Australia is to cut $A500 million ($NZ514 million) in funding from its renewable energy agency as it strives to plug a $A6 billion budget shortfall, a smaller cut than initially planned.
The Australian Renewable Energy Agency (ARENA) will get $A800 million in funding over the next five years.
Under an earlier government plan, the agency's funding was due to be cut by $A1.3 billion but the cut was softened after negotiations with the opposition.
"As part of the agreement we will restore $800m of ARENA’s funding over five years and will work with the agency on its forward work program," Minister of Energy and Environment Josh Frydenberg said in a statement.
The new funds will be in addition to funding ARENA has in place to complete about 200 projects and to fund several large-scale solar projects announced last week.
The government has pledged to support a dozen large-scale solar projects worth $A1 billion as it looks to boost the use of clean energy in the coal-rich country, which is one of the world's biggest carbon emitters per head.
Australia wants to double its large-scale renewable energy generation to 33,000 gigawatt hours by 2020, which means solar, wind and hydro-electricity would have to make up nearly a quarter of power generation by then.
Clean Energy Council chief executive Kane Thornton said the funding cuts would slow the rate of development and innovation in new, clean energy technologies.
As evidence of the improving competitiveness, ARENA said last week early large-scale solar plants needed $A1.60 per watt in government funding, but funding for the 12 new projects has dropped to just 19 cents per watt in just three years.
"We've seen a lot of projects getting up on their (ARENA’s) funding, and lot of projects reducing costs," consultant Peter Munns, who heads British infrastructure firm John Laing’s Asia Pacific renewables division, told Reuters.
"The cuts probably reflect the fact they have done a good job in terms of pushing new technologies into the market. They may be getting to a point where ARENA needs less funding than it has."
