In a significant move towards a greener future, the Australian government has unveiled plans for a new national Capacity Investment Scheme (CIS) tender process, set to commence in May. This initiative aims to procure 6 GW of new variable renewable energy projects, signaling a strategic shift away from aging coal power generation within the National Electricity Market (NEM).
Federal Energy Minister Chris Bowen outlined the details of the tender process, highlighting a key agreement with New South Wales (NSW) to secure at least 2.2 GW of new renewable energy supply for the state. Additionally, an allocation of 300 MW for variable renewable energy projects will be designated for South Australia, pending final agreements between state and federal authorities.
The upcoming tender rounds, to be conducted approximately every six months until 2027, mark the first of several initiatives under the CIS. The scheme aims to bolster Australia's renewable energy capacity by an additional 32 GW by 2030, comprising 23 GW of renewable energy generation and 9 GW of dispatchable storage capacity, aligning with the nation's target of achieving 82% renewable generation by the decade's end.
Selected projects will benefit from long-term underwriting agreements, providing investors with predetermined ‘floor' and ‘ceiling' revenue levels, thereby mitigating financial risks and incentivizing investment in variable renewable energy and clean dispatchable capacity.
Minister Bowen emphasized the government's commitment to ensuring a reliable and affordable energy supply, stating, “Our plan is delivering the certainty and confidence the market needs to deliver the energy we need, when we need it.”
NSW stands to gain significantly from the CIS tender, replacing the next generation auction as part of the state's Electricity Infrastructure Roadmap. Energy Minister Penny Sharpe hailed the move as a victory for NSW consumers, underscoring the state's leadership in driving the energy transition.
The announcement of the CIS tender follows closely on the heels of the federal government's confirmation of the first auction process for Western Australian projects, targeting 2 GWh of dispatchable power through storage for renewables, set to launch mid-year.
Arron Wood, Chief Policy and Impact Officer of the Clean Energy Council (CEC), welcomed the tender update, lauding it as “one of the most significant policy commitments for renewable energy in our nation's history.” Wood emphasized the importance of revenue certainty for renewable energy projects, asserting that the CIS process will pave the way for the requisite wave of clean energy investments in Australia.
