Australia's federal government will attempt to turn around the nation's faltering investment in renewable power generation, expanding its Capacity Investment Scheme (CIS) to underwrite 32GW of new dispatchable and variable energy projects.
The new CIS will continue to exclude support for gas-fired power projects, picking wind, solar, grid-scale batteries and pumped hydroelectricity as the preferred source of Australia's replacement energy.
The Australian Energy Market Operator expects two-thirds of coal-fired power stations, which represent 62pc of the current electricity mix, to close by 2033.
The expansion will take the CIS to 9GW of dispatchable capacity and 23GW of variable capacity, a more than fivefold increase to June's CIS announcement that taxpayers will underwrite 6GW of renewables, worth about A$10bn ($6.55bn).
Australia's energy minister Chris Bowen has acknowledged the difficulty of reaching his government's 82pc renewables target, with Clean Energy Regulator data showing 526MW of renewable capacity reached a final investment decision (FID) during January-June.
"We need more progress after making up for a decade of delays," Bowen said on 23 November. "It's also an indication that we are competing in a world very hungry for capital, hungry for supply chain elements where every country in the world really is on the same journey as us, moving to a very high proportion of renewables." The government has declined to release costings for its policy.
Bowen said his government will negotiate bilateral agreements with states and territories under the existing national energy transformation partnership designed to prioritise the construction of new transmission lines. The Australian Labor party controls governments in all seven mainland Australian states and territories, theoretically enhancing co-operation on energy policy.
Tender winners
The federal and New South Wales state government on 22 November announced six major energy projects in the state as successful bidders under the CIS.
The scheme has approved three battery energy storage systems and three virtual power plants totalling 1,075MW of supplies and A$1.8bn of infrastructure.
The successful bidders are Australian battery storage producer Akaysha Energy's 415MW battery in the Orana Renewable Energy Zone, Australian utility AGL Energy's Liddell battery to be expanded to 500MW capacity and Iberdrola Australia's 65MW Smithfield Sydney battery.
Three separate virtual power plants will be set up through Italian utility Enel's energy transition subsidiary Enel X Australia, with a demand response project totalling 95MW of capacity.
Virtual generators link small-scale renewable generation units such as rooftop solar, allowing smaller independent power producers to jointly sell electricity. Australia's near 20GW of rooftop solar capacity has been blamed for unbalancing the grid with chronic oversupply, driving daytime wholesale electricity prices into negative territory.
This has mainly affected older coal-fired utilities unable to respond efficiently, although large-scale wind and solar developers also face reduced income from their investments.
The CIS may help green hydrogen developers struggling to reach FID on projects. Fortescue on 22 November blamed "structurally high green electricity costs" for curbing its 385,000 t/yr Gibson Island green ammonia project.
Grid power is currently unable to be used for green hydrogen production, with coal-fired generation comprising the largest share of the current mix.
