Xenophon tries to save ARENA with loans

Independent Nick Xenophon wants to save ARENA by making grants repayable with interest.

Independent Nick Xenophon wants to save ARENA by making grants repayable with interest. (AAP)

Independent senator Nick Xenophon wants to change funding arrangements for a key renewable agency to pull it off the chopping block.

He promises his bloc of three senators will vote against a planned $1.3 billion funding cut to ARENA and instead propose to force grant recipients to repay the amount with interest if the project is commercially successful.

"The cuts ignore the critical role ARENA plays in driving early stage innovation," he said in a statement on Friday.