Spotlight on Energy: Key Takeaways from the 2023-24 Australian Federal Budget

by | Jun 22, 2023 | Resources | 0 comments

In a significant boost for renewable energy, this year’s Federal Budget has allocated an additional $4 billion towards the country’s plan to become a renewable energy superpower, surpassing a total investment of $40 billion. The 2023 budget, presented by the Albanese Government, emphasises the significance of combating climate change and supporting sustainable energy. Key initiatives include a $2 billion investment in the ‘Headstart Hydrogen’ program, as well as the introduction of policies focused on energy price relief, support for small business innovations, and the commercialisation of clean energy technologies.

While there’s been a positive response to the increased investment in renewables, there have been criticisms that the budget falls short in demanding more from polluters and abolishing fossil fuel subsidies. Nonetheless, the budget marks a significant shift from previous years, with increased investments in renewable energy and a clear statement about Australia’s clean energy ambitions

.In this article we’ll dissect the key energy measures outlined in the budget, examining their implications for businesses, households, the clean energy industry, and the fight against climate change. 

Key Energy Measures from the 2023-24 Budget: Impact on Businesses, Households, The Clean Energy Industry and Climate Change

Support for Businesses

1.    Energy Price Relief Plan

The Energy Bill Relief Program will assist small businesses in managing high energy prices and reducing their financial burden. Small businesses that meet the electricity usage criteria in their state or territory will automatically receive bill relief starting July 1, 2023. Approximately one million eligible small businesses are expected to benefit from this program, with $325 being automatically deducted from their power bills. In jurisdictions where the funding from the government is matched by state or territory governments, small businesses will receive a total of $650 in bill support.

2.    Instant Asset Write-Off

The Government is reintroducing the Instant Asset Write-Off threshold of $20,000 for a period of 12 months starting on July 1, 2023. Small businesses with a turnover of less than $10 million per year will be able to immediately deduct the full cost of eligible assets valued at up to $20,000 each. There will be no limit on the number of assets that can be purchased under this scheme, and the write-off will apply to assets first used or installed ready for use between July 1, 2023, and June 30, 2024.

3.   Small Business Energy Incentive

The Small Business Energy Incentive has been created to support small and medium businesses in saving on energy bills by incentivizing investments in electrification and energy-efficient assets. Businesses with an aggregated annual turnover of less than $50 million will be eligible for an additional 20% deduction on the cost of eligible depreciating assets that support electrification and improved energy use, such as heating or cooling systems and demand management assets like batteries. Up to $100,000 of total expenditure will be eligible, with a maximum bonus deduction of $20,000 per business. This incentive will be applicable from July 1, 2023, to June 30, 2024, and excludes electric vehicles, renewable electricity generation assets, capital works, and assets not connected to the electricity grid that use fossil fuels.

4.   Industry Growth Program

The Government has allocated $392.4 million over four years to establish the Industry Growth Program, aimed at supporting small-to-medium-sized enterprises and startups. The program will help these businesses commercialise their ideas and expand their operations, with a specific focus on priority areas identified by the National Reconstruction Fund , including renewables and low-emission technologies.

5.   Powering Australia Industry Growth Centre

The Powering Australia Industry Growth Centre has been established as part of the Australian Made Battery Plan to support local businesses in manufacturing renewable energy technologies, particularly focusing on the battery value chain. The program, running over four years, has a budget of $14.8 million and aims to provide advanced technology, skills development, and support for businesses to locally produce renewable technologies and commercialise innovative ideas.

6.   Promoting Energy Efficient Commercial Buildings

Starting from July 1, 2025, the Government plans to extend the Clean Building Managed Investment Trust withholding tax concession to eligible data centres and warehouses. To qualify for the concession, these buildings must have commenced construction after Budget Night and meet higher energy efficiency standards. The current withholding tax concession rate of 10% will apply to fund payments made from July 1, 2025, onwards.

In addition to data centres and warehouses, the higher energy efficiency standards will also apply to new construction projects of existing clean buildings, such as offices, hotels, and shopping centres. The current requirement of a 5-star rating from the Green Building Council Australia or a 5.5-star NABERS rating will be raised to a 6-star rating. The government plans to consult on transitional arrangements for existing clean buildings to meet the new higher efficiency standard.

7.   National Skills Agreement

The skills and training sector is set to receive a significant boost with an additional $3.7 billion allocated towards a five-year National Skills Agreement, which is scheduled to kick off on January 1, 2024. This funding will be directed to state and territory governments, aiming to strengthen the vocational education and training (VET) systems and cultivate a skilled workforce in vital industries, including renewables. As part of this initiative, a network of renewable energy training centres will be established nationwide to ensure a successful transition to the emerging clean energy economy.

An example of this type of government investment already in action is Australia’s First Renewable Training Facility, which opened in Queensland and was a joint effort between Electrogroup, the ETU, Master Electricians Australia, Kane Builders, Spinifex Energy, and funding from the Queensland Government.

The world-class facility features a significant number of renewable energy technologies, including solar systems, wind turbines, a dual-axis solar tracking array, and battery storage systems using lithium and lead acid.

Delivering a forward-thinking facility of this calibre was a significant undertaking, according to Spinifex Energy Director Tom Warriner, who was subcontracted to complete the installation. However, bold vision and investment in and delivery of innovative projects like this are needed to combat the ongoing energy crisis.

“This facility will provide our current and future electrical workers with the skills they need in emerging technologies for this growing industry, and we look forward to partnering with other states and territories to further expand and build upon this ground-breaking work.” Mr. Warriner explained. 

Support for Households

8.    Household Energy Upgrades Fund

The Government has announced a $1.3 billion Household Energy Upgrades Fund aimed at improving energy efficiency in homes. Recognising the significance of retrofitting older homes, which were built before the implementation of minimum performance standards, the fund will offer homeowners low-interest loans for essential upgrades like double-glazing windows and solar panel installations. The Clean Energy Finance Corporation will receive $1 billion to administer these loans in partnership with private lenders, with eligibility criteria to be determined soon. It is estimated that approximately 110,000 households will benefit from this initiative, which is expected to start next year.

9.    Energy Bill Relief Fund

Starting from July 2023, eligible households will receive up to $500 via a one-off rebate through the Energy Bill Relief Fund, which will be applied directly as automatic credits to eligible households’ electricity bills over the next financial year. Those eligible for the household rebate include pensioners, veterans, seniors, concession card holders, carer’s allowance recipients, and families receiving a family tax benefit or qualifying for state or territory electricity concessions.

10.    Better Information on Energy Saving Opportunities

The Government has allocated $36.7 million to enhance and expand the the Nationwide House Energy Rating Scheme (NatHERS), making it applicable to existing homes. This improvement will provide households with valuable information about their home’s energy performance, enabling them to make informed decisions regarding energy upgrades, renting, purchasing, or renovating properties. Additionally, the government plans to modernise and expand the Greenhouse and Energy Minimum Standards program, making it easier for individuals to select energy-efficient appliances and support emissions reduction efforts.

11.    Social Housing Upgrades

$300 million has been allocated to co-fund energy upgrades for social housing in collaboration with states and territories. This funding will support the retrofitting of approximately 60,000 social housing properties, aiming to install all-electric appliances and implement energy efficiency measures. The upgrades are expected to reduce energy consumption by up to one-third per year and give tenants savings on their energy bills

Accelerating the Clean Energy Industry and Climate Change Targets

12.    Rewiring the Nation

The Government has allocated $12 billion of its $20 billion investment in the Rewiring the Nation program to transformational transmission projects that aim to boost renewable energy and support the country’s transition to clean energy. This includes:

  • $1 billion for Tasmania’s Battery of the Nation projects
  • $1.5 billion for Renewable Energy Zones and offshore wind projects in Victoria
  • $4.7 billion to improve critical transmission infrastructure in New South Wales

In addition, there is a commitment of over $1.4 billion for regional net-zero initiatives, including community microgrid projects in rural areas.

13.    Capacity Investment Scheme

The Australian government has announced the establishment of the Capacity Investment Scheme, which will underwrite new investment in clean energy with a focus on renewable generation and storage. The scheme will receive funding for initial auctions, with the government underwriting projected investments of over $10 billion to bring clean and dispatchable power supply across Australia.

While the complete breakdown of investment is not publicly disclosed due to commercial sensitivities, it will support projects in Victoria, South Australia, and New South Wales and is expected to attract private capital for investment opportunities in battery, hydrogen, hydropower, and gas, commencing late 2023.

14.    Electric Vehicles and Fuel Efficiency

Australia’s first National Electric Vehicle Strategy was unveiled to encourage adoption of electric vehicles (EVs) and provide consumers with a wider range of choices for cleaner and more cost-effective transportation. As part of this strategy, the government is allocating $7.4 million to develop a Fuel Efficiency Standard, which aims to improve the availability of hybrid and electric vehicles by making the sale of combustion engine vehicles more costly. Australia is currently one of the few countries worldwide without a fuel efficiency standard.

In addition, the government has committed $146.1 million to accelerate the uptake of EVs. This funding includes $5.2 million for the development of EV charging infrastructure and $7.8 million for a Transport and Infrastructure Net-Zero Roadmap and Action Plan.

15.    Powering the Regions Fund

The Powering the Regions Fund will provide grants and funding to both existing and emerging energy industries, assisting them in their efforts to decrease carbon emissions. Recent government reforms will necessitate AWU employers to reduce their carbon emissions, and the Powering the Regions Fund will assist in covering the costs associated with adopting new technologies and adopting more sustainable work practices.

Within the $1.9 billion fund, specific allocations have been made to address various industry needs, including:

  • $600 million to the Safeguard Transformation Stream to assist trade-exposed safeguard facilities.
  • $400 million to the Industrial Transformation Stream, supporting regional industrial facilities, including rail and aviation, and helping support new clean energy industries
  • $400 million to the Critical Inputs to Clean Energy Industries stream supporting the primary steel, cement, lime, aluminium, and alumina industries

16.    Hydrogen Headstart Program

The Federal Budget’s most significant clean energy commitment is a $2 billion allocation to the Hydrogen Headstart program, which aims to accelerate the production and export of hydrogen gas, enabling Australia to compete with countries like the US and Europe in the emerging hydrogen market. By addressing the commercial challenges faced by early-stage projects, the program will provide financial support through competitive production contracts, facilitating the development of large-scale renewable hydrogen initiatives.

In addition to the Hydrogen Headstart program, $2 million of the funding will be dedicated to establishing a fund that supports First Nations communities in engaging with hydrogen project proponents and planning processes. The budget also includes $38.2 million for the creation of a Guarantee of Origin Scheme, which will track and verify the emissions associated with hydrogen and other low-emission products.

17.    Building Critical Minerals Industries

The Government is investing $57.1 million to develop Critical Minerals International Partnerships, aimed at securing strategic and commercial alliances in the critical minerals sector. Critical minerals, essential for renewable technologies, are a key focus of the budget, with funds allocated to foster international partnerships, promote Australian projects, and establish resilient supply chains.

Australia holds significant reserves of critical minerals, including lithium, cobalt, rare earths, and nickel, which are vital to producing electric vehicles, batteries, and solar panels. As global demand for these minerals is expected to grow substantially, the government’s investment aims to leverage Australia’s vast reserves and capitalise on the growing global demand for low-emission technologies.

18.    National Reconstruction Fund

The Government has allocated $15 billion to the National Reconstruction Fund, which marks one of the largest investments in the country’s manufacturing sector. The fund will collaborate with the private sector through loans, guarantees, and equity investments to invest in priority areas that leverage Australia’s strengths in renewables, low emissions technologies, medical science, transport, value addition in agriculture, forestry, and fisheries, value addition in resources, defence capability, and enabling capabilities.

19.    Reform of Petroleum Resource Rent Tax

In a move aimed at boosting tax revenue from significant fossil fuel producers, the Australian government has announced modifications to the Petroleum Resource Rent Tax (PRRT). The existing tax rate of 40% has been shown to be ineffective due to concessions granted to oil and gas companies for exploration and development permits. Notably, numerous LNG projects have evaded paying any PRRT. For example, in the fiscal year 2019-20, Chevron accumulated $12.1 billion in revenue, Exxon reported $15.1 billion, and Shell recorded $5.3 billion, yet none of these companies paid any corporate tax.

Under the new regulations, deductions will be limited to 90% of revenue, guaranteeing that a minimum of 10% of income is subject to the PRRT. These changes are estimated to generate an additional $2.4 billion in tax revenue over the course of five years.

20.    National Net Zero Authority

The Government has announced the establishment of the National Net Zero Authority, a new agency aimed at assisting individuals and companies in transitioning to cleaner jobs in heavy-polluting industries such as coal, gas, and certain manufacturing sectors. With a financial injection of $400 million, this authority will assume a vital role in managing the closure of coal-fired power plants and assisting impacted communities in transitioning away from these sectors. It will also support workers in emissions-intensive sectors, promote regional development in clean energy industries, and offer guidance to investors and companies interested in participating in the net-zero transformation.

21.    Building Government Capacity

While it may not sound exciting, it is crucial to build the government’s internal capacity to do things like ensure accurate measurement of emissions, validate the environmental integrity of green hydrogen, verify the effectiveness of carbon credits in reducing emissions, and promote energy-efficient buildings. Recognising this importance, several government bodies and other regulatory authorities will receive new funding of $80 million over four years, including:

  • $46.5 million to the Australian Energy Regulator (AER) for the purpose of regulating energy markets, overseeing the hydrogen ‘Guarantee of Origin’ scheme, and supporting cross-government energy market reforms and national energy projects directed by Energy Ministers.
  • Additionally, there will be a provision of $10.9 million over four years for the AER’s new legislated functions, which contribute to Australia’s energy transformation and emission reduction objectives.
  • The Department of Climate Change, Energy, the Environment, and Water will receive $5.6 million to conduct analysis aimed at maintaining Australia’s competitiveness, fostering a skilled workforce, and securing supply chains in renewable energy ventures.
  • $4.2 million has been allocated to ASIC to facilitate the enforcement of actions against greenwashing.
  • $18 million will be utilised to reform the Australian Carbon Credit Unit (ACCU) scheme, addressing past challenges and issues.

22.    Decommissioning

The Australian government has allocated $4.5 million to establish a roadmap for decommissioning offshore petroleum infrastructure. This initiative aims to ensure environmentally responsible and safe decommissioning practices for offshore oil and gas facilities. With an expected $60 billion of decommissioning activity projected over the next 30 to 50 years, the roadmap will identify ways to leverage this expenditure for Australia’s benefit. It will explore options for repurposing, recycling, and waste disposal of decommissioned infrastructure, as well as opportunities to re-skill oil and gas workers for the emerging decommissioning industry.

Spinifex Can Help you Take Advantage of the Latest Federal Budget Energy Incentives & Funding

Spinifex Energy is an established renewable energy solutions provider that specialises in the design, installation, and maintenance of solar power and battery systems for commercial, industrial, and rural sectors.

Drawing on our experience with some of Australia’s biggest brands and projects, our skilled team will assess your operations to understand your unique needs and goals, developing a solution that takes advantage of the latest renewable technologies, taps into government grants & rebates, and maximises energy production and financial returns.

Click here for an obligation-free solar assessment for your business, or to learn more, call 1300 859 765

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