The federal government is upsizing its investment in renewable energy projects as coal fired plants reach the end of their lives.
The Capacity Investment Scheme (CIS) will be expanded to underwrite renewable generation and storage projects for 9 GW of dispatchable (on-demand) capacity and 23 GW of variable (where availability fluctuates) capacity nationally, climate change and energy minister Chris Bowen announced on Thursday.
The total 32 GW is equivalent to about half the current National Electricity Market (NEM).
The announcement came a day after the government announced successful bids for six battery storage projects in NSW following a pilot CIS auction, amounting to more than 1 gigawatt of energy and $1.8 billion in energy infrastructure.
The projects will be rolled out in a joint program between the NSW Government’s Long Term Energy Service Agreements (LTESA) and the CIS. They are:
-Akaysha Energy’s Orana REZ battery in central western NSW.
-AGL Energy’s Liddell battery in Muswellbrook
-Iberdrola Australia’s Smithfield Sydney battery in Western Sydney
-Three virtual power plants via the Enel X Australia demand response project
All projects aim to begin commercial operations by December 25.
Mr Bowen didn’t specify how much will be invested in new renewables or the expected costs of contracts, saying this information will remain confidential to ensure the best deal for tax payers.
Long term energy security plan
Mr Bowen says the NSW auction is the first in its longer term energy security plan.
“What we need to do is bring forward new investment,” he told the ABC on Thursday.
“We’ve got a massive pipeline of renewable energy investment in Australia, but we want it moving to final investment decision more quickly, and we want it making its way through the planning systems more quickly, and what we’re announcing today will see that happen.”
Mr Bowen said the government will be entering into renewable energy transformation agreements with the states to ensure “all our policies pointing in exactly the same direction”.
There are some planning systems which are quite slow for renewable energy applications. We want to work with the states through these renewable energy transformation agreements to fix that where it’s necessary.Chris Bowen
That meant working with the states to reform slow planning systems, he said.
“There are some planning systems which are quite slow for renewable energy applications,” he said.
“We want to work with the states through these renewable energy transformation agreements to fix that where it’s necessary.
“It’s not about making environmental approvals more lax or reducing conditions, it’s about trying to get to yes or no more quickly, which gives communities comfort and certainty and gives the proponents comfort and certainty.”
More effort needed to meet targets
Mr Bowen acknowledged the government isn’t on track to meet its renewables target of 82 per cent by 2030, with the figure currently hovering just under 40 per cent.
“We’re doing well but not well enough,” he said.
Clean Energy Council CEO Kane Thornton welcomed the government’s commitment to accelerated investment in large scale renewables.
He said Investment in renewable energy has been in gradual decline since 2020 as a result of higher project costs, frustrating permitting processes, a congested grid and intensifying global competition in the race to net zero.
“There is a clear role for government to facilitate the enormous levels of investment needed to transition our energy system,” he said.
“We look forward to working closely with the federal government on the detailed design of the contracting mechanism to ensure it is effective and delivers the new investment and lower power prices that are expected.
“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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