Capacity Investment Scheme to Drive Boom

The Albanese Government's expansion of the Capacity Investment Scheme [1] marks a pivotal move in boosting Australia's transition to clean energy. The scheme aims to significantly increase renewable energy capacity by an additional 32 GW, with a focus on wind, solar and battery storage.

Key aspects of the scheme include:

- Enhancing investment in renewables by providing revenue certainty for investors.
- "Incentivising" streamlined approval processes for states and territories.
- Adopting a "contract for difference" strategy to minimise impacts on household bills.
- Utilising auctions for underwriting and pricing, ensuring minimal subsidies.
- Excluding gas projects from federal funding, although states have the autonomy to finance such projects independently.

In light of the earlier closure this year of the Liddell power station, and the anticipated (albeit possibly delayed) closure of the Eraring power station in NSW, there is an urgent need for additional energy capacity and storage solutions in NSW. This situation underscores the importance of the Capacity Investment Scheme in addressing these energy challenges. In the short term, there is a significant opportunity to rapidly identify optimal locations for storage projects.

This strategic initiative by the government is expected to significantly bolster Australia's renewable energy capabilities and contribute to a cleaner, more sustainable energy future. The NEM energy share graph below for 12 Nov 2023 - the day of our current maximum instantaneous renewable energy share of 72.9% - gives an inkling of the work to be done, to replace the grey (coal) and minimise the red (gas). We now have a path to the next phase of our Energy Transition.

[1] Bowen dramatically expands green energy support [AFR | 22 Nov 2023]

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