Australia Announces Plans To Auction 32 GW RE Capacity

• Australia has announced it will expand the scope of CIS to now auction 32 GW dispatchable and variable capacity 
• It will help achieve reliable, competitively priced clean electricity for the country to meet its 82% renewables goal by 2030 
• Investors too will get a certainty for their investments, thus decreasing financial risks, according to the government 

The Australian government is taking the auctions route to speed up renewable energy generation in the country that it believes can generate long-term, reliable and affordable electricity. The Minister for Climate Change and Energy Chris Bowen said the government plans to support 32 GW capacity by expanding the existing Capacity Investment Scheme (CIS). 

Originally, the CIS was to support 6 GW of clean dispatchable capacity by 2030 via competitive tenders for an investment of a minimum AUD 10 billion ($6.7 billion). However, now the federal government is expanding its scope to include 9 GW of clean dispatchable capacity and 23 GW of variable capacity nationally. 

"The Australian Government will provide revenue support for the selected CIS projects, with an agreed revenue 'floor' and 'ceiling'. This will provide a long-term revenue safety-net that decreases financial risks for investors and encourages more investment when and where it is needed," stated the government. 

Out of 32 GW, bilateral contracts will be signed with states and territories for 18 GW. The capacity may be re-allocated from any jurisdictions that don't make agreements to those that do. 

The new investment is aimed at supporting the speedy achievement of the national target of 82% renewables by 2030, according to the government. 

Bowen cited the recently concluded storage capacity auction in the New South Wales (NSW) under its Electricity Infrastructure Roadmap, as part of the current CIS framework, to point out competitive prices these auctions can achieve. He did not, however, reveal the expected costs of CIS contracts. 

He added that the government will also consider barriers to renewable investment such as workforce and supply chain constraints. 

The Clean Energy Council (CEC), Australia's renewable energy association, has welcomed the 'decisive action' from the federal government to boost investment in renewables that it says has been gradually declining ever since the Renewable Energy Target (RET) was met in 2020. 

"The rate of investment slowed more dramatically over the past year as a result of higher project costs, frustrating permitting processes, a congested grid and intensifying global competition in the race to net zero," added CEC Chief Executive Kane Thornton.  

The association said it will work closely with the government on the detailed design of the contracting mechanism to ensure it is effective and delivers the new investment and lower power prices that are expected. 

This strategic move from Prime Minister Anthony Albanese-led Australian government follows the AUD 15 billion National Reconstruction Fund announced in March 2023 to support 7 priority areas including solar panel production in Australia (see Australia's Response To Inflation Reduction Act).