Australia has announced that it will cut A$500m ($375.50m) in funding to its renewable energy agency.

The budget cut, which leaves Australian Renewable Energy Agency (ARENA) with a funding of A$800m ($601.4m) over five years, is part of the government’s agreement on the passage of more than $6bn in savings measures.

Earlier, the government planned to cut the agency's funding by A$1.3bn ($977.3m). However, upon negotiating with the opposition Australian Labor Party (ALP), the government reduced the cut.

Minister of Energy and Environment Josh Frydenberg said: "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.”

Meanwhile, industry body Clean Energy Council said that the cuts to ARENA's funding would slow rate of development and innovation of new clean energy technologies.

Clean Energy Council chief executive Kane Thornton said: "While the $800m that Labor has proposed to leave in ARENA's future budget would allow it to continue many critical functions, the extent and rate it can bring forward exciting new technologies will clearly be constrained.”

The new funds will be in addition to ARENA’s existing funds, which will support the completion of about 200 projects and several large-scale solar projects, reported Reuters.

Thornton further noted: "While the $800m that Labor has proposed to leave in ARENA's future budget would allow it to continue many critical functions, the extent and rate it can bring forward exciting new technologies will clearly be constrained.

"We hope that the Australian Parliament will now move quickly to resolve this situation and give the clean energy industry some certainty in the future of ARENA, allowing businesses to invest in innovation that can transition the Australian energy sector."

Arena has recently granted funding for the development of 12 solar photovoltaic (PV) plants with a combined capacity of 482MW.

By the end of this decade, Australia plans to double its renewable energy generation to 33,000GWh.

Image: Arena recently granted funding for the development of 12 solar projects. Photo: courtesy of worradmu/ FreeDigitalPhotos.net.