Arena’s $60 Million Funding for Ultra Low-Cost Solar Innovation

The Australian Renewable Energy Agency (ARENA) has unveiled an ambitious new initiative aimed at driving down the costs of solar energy. With a funding round of $60 million, the focus is on fostering innovation in the production of solar cells and modules, as well as finding more economical installation and operational methods.

This funding round is designed to assist leading universities, research institutions, and start-ups across Australia in achieving significant advancements that could lower the installed cost of solar to 30 cents per watt and reduce the levelised cost of electricity (LCOE) to below $20 per megawatt hour by the year 2030.

Current Solar Costs and Future Goals

In October of last year, ARENA reported that the global average LCOE for large-scale solar was approximately $US0.044/kWh, or $A0.064/kWh, making it considerably cheaper than most fossil fuel sources. However, ARENA’s chief, Darren Miller, emphasised the need for further reductions in costs as Australia strives towards net zero emissions.

“Ultra low-cost solar PV is essential for electricity generation and will play a pivotal role in the energy transition,” Miller stated on Wednesday. He highlighted that ARENA has been instrumental in solar innovation since its inception 13 years ago, significantly transforming the renewable energy landscape in Australia.

Complementing the Solar Sunshot Programme

This new funding initiative complements the federal Labor government’s $1 billion Solar Sunshot programme, which was announced in March 2024 and launched in September. The first phase of this programme offers $550 million to assist companies in scaling up the commercial manufacturing of solar PV modules and related technologies.

In May, the “Maverick” rapid-deploying solar generation technology developed by Australian innovator 5B was the first to receive funding from the Sunshot programme, marking one of Labor’s initial significant energy policy announcements following their re-election.

Funding Streams and Focus Areas

The $60 million in new funding from ARENA will be divided equally across two streams and six focus areas, reflecting the agency’s commitment to supporting Australia’s renewable transition while also fostering new export industries.

The first stream is dedicated to solar cells and modules, providing financial support for innovations aimed at enhancing solar efficiency and stability while simultaneously reducing costs. Specifically, ARENA is looking for advancements in large-sized solar cells for next-generation modules that can achieve over 30 per cent efficiency, as well as innovations that can bring system costs down to below 30 cents per watt.

Additionally, ARENA seeks innovators who can enhance the stability of solar cells and modules for utility-scale solar farms, aiming to extend their operational lifespan beyond the minimum asset life of 30 years.

Cost Reduction in Deployment and Maintenance

The second stream focuses on reducing costs associated with the balance of system (BoS) deployment and ongoing operation and maintenance (O&M) activities. Miller reiterated the importance of making solar even more affordable to facilitate the renewable energy transition, particularly in decarbonising heavy industry and establishing new export markets.