The federal government is to supersize its flagship Capacity Investment Scheme as it races to ensure enough wind, solar and storage is built to meet its target of 82 per cent renewables by 2030.
Federal climate change and energy minister Chris Bowen will announce on Tuesday that the scheme will be boosted by 8 gigawatts (GW), taking the overall target in the series of auctions from 32 GW to 40 GW.
The increase in the size of the CIS is not a surprise, given that energy experts had already said that the 32 GW targeted in the original program launched in 2023 would not be enough to get all the way to the 2030 renewables target.
“Our energy grid’s transition remains urgent. As our ageing coal fired power stations only become more expensive and more unreliable we need new generation now,” Bowen will tell the Investor Group on Climate Change on Tuesday.
“It remains the case, that to rebuild Australia’s energy grid, into the modern, reliable and fairer system we need to get renewables and storage online, faster.”
The announcement comes as the CSIRO and the Australian Energy Market Operator release the final version of the 2024/25 GenCost report which confirms that integrated wind and solar remain by far the cheapest clean energy option for Australia, after Canada’s first small modular reactor contract confirmed nuclear as by far the highest cost technology.
It also comes as the CEO of AEMO, Daniel Westerman, says the Australian power system will be able to run at periods of 100 per cent renewables, which will be essential if the government is to reach that target of 82 per cent renewables (where the periods of low output will be supported by storage and offset by periods of very high, or 100 per cent renewables).
Bowen on Tuesday UN climate chief Simon Stiell, who urged Australia to lead the way with an ambitious emissions reduction target for 2035. “It’s a critical moment for all countries,” Stiel told ABC Radio National.
“But for Australia specifically, there’s an incredible opportunity to demonstrate what ambition looks like, to take full advantage of all of its natural resources in the green energy space, and to accelerate its transition away from its dependence on fossil fuels to new green technologies.
On Monday, the chair of the Climate Change Authority Matt Kean, who is to deliver his recommendations to the federal government in the coming years, urged “maximum” ambition.
The CCA has previously flagged it was looking at a 2035 target emissions cut of between 65 per cent and 75 per cent. Environmentalists say 75 per cent should be the bare minimum, and the Climate Council says Australia should be aiming for net zero by 2035, rather than 2050, although Coalition MPs are calling for the repeal of the 2050 net zero target.
The original design of the CIS called for 23 GW of new wind and solar capacity and 9 GW of dispatchable capacity (36 gigawatt hours), met mostly with battery storage.
This will now be ramped up with an extra 3 GW of wind and solar, taking that total to 26 GW, and an extra 5 GW of dispatchable capacity, taking that total to 14 GW (56 GWh).
Bowen had already moved to accelerate the process of the CIS, announcing earlier this year that the tender process would be cut to 6 months from 9 months. The government has already held its first big wind and solar auction, awarding more than 6.4 GW of capacity, although only one small project has begun construction.
He says that each of the six tenders that have been held have been “consistently and massively oversubscribed”, particularly the dispatchable tender which sought 16 GWh of storage and received 135 GWh of bids.
“Now around halfway through the CIS, and with the cost of deploying solar and batteries declining faster than expected, we have an opportunity to supercharge our transition,” Bowen says
“It’s right that the sunniest and windiest continent remains at the forefront of solar and wind innovation – and this backing shows the Government intends for it to stay that way.”
Renew Economy understands that the extra capacity will be added to future tenders – there is currently one wind and solar tender and one dispatchable tender, seeking a combined 10 GW under way. Results of those tenders are expected in September and October.
NSW energy minister Penny Sharpe will also announce at the Clean Energy Summit on Tuesday a new tender to seek 500 MW of “firming” capacity, through a mix of battery storage, VPPs and gas. The projects have to be built by 2027/28, to be on line in time for the anticipated closure of the state’s largest coal fired power generator, Eraring.
Another speak at the Clean Energy Summit is Professor Ross Garnaut, the head of the Superpower Institute, who says Australia is currently on a trajectory to miss its renewable targets because of low investment and output in grid-scale solar and wind.
“Not by a little, but by a big margin,” Garnaut says. And he adds this is hindering progress on Australia becoming the world’s main exporter of zero-carbon energy-intensive goods.
He says the CIS, and other government schemes, are getting in the way of private investment, not encouraging it, and wants a carbon price – such as the one he helped design for the Gillard government more than a decade ago – to be reinstated.
“Government policy has pushed private decisions based in competitive markets to the margins of power generation investment decisions, removing a source of knowledge and economic dynamism that is essential for achievement of the objectives,” Garnaut says.
“There is now almost no new private grid-scale investment in solar and wind generation that is not underwritten by the CIS or by Government through other mechanisms.
“We run the risk of spending a national budgetary fortune to buy failure. The best cure in the national interest is a carbon price. Not by a little bit, but by a big margin.”
Giles Parkinson is founder and editor-in-chief of Renew Economy, and founder and editor of its EV-focused sister site The Driven. He is the co-host of the weekly Energy Insiders Podcast. Giles has been a journalist for more than 40 years and is a former deputy editor of the Australian Financial Review. You can find him on LinkedIn and on Twitter.