The 2011 Federal Budget released this week has provided a boost for the renewable energy sector with two key funding investments proposed.
Partners Martin Klapper and Jonathan Fulcher discuss the details of the proposals below.
The two key funding investments proposed include:
- Funding for the Emerging Renewables Program
- Funding for the Renewable Energy Venture Capital Fund
Upfront costs and high risks currently prevent many private sector investors from investing in emerging renewable technologies. This funding will provide support for investment in renewable energy and technology projects.
Emerging Renewables Program
The 2011 Federal Budget provides $100 million funding for the Emerging Renewables Program. This is an increase of $40 million from the election commitment.
Australian businesses will benefit from this program as it will assist in providing low-cost and emissions-free energy. The funding will help reduce the cost of renewable energy technologies and increase the skills of workers in the sector.
The Emerging Renewables Program will focus on providing funding in the initial stages of a project, where risks are generally higher. Companies that use technologies such as wave and geothermal energy are likely to benefit the most under the program.
The program encourages funding for private sector and other government investments that:
- use renewable energy and enabling technology; or
- use renewable energy measures.
It is expected that applications will be available from mid 2011.
Renewable Energy Venture Capital Fund
The Renewable Energy Venture Capital Fund (REVCF) will receive $100 million in investment until 2023-2024.
Australian companies that commercialise renewable energy technologies are likely to benefit from this investment. The REVCF will provide early investment to companies that currently have projects that are in the later demonstration stages.
The major challenge for renewable energy companies is access to capital. The Government's role in providing capital is therefore crucial to the commercialisation of emerging renewable technologies.
The fund will be administered by ACRE and two capital fund managers will be appointed. Fund managers who have experience in this type of investment and knowledge of the renewable energy and other energy markets should apply. Applications will close mid 2011.
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