December 8 (Renewables Now) - The Australian government will implement a Capacity Investment Scheme (CIS) to support new renewable dispatchable capacity with the aim of ensuring reliability and security of the country’s energy market.
The federal government was on Thursday given the thumbs up by State and Territory energy ministers to create this new revenue underwriting mechanism, which is expected to trigger some AUD 10 billion (USD 6.7bn/EUR 6.4bn) of investment in clean dispatchable power such as wind and solar backed by storage.
The scheme will support projects through open tenders. It will provide an agreed revenue floor, while if revenues top an agreed ceiling, projects will return part of their profits. More details will be announced in the coming months, with the first auction targeted to take place in 2023.
The CIS will help create the optimal mix of storage and renewable technologies needed in the system over the next decade, according to a statement by the Department of Climate Change, Energy, the Environment and Water. It said that Australia’s energy market is now vulnerable to market shocks as 4 GW of dispatchable power have exited the grid over the past decade with only 1 GW of it being replaced.
“Australian households, industry and the energy market are all moving with their feet towards more affordable renewable energy. The Capacity Investment Scheme will ensure the reliable power we need is delivered as this transition continues,” said Minister for Climate Change and Energy Chris Bowen.
The Climate Council’s head of advocacy Jennifer Rayner commented that energy ministers from across the political spectrum have agreed to turbo charge renewables, which is a huge win for all Australians. “Wind and solar power backed by batteries and pumped hydro is the recipe for cheap, clean and reliable energy,” said Rayner.
The CIS is intended to complement existing schemes in states and not overlap with them.
(AUD 1 = USD 0.669/EUR 0.636)
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