Hydro Tasmania will develop a combination solar, wind, diesel and storage system for Flinders Island thanks to $5.5 million in funding from the Australian Renewable Energy Agency.

The off-grid technology, which will incorporate a sophisticated control system, is set to displace more than 60 per cent of the diesel generation the island currently relies upon.

“The Flinders Island project will build on the success of a similar project Hydro Tasmania developed on King Island with ARENA support, which is delivering 100 per cent renewable energy to the island when conditions allow,” ARENA chief executive Ivor Frischknecht said.

“One of the exciting aspects of the Flinders Island project is the development of a portable hybrid energy solution with the potential to further drive down costs and move a step closer to delivering a commercially competitive product.”

Mr Frischknecht said the low-cost, scalable approach being used by Hydro Tasmania had the potential to be a “game changer” in remote areas, reducing costs, risks and construction time.

“Australia is a large country with many off-grid communities and industries facing similar energy supply challenges, whether they are on islands or in remote locations on the mainland,” he said.

“ARENA is committed to working with Hydro Tasmania to share the learning and expertise from the King Island and Flinders Island projects. This knowledge sharing will ensure we are best placed to advance competitive, reliable renewable energy options for off-grid Australia and help reduce its reliance on trucked and shipped in diesel.”

The $12.9 million Flinders Island project is scheduled for completion in November 2016.