The Albanese government’s plan to turbo-charge the development of renewable energy has been described as a “landmark” policy for the nation’s transition away from fossil fuels and has been broadly welcomed by industry and state governments.
The energy minister, Chris Bowen, revealed a capacity investment scheme originally aimed to support 6GW of batteries and other storage would be expanded to 32GW. Of that total, 23GW would be for new wind and solar farms, with 9GW for storage.
The scheme’s cost is uncertain. Tenders held every six months over four years will set strike prices. Should market prices exceed a ceiling, the commonwealth could make money, and if they fall below a floor, taxpayers would have to make up the difference.
Simon Corbell, who as a former energy minister introduced a similar scheme in the ACT, said the plan would “unlock significant new investment in new renewable energy generation and storage projects across Australia”.
Corbell, now chair of the Clean Energy Investor group that boasts 11GW of installed renewable capacity, said the scheme would give greater revenue predictability and bring more projects to financial close.
EnergyAustralia’s managing director, Mark Collette, said his company had $3bn-$5bn of potential investments in the works and the scheme’s expansion was “a step forward”.
“The details appear to provide broad policy support to accelerate the investments needed in dispatchable and renewable energy while ensuring reliability concerns are met with a strategic reserve,” Collette said.
Financial approvals for new wind and solar farms have all but stalled in recent quarters, putting at risk the decarbonisation of the power grid. The government’s target of 82% of electricity to be generated from renewable energy sources by 2030 is widely seen as out of reach without a rapid build-out of new clean energy projects.
Renewable energy advocates such as Tim Buckley, director of thinktank Climate Energy Finance, hailed the scheme’s expansion as “exactly the kind of bold, landmark federal policy and investment ambition we need to rapidly transform Australia’s energy market whilst ensuring grid reliability and energy affordability”.
“It will help facilitate the mothballing of polluting coal clunkers such as Origin Energy’s Eraring power station in New South Wales, Australia’s biggest, scheduled for 2025, while enabling stand-by capacity to ensure supply,” he said.
Origin, in the midst of a potential takeover, said the expanded scheme “represents a potential source of significant new generation supply into, and a meaningful intervention in, the national electricity market”.
The Australian Energy Council issued a word of caution, though, stating the new policy was “not without risk”. Planning bottlenecks were among the issues that will need to be resolved before many projects proceed.
“At 32GW this is a significant injection of new generation capacity into a grid with unresolved system constraints,” the council’s chief executive, Sarah McNamara, said. “These include delays in transmission deployment, social licence issues, supply-chain bottlenecks and the challenge of maintaining essential system services as more renewables come online.”
“New generation should be delivered where it will be of most benefit to consumers, and where constraints have been addressed to ensure it delivers the best value for government and taxpayers,” McNamara said.
The Clean Energy Council, which had been supporting an extension of the renewable energy target (RET) as the means of supporting the sector, backed the government’s plans.
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“Investment in renewable energy has been in gradual decline since the RET– a policy that delivered substantial new investment – was met in 2020,” council CEO Kane Thornton said.
“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,” Thornton said.
Ted O’Brien, opposition energy spokesperson, said Labor was writing “a blank cheque on behalf of Australian taxpayers”, providing “a glaring admission that its climate and energy policies have failed”.
“Instead of learning lessons from its failure, Labor is doubling down and it will be everyday Australians that have to pay the bill,” O’Brien said, adding that a “renewables only” policy had “lost all credibility”.
The expanded scheme is expected to dominate discussion at a gathering of energy ministers on Friday in Perth.
Victoria’s energy minister Lily D’Ambrosio, said her state looked forward “to having productive discussions with a commonwealth government that actually cares about climate change at the upcoming energy and climate ministers meeting”.
“Victoria has led the way with our targets of 95% renewables by 2035 and net zero emissions by 2045, and the commonwealth support through the expanded capacity investment scheme will build upon what we have already achieved.”
Her New South Wales counterpart, Penny Sharpe, said her state welcomed “all efforts by the federal government to get more renewable energy into the system”.