Australia clears renewable energy power firming plan

Australian federal and state energy ministers have agreed to set up a clean energy firming plan that should accelerate the deployment of an estimated A$10bn ($6.8bn) in large power back-up batteries and renewable energy, to provide firming capacity to the country's power grids that are increasing sourcing electricity from renewable sources.

The federal government and its state and territory counterparts endorsed a plans to set up a capacity investment scheme (CIS), which encourage new renewable dispatchable capacity and ensure reliability in Australia's rapidly changing energy market over the next decade and beyond, said federal energy and climate minister Chris Bowen.

This new revenue underwriting mechanism will unlock around A$10bn of investment in clean dispatchable power to support reliability and security as the energy market, Bowen said. "The capacity investment scheme is essentially a keep the lights on mechanism. Australian households, industry and the energy market are all moving with their feet towards more affordable renewable energy."

The CIS replaces a previous plan proposed by the former Liberal-National coalition government that supported a plan to underwrite new electricity generation through gas-fired plants to provide firming capacity to the increasing share of renewable energy within the country's power network systems. The coalition government had previously proposed a plan to pay operators of coal-fired power plants to keep their plants open under a firming capacity plan.

The emphasis on renewable energy, largely in the form of solar and wind, in the CIS plan is consistent with the ruling federal Labor party's policy of reducing the greenhouse gas (GHG) emissions intensity of Australia's electricity sector, which accounts for around a third of the country's GHG emissions and is the largest single source of its emissions.

Since Labor was elected in May it has introduced an 82pc renewable energy target by 2030 compared with around 34pc of power supplied from renewable sources. It has also deepened Australia's GHG reduction target to 43pc by the end of the decade from 2005 levels compared with the previous target under the coalition government of between 26-28pc over the same period.

The majority of Australia's electricity is generated from coal-fired plants, which accounts for 59pc of power generation in the past 12 months in the National Electricity Market (NEM) covering east Australia. Gas accounted for around 7pc of power generation in the NEM over the past 12 months. The NEM represents more than 85pc of the country's power consumption.

The Australian government has several funding bodies to help finance the installation of renewable energy through the Clean Energy Finance Corporation, the Australian Renewable Energy Agency and legislation introduced last month to set up a A$15bn national reconstruction fund to support investment in renewables and low emissions technology.

By Kevin Morrison