Federal government launches $50m microgrid funding round

A $50 million fund to support the development of off-grid and fringe-of-grid stand-alone power systems around Australia has been launched by the Morrison government.

Federal energy minister Angus Taylor said on Friday that a first round of up to $20 million of grants from the Regional and Remote Communities Reliability Fund was now open to applications, to help boost energy reliability and save “hundreds of millions of dollars” on network upgrades.

Taylor said the grants aimed to help community organisations, electricity distribution businesses and other interested entities to undertake feasibility studies for microgrid solutions, using resources such as solar and battery storage.

Where feasibility studies found a microgrid solution to be economically viable, he said, additional support can be sought from the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC).

Just this week, the NSW Lord Howe Island won the crucial support of ARENA to get to work on a long-awaited solar and battery microgrid that will supply more than two-thirds of the island’s energy needs, and therefore drastically reduce its reliance on costly and heavily polluting diesel.

Notably, the original feasibility study for that project had recommended using a combination of solar, battery storage and wind power as the most efficient way to power the remote island, but former energy minster Josh Frydenberg had intervened to rule out any use of turbines.

“Microgrid technology is becoming increasingly cost effective, creating the opportunity for a reliable, low cost, off-grid supply,” Taylor said this week.

“Supplying remote, grid supplied customers to a self-supporting microgrid could save hundreds of millions of dollars in costly network infrastructure and maintenance while improving reliability.”

Network operators have known for years that renewable-based micro-grids were a cheaper option than delivering electricity from large centralised generators across a wide network, but have been unable to build them because the rules did not allow it.

That is now likely to change after the AEMC agreed to a rule change that will encourage networks to take the cheaper, renewable micro-grid option. Western Power, for instance, believes that up to 15,000 customers could be taken off grid and tens of millions saved.

The fund’s launch comes as Taylor repeats claims that Australia has built too much renewable energy generation, and that the only way to address high electricity prices and reliable supply is to build dispatchable generation capacity, such as coal and gas plant.

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