The Clean Energy Finance Corporation and Australian Renewable Energy Agency will join forces to push forward development of flexible capacity and large-scale storage projects that will aim to smooth the integration of renewable energy sources into the electricity market.

Prime Minister Malcolm Turnbull on Wednesday February 1 called on both organisations to focus on encouraging the development of solutions to removing system variability problems as Australia transitions to low emissions technologies.

ARENA CEO Ivor Frischknecht said ARENA would call for expressions of interest for demonstration projects under its Advancing Renewables Program. It’s expected ARENA will allocate more than $20 million to successful projects.

Eligible projects will likely revolve around battery storage, pumped hydro, concentrated solar thermal, biomass and demand management technology.

CEFC CEO Oliver Yates expects funding recipients will secure long-term debt finance to support their projects. The CEFC was also open to considering finance solutions for other projects not seeking ARENA funding. CEFC finance would be provided along similar terms to its $250 million commitment to accelerate large-scale solar.

“As ARENA and the CEFC work to accelerate Australia’s shift to an affordable and reliable renewable energy future, we know that the energy sector and the whole economy face a range of challenges in ensuring it is an orderly transition,” said Frischknecht.

“Developing large-scale flexible capacity projects, such as grid scale batteries and pumped hydro, will be a crucial part of the solution.”

Yates is enthused by the fast-dropping cost of renewable energy technology. “If we are to maximise Australia’s strategic national competitive advantage in clean energy, we need to complement this with energy storage and grid stability services,” he said.

“Australia is blessed with diverse renewable energy resources across the nation that can produce power at different times. Electricity is easy and fast to move from one place to another with appropriate grid infrastructure. When we complement renewable generation with the addition of energy storage and grid support, we can develop an electricity supply that is cost-effective, reliable, clean and secure.”

The call for interest from researchers and developers will allow the two organisations to develop a funding round dedicated to flexible capacity or large-scale storage, they said.

“The intention, as is always the case with ARENA and the CEFC, is to accelerate a technology’s path to commerciality as quickly as possible and then step away,” said Frischknecht.

Last year the agencies worked together on the large scale solar competitive round which will result in 12 new solar plants being constructed across the country. That joint program has seen costs fall to the point that Australian large scale solar PV technology is now cost competitive with other generation technologies.