Australia’s federal and state ministers have agreed to deliver a Capacity Investment Scheme to encourage clean energy and storage into the nation’s electricity system, writes Greg King-Evans.
The landmark agreement aims to shore up Australia’s reliable delivery of electricity and reduce power bills as the grid transitions to renewable energy.
The Capacity Investment Scheme will provide the national framework needed to drive new renewable dispatchable capacity during the next decade and beyond.
The new revenue underwriting mechanism will unlock around $10 billion of investment in clean, dispatchable power to support reliability and security as the energy market undergoes its biggest transformation since the industrial revolution.
The scheme will ensure Australia has an ongoing supply of cheap, renewable, domestically produced energy, regardless of global circumstances.
“The Capacity Investment Scheme is essentially a keep-the-lights-on mechanism,” said Minister for Climate Change and Energy Chris Bowen at the announcement in December 2022.
“Australian households, industry and the energy market are all moving towards more affordable renewable energy.
“The scheme will ensure reliable power is delivered as this transition continues, and will create construction and operations jobs in clean energy projects, especially in the regions.”
The Capacity Investment Scheme will make energy prices lower and more stable for homes and businesses; attract new investment in renewable electricity backed by batteries, pumped hydro and other long-duration storage technologies; and kickstart domestic battery manufacturing in Australia.
“Energy Ministers from across the political spectrum have agreed to turbocharge renewables,” says Climate Council head of advocacy Dr Jennifer Rayner.
“It is a huge win for all Australians as it will open clean, cheap and secure power for our future.
“Moving to cheap, clean, renewable energy will free Australians from the huge energy bill shocks they’ve been facing.
“It also puts us on track to make deep cuts in emissions needed this decade to avoid more harmful climate change.
“Wind and solar power backed by batteries and pumped hydro is the recipe for cheap, clean and reliable energy.
“This decision is the strongest signal yet that Australia’s energy future is renewable, with all governments now working to deliver this.”
Clean Energy Council chief executive Kane Thornton says the Capacity Investment Scheme is a win for clean energy investors and Australian consumers.
“The Clean Energy Council has long advocated for sensible policy measures that accelerate Australia’s shift to renewable energy and energy storage,” he says.
“This decision will help unlock the next wave of renewable energy projects.
“Energy storage will play a crucial role in supporting the massive amounts of new wind and solar needed for the future.
“While measures to accelerate storage rollout are important, we also need to develop the markets and technical frameworks that will enable stable, long-term investment in storage.
“Significantly, the decision to fund Australia’s renewable energy storage build-out via the Commonwealth will drive down consumer costs while not adding to already stretched household budgets.
“Renewable energy is the only answer to keep energy affordable in the long-term.”