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Environment and Communications Legislation Committee
22/05/2018
Estimates
ENVIRONMENT AND ENERGY PORTFOLIO
Australian Renewable Energy Agency

Australian Renewable Energy Agency

[11:32]

CHAIR: We will now move to the Australian Renewable Energy Agency. Welcome, Mr Frischknecht; thank you very much for joining us. Would you like to make an opening statement?

Mr Frischknecht : No, thank you, Senator.

CHAIR: We will proceed straight to questions.

Senator MOORE: Mr Frischknecht, I am particularly interested in whether ARENA is working on projects that would assist in providing access to small-scale solar and batteries for renters rather than owner-occupiers. This has been a particularly important issue around discussion across a whole range of areas. Is ARENA working in this space?

Mr Frischknecht : Yes, we are. There are a number of projects that we have supported historically. One that was recently announced on solar gardens is a feasibility study with the University of Technology Sydney to look at the feasibility of having either communally-owned or community-leased solar farms that renters or people in apartment buildings that cannot have solar on their roofs can access. There have been other projects that are similar in nature. For example, we did one in Western Australia focused on strata title unit holderspeople who are in an apartment building who want to share an asset, whether it is solar or batteries, and how they then allocate the benefits of that and the costs of that.

Senator MOORE: Are evaluations done when you have done those projects to see exactly how effective they have been?

Mr Frischknecht : I would have to take the details on notice, but the biggest challenge is really regulatory in nature; it is not that somehow the benefits cannot be shared or that it does not work. Technically, there are no issues with either of those aspects.

Senator MOORE: With the project with the university in Sydney, what is the time frame for that? You can take it on notice.

Mr Frischknecht : I cannot tell you off the top of my head; I am sorry.

Senator MOORE: When you said the main barriers are regulatory, what exactly does that mean? There is a lot of interest in having this kind of project. If you have identified that this is the major problem, can we find out exactly how that works?

Mr Frischknecht : Yes. I can give you a bit of a

Senator MOORE: That would be very useful.

Mr Frischknecht : Would you like something on notice or an overview now?

Senator MOORE: A little bit now and, if you have more on notice, that would be good. There is a lot of discussion amongst the housing groups and community groups about this issue. If we know about the main problems you have identified already in the projects you have worked on, that would be handy.

Mr Frischknecht : Yes, absolutely. One issue is around the retailer of last resort. If somehow the energy system were not to work or if the consumer were unable to pay their bills, what happens, given that electricity is an essential service? Let us say the issue was that the solar no longer worked and it was supplied by a third party; who carries the burden of making sure those vulnerable consumers are still supplied, and who carries the risk from a credit perspective for them not paying, now that they suddenly have an additional burden to bear, if you like? That is one issue. Another one is how you use the networks. There are rules around not being able to string your own electricity wire across property boundaries.

Senator MOORE: Good rules.

Mr Frischknecht : Yes, there are probably some good reasons for that. In some cases there are very good reasons, and in other cases, where you have two rural properties and neighbours might want to share energy, common sense does not prevail in that case. You can't actually cross the boundary. Let's say you are in a city type location, and you have built a community solar farm outside the city. You have to make use of the network. There are rules around how you do that. A retailer has to be involved, in order to end up having to use the network and have a consumer buy the energy in the end. You cannot just directly participate with a solar farm, for example. And there is the cost of the network, of course, which is very substantial and it is fixed. Even if you are only moving energy a few blocks, you still have to pay transmission charges as if you were moving it across the state, and that obviously increases the cost. That gives you a bit of a flavour for some of the issues.

Senator MOORE: Can we get some more on notice on that in detail? That would be very useful, because I think there is interest.

Mr Frischknecht : Yes. We are keen to do more work in this area, and we are open for applications.

Senator MOORE: You have identified projects that you have donethese kinds of issues that you have just talked about. That is identified during the time that you are working through the project. Your commitment is then finished and you move away, and it continues. How do you discover how you get over the barriers? You have identified these barriers. You have something in place. How then do you get the knowledge to know what to do to respond to these issues, because there must be responses? The things you have worked on are continuing to operate.

Mr Frischknecht : That is right. A big part of our role is knowledge sharing. For these studies, and for many others, we do them, at least in part if not primarily, to inform the policymakers, the regulatory change processes, and we make sure that we feed the learning in, in the form of submissions, for example, in the form of informal interaction with the government, the AEMC or AEMO. The knowledge that we have gained does go in, and we also make sure that we make it public so that third parties can rely on the studies and the demonstration projects that we have done, to also take their own initiative.

Senator MOORE: That is all up on your website?

Mr Frischknecht : Yes, absolutely.

Senator MOORE: People can get their issues looked at, even before they make a submission?

Mr Frischknecht : That is right, and they can reference our work in submissions.

Senator MOORE: Are you involved in any solar thermal projects besides the South Australia Port Augusta project, which I think we have spoken about before? Are you involved in any other solar thermal?

Mr Frischknecht : We have been historically involved in a number. I am trying to think. Currently, there is Vast Solar; that is an ongoing project. That is an Australian pilot project that is in the process of being commissioned. It is at a sizable scale, actually generating electricity.

Senator MOORE: Where is that?

Mr Frischknecht : It is in central New South Wales, at a place called Jemalong.

Senator MOORE: It is a rural area?

Mr Frischknecht : Yes, absolutely. Jemalong is near Parkes.

Senator MOORE: That is a big one that you are involved in now?

Mr Frischknecht : Yes. It is not of the size and scale of the proposed Port Augusta project, but it is one megawatt electrical, which is a significant scale. To give you a sense of it, there are five towers that are each in the order of 40 metres, so they are not that enormous. You can easily see it from standing in one spot. You can see the whole facility. There are a number of others that we have spoken to over the years. We have done some feasibility studies that have been completed. We did run a request for information last year and we published, in the last few months, the outcome of that request for information. There is a summary available on our website that says, 'Here's the sort of projects that are interesting and that we have seen in Australia.'

Senator MOORE: Again, as an information source?

Mr Frischknecht : Yes.

Senator MOORE: That would be one of the few places where you would have it all together in one spot, wouldn't it? If you were interested, it would be a very useful thing to have all of that information in one area rather than trying to sort it out for yourself?

Mr Frischknecht : Yes. It is a very useful information source. We are also currently working on a roadmap for CST. That has not been completed yet, but we expect to finish that over the coming month or two.

Senator MOORE: I am from Queensland, Mr Frischknecht, and I have always thought we have a lot of solar up there. Are you working on any projects in my state?

Mr Frischknecht : There are plenty of renewable energy projects.

Senator MOORE: There sure are.

Mr Frischknecht : Are you specifically interested in solar thermal or

Senator MOORE: I am interested in solar thermal. I was talking to a gentleman the other day in another committee who was doing something in the centre of Queensland. I did not cross-reference ARENA in those discussions, but there does seem to be a lot of interest in alternative sources around Queensland using different things. It just seemed that solar thermal is perfect for our conditions.

Mr Frischknecht : We are having a discussion with the Queensland government about that topic. Solar thermal energy is significantly more expensive than either wind or solar PV. It does have an advantage in that it incorporates storage relatively cheaply, as I suspect you already know. It has some additional value as a result of that. Ultimately, the comparison will be between solar PV or wind, plus something like pumped storage, plus battery, plus demand response. With that package, how does that compare to solar thermal?

Senator MOORE: And how it all works together.

Mr Frischknecht : In the end we do not know the answer yet, as to in which circumstances solar thermal will be more competitive and in which circumstances it will be less competitive. That is something we need to work through.

Senator MOORE: I know our state government is very interested in it, so they are putting some work towards it as well. At the moment your mandate restricts the work you do to renewable energy, doesn't it? The mandate for ARENA is specifically around renewable energy?

Mr Frischknecht : That is correct, but it is fairly broad in that context, in that it includes anything that enables renewable energy or can be hybridised with renewable energy. That would include, for example, solar-diesel hybrid or a waste-to-energy plant, where only a fraction of the waste stream were organics, which makes it renewable.

Senator MOORE: Are you aware of a need for ARENA-type support for non-renewable decarbonisation efforts in non-electricity sectors of the economyfor example, to lower industrial process emissions in industries like cement and aluminium manufacture?

Mr Frischknecht : I will ask Mr Kay, who heads up investments for ARENA, to comment on that.

Senator MOORE: Has that kind of question come to you before, Mr Kay?

Mr Frischknecht : We have certainly had discussions. I am trying to think if we have specific applications or specific projects on the go.

Mr Kay : No applications. To support initiatives like that, a renewable element would have to be attached to the project.

Senator MOORE: Is that the kind of thing you have turned your mind to in terms of those examplescement and aluminium manufacture, which are high energy-using industries?

Mr Frischknecht : Yes.

Senator MOORE: Have you done any work on that? Have you turned your minds to that?

Mr Frischknecht : Absolutely. We have had some detailed discussions with some of the aluminium smelters and refiners in the context of renewables. You could imagine that they would only be interested in energy efficiency, for example. A slightly different way to answer your question is that we have contemplated projects that fall outside our mandate and that are purely energy efficiency; for example, building energy efficiency.

Senator MOORE: The mandate currently stops you from becoming involved in projects aimed at lowering industrial process emissions?

Mr Frischknecht : Only if there is no renewable component.

Senator MOORE: So any attachment to renewables that you could work through may mean that ARENA would be able to move in there?

Mr Frischknecht : Correct. We have a number of projects like that where we are looking at industrial facilities as a whole, trying to make them energy efficient and their energy supply as cheap as possible. That usually involves a reduction of energy use and energy efficiency initiatives. It usually involves renewables

Senator MOORE: Because that is where you get in, with renewables?

Mr Frischknecht : Right. There is usually an integration of all of these components that makes the project work as a whole. For example, for most users, industrial or otherwise, having solar on the roof is simply a cheaper way to get energy. It is not going to be all of their energy. Can they also rework their process to reduce their demand charge, so reduce peak demand? Maybe you need a battery to do that as well. So all these bits come together.

Senator MOORE: Then you have the facility within ARENAthough the major expertise is within the renewables areato turn your mind to how it could all work together?

Mr Frischknecht : Yes.

Senator MOORE: Is that what you meant by hybridisation?

Mr Frischknecht : Yes, that is both hybridisation and enablement of renewables. We have some expertise, a number of people, within ARENA focused on energy productivity because it is one of our four priorities.

Senator MOORE: You would have to get a submission as well; people would have to come to you to seek that?

Mr Frischknecht : Yes.

Senator MOORE: You do not go; someone has to come to you with a project that you then work on?

Mr Frischknecht : We do both. We have an active outreach program.

Senator MOORE: I have seen some of the stuff on the website where you are going out to team, talking about what you do and what the options are. So that is what you call the outreach?

Mr Frischknecht : We tend to be targeted. If we simply go out and say, 'Anybody who wants to improve energy productivity, come in,' it is hard to get through to people. But if we get specific and say to the dairy industry, 'We know you have thermal requirements for pasteurisation and drying of milk and so on. How about you talk to us about that?' We also have a specific forum that we call ALAB that is a design/thinking collaboration format to come up with ideas that are specific to a particular industry or focus area.

Senator MOORE: Thank you. I will request on notice some of the information on the projects I asked about earlier.

Senator PATRICK: I have some questions around the topic of lithium and its relevance to ARENA.

Mr Frischknecht : Yes.

Senator PATRICK: Lithium can become a dispatchable component from a NEG perspective to any renewable product. Are you aware of a paper released by the Association of Mining and Exploration Companies called 'A lithium industry in Australia'?

Mr Frischknecht : I am not aware of it.

Senator PATRICK: It suggests that as lithium is a disruptive technology and something we have lots of, particularly in Western Australia, rather than just shipping it offshoreas we typically do with most rocksand then having the value-add product come in, we could work in all of the five stages rather than just the first stage, which might involve electro-chemical processing. It might involve the development of cathodes and anodes and such things and the construction or production of lithium batteries. Is it within the scope of your organisation to assist in some of those processing stagesyou might have to take it on notice, but as a general principle?

Mr Frischknecht : I can certainly tell you that as part of trying to make variable output renewables, like solar PV and wind, reliable in the network, lithium ion batteries are a key enabler, so it is one of the primary forms of storage that we see rolling out in high volume in the network. In the context of lithium being an enabler or key component of batteries it is within our mandate; certainly batteries are within our mandate. How far we go down the supply chain is an open question, but there is no reason why we would not at least consider that. Certainly our sister organisation, the Clean Energy Finance Corporation, has already provided some funding. I believe it is a lithium mine or a lithium processor. You can ask them this afternoon.

Senator PATRICK: I may ask them, but has ARENA done anything in the lithium space?

Mr Frischknecht : We have supported batteries, but not further down the supply chain. We have not supported, nor have we been approached by, a processor or a mine or anything like that. But it is one of our priorities to help energy upgrade exports. So rather than exporting rocks we might export metals, for example, which is related to what you are talking about.

Senator PATRICK: Fantastic. Can I ask you then, perhaps on noticeI will get the name of the paper to youto have a cursory review of it and come back and suggest to the committee where you think it would be most appropriate that ARENA could become involved from the perspective of your remit. Is that possible?

Mr Frischknecht : Absolutely; happy to do so.

Senator PATRICK: Thank you. To the minister, more broadly, I have seen in documentation that we extracted painfully in relation to the naval group's plans for the future submarine project lots of redactions, and in and next to some of the redactions the words 'lithium battery', so it is clearly a topic. How across government might we coordinate an opportunity in a disruptive industry, a disruptive technology, to merge, say, making lithium ion batteries for submarines as are used in Japan and as are purportedly going to be used on Singaporean submarines, for example, and a commercial output where they might be used on a wall bank or in place of, say, Elon Musk's batteries across Australia. How do we look at that from a government perspective, tying in defence, AREA and industry to take advantage of this sort of opportunity?

Senator Birmingham: If you want to look at it from the whole-of-government, whole-of-economy approach, particularly from the potential that may exist for innovation and advances there, then whilst I would be happy to volunteer here to try to provide some thoughts to you on the topic, the jobs and innovation portfolio would be the better portfolio to give a whole-of-government perspective of how you might achieve outcomes in defence and energy, and ultimately outcomes that see Australia use a potential competitive advantage in terms of availability of the resource for innovation and jobs potential. They could provide that more comprehensive thought process. The answer will still be a serious of component parts that would stretch across government and see different agencies engaging in different ways, as you have just asked ARENA about. In terms of the potential you are asking for exploration of, they are the relevant agency to administer and to try to put the big picture through the jobs and innovation and science portfolio.

Senator PATRICK: Thank you for that. I will be asking the Clean Energy Finance Corporation, Defence and others at the individual level, but it kind of had an energy flavour to it. Hence I thought I might ask you. I know you are the minister representing, but thank you for that.

Senator DI NATALE: I want to move through the elements on the periodic table from lithium to hydrogen and talk to you about hydrogen. In the current hydrogen funding round you have just closed off applications; is that correct?

Mr Frischknecht : Yes, it is. We are currently assessing those.

Senator DI NATALE: How many expressions of interest have you had, and how many of those are formal applications?

Mr Kay : We set aside $20 million as being the expected amount of money to spend. We have received the expressions of interest and they have now submitted their full applications. They closed earlier this month and we have an assessment panel going through those, I think, in the next week or so. So they are in the process of being assessed.

Senator DI NATALE: Okay. Did the number of applications exceed your expectations? What was the quality of those applications? Can you give me a general sense of that?

Mr Kay : Yes; from memory we received 50-odd applications, the usual mixed bag that we get. At this stage we are reasonably confident that we will have sufficient good quality applications to cover the $20 million. So it feels about right in terms of balance, but we will not know until we go through the assessment process with the expert panel.

Senator DI NATALE: Were projects using ammonia or other means of export included, or was it just hydrogen?

Mr Kay : People were able to look at hydrogen and how it should be transported. I cannot remember the mix of the proposals.

Senator DI NATALE: Just a sense of why you put aside $20 million with regards to hydrogen and particularly the potential for the renewable energy export supply chain: why did you choose that? Do you see a strong future in Australia for hydrogen and, in particular, hydrogen export?

Mr Frischknecht : Yes, the context for that priority, exporting renewableswhich is one of our four prioritiesis that our nation exports most of our energy in the form of coal and gas, the view being that in the very long term there will be less demand for that. But we have a huge amount of solar resource and wind resource in the country. How do we learn to export that? That is a multi-decade initiative and there are various options of how we do it. One is with a direct cable link to Indonesia or Singapore. Another is via hydrogen or ammonia or fertiliser, another carrier; something like that. A third is what we just talked aboutupgrading our existing mineral exports so that we are not just exporting the dirt; we are exporting something that has energy added back into it.

Senator DI NATALE: Again, are you bullish about the prospects of something like that in Australia?

Mr Frischknecht : Absolutely. Longer term, I think there is a very high probability that we will learn to take advantage of these energy resources that we havejust like we have learnt to take advantage of the energy resources we have in the pastand make good use of them for the benefit of the country. The scale of these industries is enormous and at the moment we are still at the point where there are actually technical barriers, let alone scaling up issues or commercial issues, that need to be resolved.

Senator DI NATALE: Moving to that question about how you export it, I want to go specifically to the Asian Renewable Energy Hub. With regard to that project, is that something that ARENA knows much about? Do you have a view on it?

Mr Frischknecht : We don't know much about it, no.

Senator DI NATALE: So you've got no direct involvement in the project or there have been no applications to ARENA for that project?

Mr Kay : We're in discussions with the proponent, but it is early days.

Senator DI NATALE: In discussions with?

Mr Kay : With the proponent for the Asian energy hub.

Senator DI NATALE: This is an example where you could have the production of hydrogen for domestic and export markets via an under-sea high voltage DC transmission cable. That speaks to one of the modes by which Australia might become an energy exporter, as opposed to shipping it overseas. We are talking about direct transmission by underground DC cables?

Mr Frischknecht : That is right, and there's not a good sense yet of which of these modes of transmission might be more economic in which circumstance. It also depends on the demand at the other end. We have countries like Japan and South Korea thinking that they are going to convert their transportation fleets to hydrogen, as opposed to batteries, and if that ends up coming to pass then there will be a market for liquid or highly compressed hydrogen.

Senator DI NATALE: Do you have a view about what direction that is more likely to proceed in? Obviously that is an ongoing debate about the role of hydrogen in the transport sector via batteries.

Mr Frischknecht : We do not. Certainly for vehicles, personal transportation vehicles, there are some advantages to hydrogennamely, much faster refuellingbut very considerable disadvantages: more complicated technology, less mature technology. There is a much bigger energy loss in the process of turning electricity into hydrogen and back into electricity to drive a vehicle. Exactly how that is going to resolve we do not know. But it may well be resolved differently in different places and different markets. I should emphasise that the work we are doing in hydrogen now is R&D. It is R&D phase work. We're not piloting anything; we're not actually building a plant to export hydrogen.

Senator DI NATALE: A final question: I am just interested in looking at whether you are undertaking any work to determine how Tasmania can contribute to stable electricity supply into the national electricity market.

Mr Frischknecht : We are, and I'll ask my colleague to comment on the details. At a high level we are looking at a second interconnector as a possibility. There's a feasibility study underway. We are also supporting three different studies within Hydro Tas to look at how to make better use of the existing and potentially new hydro assets.

Senator DI NATALE: Maybe a bit of detail of what that might look like?

Mr Kay : There is the project with Tasmanian Networks, which is the second interconnector. There's a feasibility study that is just about to start, and this is the second part of the feasibility study. We supported Hydro Tas on the first stage in relation to Tarraleah. There is ongoing work in identifying other potential pumped hydro sites in Tasmania.

Senator DI NATALE: And you were saying about the three different projects that you are looking at?

Mr Kay : Those are kind of chopped up into separate feasibility studies.

Senator DI NATALE: What are they looking at with regard to Hydro Tas specifically? Can you just talk me through what the actual technologies look like?

Mr Frischknecht : Sure. The first activity is looking at two different existing storages, so Tarraleah and Gordon. It is about upgrading those so that they have more pumped capacity and potentially slightly more storage capacity. So they become more of a peaker. Right now the way they run is kind of like run-of-river. Even though there is a dam there, the average flow is turned into electricity for very many hours in the day as opposed to it being a peak output plant.

Senator DI NATALE: What needs to be done for that to happen? Are you talking about scaling it up?

Mr Kay : There has to be a new large pond built proximate to the tail race that the water is going down. As Ivor said, it's kind of long run-of-river from the existing dam and it is putting in a new pond.

Senator DI NATALE: Pond. I like that. It is a pretty big pond.

Mr Frischknecht : That is activity 1. The second activity is really looking at the system broadly, so what are the opportunities in terms of increasing the power output capacity, not necessarily storage capacity but power output. That involves both potential pumping projects as well as potentially connecting, a bit like Snowy, to reservoirs that are not currently connected to get more altitude, for example. That is at a much higher level than the detailed work done on Tarraleah and Gordon. That has identified in the order of 15 projects that could be looked at in greater detail. That is currently nearing its conclusion in terms of the feasibility.

The third activity is really looking at the role of the Tasmanian hydro assets in the context of a broader NEM energy strategy. If you think about more wind farms in Tasmania, if you think about an upgraded hydro capacity, including pumped capacity in Tasmania, and you assume another interconnect, how would that actually work from a commercial perspective? How would that work in terms of supporting more renewables either in Tasmania or on the mainland? Those are the three bits of work.

Senator DI NATALE: Excellent.

Mr Frischknecht : With the last being at what we call the highest level or earliest stage and then the first one obviously being quite detailed and specific.

Senator DI NATALE: Good luck.

CHAIR: Senator Abetz.

Senator ABETZ: Following on from that, is any work being done on more efficient turbines in the Tasmanian system and alsoit is not the technical term, I am surethe smoothing of the pipelines internally so that the water flow is faster and therefore hits the generator or turbine harder and therefore, per drop of water, you are able to generate more electricity? Are you aware of any?

Mr Frischknecht : I'm not aware of any work like that that is underway. That does not mean it's not happening.

Senator ABETZ: There is a Canadian technology which seeks to line old concrete pipes of that nature so they are a lot smoother and, as a result, the water moves faster, so for the same amount of water you can generate more energy.

Mr Frischknecht : That is interesting.

Senator ABETZ: Anyway, that is just an aside.

Mr Frischknecht : Thanks for that, Senator. I am aware of some quite interesting work that is being done overseas into making turbines, water turbines, much faster to turn on so that they are better as a peaking generator and also faster at turning from generation to pumping.

Senator ABETZ: That is where Tasmania, in particular, is relatively well suited, because hydro energy can be electrically turned on and off with a few minutes notice.

Mr Frischknecht : That is right. We want to turn minutes into seconds.

Senator ABETZ: Yes, which is good. Turning to Hornsdale, stage 2, did ARENA fund $300,000 towards that for a 100 megawatt capacity increase? Is that correct?

Mr Frischknecht : Not quite, Senator.

Senator ABETZ: Right. Correct me?

Mr Frischknecht : We did provide some funding, but it was very specifically for investigating the use of that wind farm. I believe it was stage 2, actually; it was not stage 3. Using that wind farm

Senator ABETZ: Did I say stage 3? I meant stage 2 if I said stage 3.

Mr Frischknecht : It was very specifically to investigate the use of that wind farm for frequency support. In order for the system to stay reliable and stable'secure' is the word we usually use, secure and stablethe frequency needs to stay at exactly 50 hertz. That is a serviceI call it a serviceto the system that has traditionally been provided for free by the large spinning turbines, whether hydro, gas or coal. Traditionally, wind and solar have not been able to provide that. But there is no technical reason why they could not and this funding was to investigate how that would actually work in practice.

Senator ABETZ: How much was that funding? Was it $300,000?

Mr Kay : It's in the order of $300,000, yes.

Senator ABETZ: Just remind me: Hornsdale is operated by a French company?

Mr Kay : Yes, Neoen.

Senator ABETZ: Whereabouts is Hornsdale situated geographically, which state?

Mr Frischknecht : South Australia.

Senator ABETZ: I am sorry to do this to you, Minister, but can you confirm that the wind generation capacity in South Australia has, in fact, increased over the past year or twothat is, the actual capacity? I am sorry; I am not asking you specifically, Minister. I was just reflecting on the fact that you were from South Australia. I was not expecting you to answer; sorry.

Senator Birmingham: All good.

Mr Frischknecht : You were asking about how much the wind capacity has increased in South Australia?

Senator ABETZ: Yes.

Mr Frischknecht : I am not across the details, but my understanding is that it has actually slowed down a little bit in the last couple of years.

Senator ABETZ: That is what I was going to ask: whether the actual capacity to generate has increasedin other words, we've got more turbinesbut the actual power generated has, in fact, decreased. I just want to get that on the record as being a fact.

Mr Frischknecht : I do not know that. I do know that the wind output has been constrained by AEMO on occasion.

Senator ABETZ: Is it appropriate for you to take that on notice or possibly the officials? I do not want to detain the committee.

Senator Birmingham: So between the department and perhaps CEC

Senator ABETZ: Would you be so kind as to direct it to the appropriate element of the department and then advise as to the amount of wind energy produced in 2015-16 and 2016-17 for South Australia, Queensland and New South Wales? As I understand it, the actual power generated by wind farms decreased in all those three states between those two years. What's the explanation and what is the cost of increasing capacity when the actual yield of energy from these wind turbines is, in fact, decreasingone assumes because of the weather, the vagaries of the weather, but there may be other reasons as well.

Senator Birmingham: We'll take a look at that, Senator, so far as possible, and indeed look at whether it's regulatory interventions and whether, in fact, it's total quantum versus perhaps generation per turbine, which may also be a variable factor.

Senator ABETZ: That is why I am not making any assertions; I am asking questions. Because then when we get the answers, hopefully assertions can or cannot be made. Thank you. Thanks, Chair.

CHAIR: Thank you, Senator Abetz. Senator Keneally.

Senator KENEALLY: Thank you to ARENA for being here today. ARENA was involved in the Snowy 2.0 feasibility study, correct?

Mr Frischknecht : Yes.

Senator KENEALLY: And were you involved in the economic modelling by MJA of the project?

Mr Frischknecht : Just to be clear, we provided funding, $8 million out of $29 million, for the feasibility study. And the feasibility study had two components. There was the technical/commercial feasibility study and then there was the MJA markets report. So we provided funding for the entire whole.

Senator KENEALLY: You provided funding for the entire MJA report or the entire technical part as well?

Mr Frischknecht : Both, yes. They were indivisible from our perspective.

Senator KENEALLY: The scenarios that were modelled considered Snowy Hydro compared to other alternatives to firm, increased renewable generation in the national electricity market. I understand these alternatives included more gas and batteries, is that correct?

Mr Kay : No. I think what it did was it said: what is the benefit to the market, the market benefit, of having Snowy 2.0 built under two scenarios?

Senator KENEALLY: What were the two scenarios?

Mr Kay : The two scenarios were the large renewable energy target we have at the moment, the RET, plus the other legislated scheme at the time, which was the VRET. That was one scenario. And then the second scenario is what is called the long-term commitment in the MJA report. That ended up with an assumption of 60 per cent renewables by 2040, which includes all rooftop solar as well.

Senator KENEALLY: Apologies if I am not being clear. In those comparisons, what I am trying to understand: was there any modelling or consideration of Snowy Hydro and then comparing doing Snowy Hydro as opposed to doing other types of renewable energygas, batteries?

Mr Kay : No.

Senator KENEALLY: It was not a comparison of that type?

Mr Kay : It assumed Snowy taking place with, then, the withdrawal of existing generation capacity and being replaced in the modelling by the least cost, and then the implication of Snowy 2.0 in that. Those were the two scenarios.

Mr Frischknecht : Senator, if I could be so bold as to ask if you are trying to get at a cost comparison between different forms of flexible capacity?

Senator KENEALLY: No. I was trying to understand if there was any consideration given to Snowy 2.0 versus, say, for example, a large distributed network of smaller, pumped hydro systems across the country?

Mr Frischknecht : Because we have done that sort of work, not with Snowy 2.0 specifically but more generically pumped storage versus batteries versus solar thermal, it is a comparison of various forms of flexible capacity.

Senator KENEALLY: You did that work. When did you do that work?

Mr Frischknecht : I am trying to think if it has been released, but the work has largely been donevery recently. So it would have been roughly contemporaneous with the Snowy 2.0 study. And I do not know the answer whether it is public at this point. But if not, it will be soon.

Senator KENEALLY: Can we put on notice when that work was done and when it will be released?

Mr Frischknecht : Yes, absolutely.

Senator KENEALLY: Thank you. Amongst that work that you did, did that include a new Basslink cable and increased firming capacity from Tasmanian Hydro Power?

Mr Kay : It was not excluded from the modelling but it was not included in the benefits that came through.

Senator KENEALLY: That work that you did looked at that as an option?

Mr Kay : The modelling that MJA did would not have had that. That was not one of the projects that would have occurred in coming up with those answers.

Senator KENEALLY: Sure. I am referring tounless we are going around in circles nowthe work that Mr Frischknecht just said was not yet released.

Mr Frischknecht : Right. That work was all generic in trying to figure out what forms of flexible capacity would be competitive and were there any clear winners and clear losers. The answer to that was no; it was more specific circumstances will dictate which form of technology would win. Specific connections like to Tasmania were not considered.

Senator KENEALLY: That is fine. Thank you.

CHAIR: Thank you very much. That concludes the Australian Renewable Energy Agency.

Senator Birmingham: Chair, this may be Mr Frischknecht's final estimates, I believe. He has indicated that he is not seeking a further term, having completed a couple of terms as CEO of ARENA. The exact time line for transition to a new replacement is not completely settled yet, but in case we do not see him again after six years in the job and bringing strong investment background and skills to the role, on behalf of the government, I would like to thank him now on record for this work and contribution.

CHAIR: Absolutely, and on behalf of the committee I am sure we echo those sentiments as well. And thank you very much for your patience with us, Mr Frischknecht, as we ask these questions.

Mr Frischknecht : Thank you for very much for your good questions.

CHAIR: Best of luck for the future. The committee will suspend now for lunch and return at 1.35 with the Clean Energy Finance Corporation.

Proceedings suspended from 12 : 21 to 13 : 35