EXPLANATORY STATEMENT
Issued by the authority of the Minister for Climate Change and Energy
Industry Research and Development Act 1986
Industry Research and Development (Community Batteries for Household Solar Program) Instrument 2023
Purpose and Operation
Section 33 of the Industry Research and Development Act 1986 (the IR&D Act) provides a mechanism for the Minister to prescribe programs, by disallowable legislative instrument, in relation to industry, innovation, science or research, including in relation to the expenditure of Commonwealth money under such programs.
The Minister for Industry and Science has delegated the Minister’s power under subsection 33(1) to the Minister for Climate Change and Energy under subsection 33(6) of the IR&D Act to prescribe the Community Batteries for Household Solar Program (the Program).
The statutory framework provided by section 33 of the IR&D Act enables a level of flexibility to provide authority for Commonwealth spending activities in relation to industry, innovation, science and research programs. This allows the Government to respond quickly and appropriately to the need to implement innovative ideas and pilot programs on an ongoing basis and as opportunities arise. Prescribing programs in legislative instruments provides transparency and parliamentary oversight of Government programs and spending activities, whilst reducing administrative burden on the Commonwealth.
Once a program is prescribed by the Minister under section 33 of the IR&D Act, subsection 34(1) allows the Commonwealth to make, vary or administer arrangements in relation to activities under the prescribed program. Arrangements may include contracts, funding agreements or other arrangements, and may provide for money to be payable by the Commonwealth to one or more third parties. The power conferred on the Commonwealth by subsection 34(1) may be exercised on behalf of the Commonwealth by a Minister or an accountable authority of a non-corporate entity, or by their delegate (under section 36).
The purpose of the Industry Research and Development (Community Batteries for Household Solar Program) Instrument 2023 (the Legislative Instrument) is to prescribe the Program. The funding for the Program has been secured through the Department of Climate Change, Energy, the Environment and Water’s (DCCEEW) 2022-23 Budget. The Program provides $29 million to install 58 community batteries in specified locations as part of the Australian Government’s commitment to install 400 community batteries under the Powering Australia policy.
The Program will run over 4 years from 2022-23 to 2025-26. The Program will provide funding to install, connect and operate community batteries in 58 locations. These locations are listed as suburbs/towns in an appendix to the Program’s Grant Opportunity Guidelines (Program guidelines) and were announced as election commitments.
The intended outcomes of the Program are:
- put downward pressure on household electricity costs
- contribute towards lowering emissions
- provide a net benefit to the electricity network, having regard to matters such as network constraints
- store solar energy for later use or sharing, and support further solar installations
- allow households that cannot install solar panels to enjoy the benefits of renewable energy through shared community storage.
Funding is available to successful applicants to undertake eligible projects to install a community battery.
Funding authorised by this Legislative Instrument comes from Program 1.3 Outcome 1, as set out in the Portfolio Budget Statements 2022-23, Budget Related Paper No. 1.3, Climate Change, Energy, the Environment and Water Portfolio (https://www.dcceew.gov.au/sites/default/files/documents/dcceew-2022-23-pbs.PDF) at page 23.
The Program will be administered by the Department of Industry, Science and Resources’ (DISR) Business Grants Hub, which is a specialised design, management and delivery body with extensive expertise and capability in delivering similar programs.
The Program is a merits based grants program. The Program will be administered in accordance with the Commonwealth Grant Rules and Guidelines 2017 (https://www.finance.gov.au/sites/default/files/2019-11/commonwealth-grants-rules-and-guidelines.pdf). Eligibility and merit criteria are outlined in the Program guidelines, available at business.gov.au/grants-and-programs/community-batteries-for-household-solar-stream-1 and business.gov.au/grants-and-programs/community-batteries-for-household-solar-stream-2. The Program will be run in two streams, stream 1 being a targeted competitive stream to meet election commitments for 56 community batteries in specified locations, and stream 2 being a closed non-competitive stream to meet election commitments for 2 community batteries with known project proponents and locations.
Spending decisions will be made by the decision maker who is a delegate in DCCEEW with responsibility for the Program, taking into account the application assessment, the process for which is set out below, and availability of funds.
Grants will be a minimum of $100,000 up to a maximum of $500,000 per eligible location, with the grant amount calculated as $1000/kWh of battery capacity. The grant amount may be up to 100 per cent of eligible project costs. Grants would be provided on the condition that funding from Commonwealth, state, territory or local government grants could not be used for the same items of eligible expenditure funded by the Program.
The Program involves the allocation of finite resources between competing applicants. Merits review would not provide an effective remedy to a party aggrieved by a decision because a successful application for review by one applicant would require a reduction in funding to other successful applicants. In addition, there is a robust and extensive assessment process, and an existing complaints mechanism for affected applicants, including as set out below. Therefore, external merits review does not apply to decisions about the provision of grants under the Program. This approach is consistent with the Administrative Review Council’s guidance document on which decisions should be subject to merits review (available at https://www.ag.gov.au/legal-system/administrative-law/administrative-review-council-publications/what-decisions-should-be-subject-merit-review-1999) (e.g., see paragraphs 4.11 – 4.15).
For both streams, applications will be assessed against the eligibility criteria and merit criteria set out in the Program guidelines in two stages. At first instance, applications will be assessed by the Business Grants Hub against the eligibility criteria. Eligible applications will then be assessed by the Business Grants Hub against the merit criteria. Only one community battery will be funded for each location. When assessing applications, the Business Grants Hub may seek independent technical advice to inform its assessment.
Applications must address the eligibility and merit criteria, and provide relevant supporting information. To be considered for a grant, applicants must score at least 60 per cent against each of the two merit criteria. If two or more applications for a community battery for a particular location are received, the application with the highest total score will receive the grant for that location.
The merit criteria includes how well the project aligns with the Program objectives and the capacity and capability to deliver the community battery.
If project proponents do not come forward for all locations, a second round may be considered for these locations. In this case, the Program guidelines may be revised and reissued.
After considering the applications, the Business Grants Hub will make recommendations to the decision maker regarding those applications suitable for funding. The decision maker will make the final decision about which grants to approve, taking into consideration the Business Grants Hub’s recommendations, and the availability of grant funds. The decision maker will not approve funding if there are insufficient Program funds available across relevant financial years for the Program.
Both successful and unsuccessful applicants will be informed in writing.
Unsuccessful applicants can submit a new application for the same or similar project to the Australian Renewable Energy Agency (ARENA) for its community battery program. Details of ARENA’s Community battery program will be released in early 2023.
Persons who are otherwise affected by decisions or who have complaints about the Program will also have recourse to the DISR. DISR investigates any complaints about the Program in accordance with its complaints policy and procedures. If a person is not satisfied with the way DISR handles the complaint, they may lodge a complaint with the Commonwealth Ombudsman.
The Legislative Instrument specifies that the legislative powers in respect of which the Instrument is made are the following:
Statement of the Relevance and Operation of the Constitutional Head of Power
The Legislative Instrument specifies that the legislative power in respect of which it is made is the external affairs power (paragraph 51(xxix) of the Constitution). The external affairs power supports legislation implementing Australia’s international obligations under treaties to which it is a party. Australia has obligations under the following treaties:
- The United Nations Framework Convention on Climate Change (UNFCCC) [1994] ATS 2, particularly Article 4;
- The Kyoto Protocol [2008] ATS 2, particularly Article 10; and
- The Paris Agreement [2016] ATS 24, particularly Article 4.
Article 4 of the UNFCCC requires Australia to, among other things, undertake a range of activities which will collectively contribute to global reduction of greenhouse gas emissions including through the promotion and cooperation in the development, application, and diffusion of technologies, practises and processes that control, reduce or prevent anthropogenic emissions of greenhouse gases (Article 4.1(c)). In that regard, funding provided under the Legislative Instrument will reduce greenhouse gas emissions by allowing more rooftop solar to be installed and connected to the grid to assist the uptake in renewable energy.
Article 10(b) of the Kyoto Protocol requires Australia to formulate and implement programs that contain measures to mitigate climate change. In that regard, funding provided under the Legislative Instrument will contribute to the mitigation of climate change by supporting the transition to a renewable energy system, supporting the use of rooftop solar.
Article 4 of the Paris Agreement commits Australia to making a nationally determined contribution to reduction of greenhouse gas emissions, and pursue domestic measures with the aim of achieving the objectives of such contributions (Article 4.2). In that regard, funding provided under the Legislative Instrument will further the objectives of the Paris Agreement by contributing to Australia’s nationally determined greenhouse gas reduction targets. In particular, the Program has been mentioned in Australia’s updated Nationally Determined Contribution 2022, a document that sets out Australia’s emissions reduction ambitions and outlines the actions and policies being implemented to reduce greenhouse gas emissions to meet the commitments under the Paris Agreement. The updated Nationally Determined Contribution 2022 is publicly available at https://unfccc.int/NDCREG, and is not incorporated by reference in this explanatory statement nor the Legislative Instrument.
Background
The Program is part of the Powering Australia policy and forms part of the Government’s election commitment to install 400 community batteries across Australia. Of these, 58 locations for community batteries were announced as election commitments during the election campaign, including 2 locations for nominated proponents to deliver. The remaining 342 batteries will be delivered through a competitive program administered by the ARENA.
Authority
Section 33 of the IR&D Act provides authority for the Legislative Instrument.
Consultation
DCCEEW undertook targeted consultation with state and territory governments, ARENA, the Australian Energy Regulator, industry stakeholders and the Business Grants Hub in developing the Program guidelines.
In accordance with section 17 of the Legislation Act 2003, the Attorney-General’s Department has been consulted on this Legislative Instrument.
Regulatory Impact
It is estimated that the regulatory burden is likely to be minor (OBPR reference number OBPR22-02455).
Details of the Industry Research and Development (Community Batteries for Household Solar Program) Instrument 2023
Section 1 – Name
This section specifies the name of the Legislative Instrument as the Industry Research and Development (Community Batteries for Household Solar Program) Instrument 2023.
Section 2 – Commencement
This section provides that the Legislative Instrument commences on the day after registration on the Federal Register of Legislation.
Section 3 – Authority
This section specifies the provision of the IR&D Act under which the Legislative Instrument is made.
Section 4 – Definitions
This section provides for definitions of terms used in the Legislative Instrument.
Section 5 – Prescribed program
This section prescribes the Community Batteries for Household Solar Program (the Program) for the purposes of subsection 33(1) of the IR&D Act.
The Program provides funding, in the form of grants, to support the installation of community batteries.
Section 6 – Specified legislative power
This section specifies that the legislative power in respect of which the Legislative Instrument is made is the power of the Parliament to make laws with respect to external affairs (within the meaning of paragraph 51(xxix) of the Constitution) as it relates to measures that would assist Australia to meet its obligations under one or more of the following:
(a) the Kyoto Protocol, particularly Article 10;
(b) the Paris Agreement, particularly Article 4;
(c) the United Nations Framework Convention on Climate Change, particularly Article 4.
The relevance of this power is discussed in the introduction to this statement.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Industry Research and Development (Community Batteries for Household Solar Program) Instrument 2023
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The purpose of the Industry Research and Development (Community Batteries for Household Solar Program) Instrument 2023 (the Legislative Instrument) is to prescribe the Community Batteries for Household Solar Program (the Program). The Program will provide grants to install community batteries to support lower electricity bills and emissions, support storage of excess solar energy, and reduce pressure on the grid. The objective of the program is to install, connect and operate community batteries in 58 locations.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
The Hon Chris Bowen MP
Minister for Climate Change and Energy