The Australian Renewable Energy Agency has granted $13 million to allow the next stage of work at the Paralana geothermal enegy site. The funding was subject to matching support from the project's joint venture partners, Beach Energy and Petratherm.

The geothermal energy project in the Flinders Ranges involves drilling two wells to provide a circulation loop through hot rock to demonstrate the viability of commercial electricity production.

The $26 million now available will allow the drilling of the second well.

The joint partners have renegotiated an earlier Commonwealth allocation of $63 million down to $24.5 million to reflect the reduced scope of the planned demonstration power plant.