated to the Australian Government through this REDP turnout: We’re ready when you are. It’s time to up the ante.
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