The Australian Government has announced it will expand its Capacity Investment Scheme to support the delivery of a combined 32GW of variable capacity, like large-scale solar and wind farms, and dispatchable capacity, like big batteries.
This would see a doubling of the renewable energy in Australia’s electricity grid, and is equivalent to more than 10 times the current total electricity generation capacity in the whole of Tasmania.
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According to The Guardian, contracts within the scheme will be won via tender and include floors and ceilings for revenue earned by a development. If the revenue is higher than agreed, the proponent pays the commonwealth a percentage of the proceeds. If it is lower than agreed, the Commonwealth pays the difference to the proponent.
The expanded scheme was welcomed by Clean Energy Council CEO Kane Thornton, who said, “It is a significant commitment that is intended to put Australia back on track to achieve the government’s policy of 82% renewables by 2030, replacing ageing coal fired generation with cheaper renewable energy and driving down power prices.
“There is now wide acceptance of the need to accelerate our shift to renewable energy.
“Investment in renewable energy has been in gradual decline since the Renewable Energy Target—a policy that delivered substantial new investment—was met in 2020. The rate of investment slowed more dramatically over the past year as a result of higher project costs, frustrating permitting processes, a congested grid and intensifying global competition in the race to net zero.
“While renewable energy remains the lowest cost form of new generation, there is a clear role for government to facilitate the enormous levels of investment needed to transition our energy system.
“It’s crucial that any new policy provides increased certainty to investors and the enormous private sector capital and capability that will be essential to Australia becoming a clean energy superpower.”
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Rewiring Australia also voiced its support for the expanded scheme, saying, “We congratulate the Federal Government’s decision to expand the capacity investment scheme to smooth the clean energy transition.
“Now we need it to incentivise households to generate and use more solar to wean themselves off fossil fuels.”