Australia’s first national Capacity Investment Scheme auction has been inundated with expressions of interest, with the federal government revealing that investors have tabled 40 GW of new renewable energy generation projects such as wind and solar.
Australian Federal Energy Minister Chris Bowen has confirmed that more than 40 GW of variable renewables projects have been registered in the first national Capacity Investment Scheme (CIS) tender that aims to increase new dispatchable renewable capacity to support Australia’s clean energy transition.
“The first auction of the Capacity Investment Scheme which will support 6 GW of new power has received more than 40 GW of project registrations,” Bowen said , noting that the response showed huge investor confidence in the CIS framework that is designed to increase new dispatchable renewable capacity and ensure reliability in Australia’s changing energy market. “There is a strong pipeline of renewables ready to go with the right policy settings.”
Under the CIS, the government will run six-monthly competitive tenders through until 2027. The objective is to deliver an additional 9 GW of dispatchable capacity and 23 GW of variable capacity by 2030 to fill expected reliability gaps as ageing coal power stations exit the system.
Successful projects will be offered a capacity investment scheme agreement (CISA) in which a revenue floor and ceiling are agreed with the Commonwealth. If a project’s revenue falls below the agreed floor, the CISA will provide revenue support. In turn, if revenue exceeds the agreed ceiling, the CISA will also require projects to pay a percentage of revenue to the Australian government.
The Australian government said 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.
Registrations for the first tender closed on 19 June 2024 and project bids are scheduled to close on 1 July 2024. Successful bids are expected to be announced in December 2024.
The CIS Tender 1 – Generation in the NEM, seeks to deliver 6 GW of renewable electricity generation across the National Electricity Market (NEM).
At least 2.2 GW of the 6 GW produced through the national tender will be allocated to New South Wales, while Victoria has been guaranteed at least 1.4 GW, and Tasmania and South Australia have been allocated 300 MW each. The remaining 1.8 GW of renewable capacity will be allocated to projects across the NEM jurisdictions based on a merit assessment of the projects.
