The Albanese government has said that it will radically expand a taxpayer-underwritten scheme to support new clean power generation and storage capacity, acknowledging it is needed to meet its objective of Australia running on 82% renewable energy by 2030.
The climate change and energy minister, Chris Bowen, is expected to confirm the expansion of the capacity investment scheme on Thursday after officials advised the government further intervention was needed to meet the electricity target and firm the grid as ageing coal plants retire.
Bowen said that the government would underwrite 32 gigawatts of new electricity, consisting of 9GW of storage and 23GW of variable renewable generation. Fossil fuels, including gas-fired power, will not be eligible. The government’s goal, according to him, is to de-risk clean energy investments and shield consumers from price volatility during a transition to net zero emissions.
Read also: Energy watchdog says companies still investing too much in fossil fuels
It follows evidence that investment in large-scale solar and windfarms has fallen significantly this year. The Clean Energy Council has warned the first half of 2023 was the slowest start to a year for financial commitments on major clean energy developments since 2017.
Analysts have said that while solar and wind are the cheapest forms of new energy generation, farms will not be built at the pace required to meet the 82% target and live up to climate commitments without additional policy support.
According to reports, the government has also faced pressure to respond to the US Inflation Reduction Act, which included A$560bn support for clean energy and has escalated global competition for climate-focused investment.
It is unclear how much the capacity investment scheme, which will effectively replace the federal renewable energy target, will cost between now and 2030, or how much revenue is expected to be raised. The scheme involves the government underwriting new investments in renewable generation and storage through “contract for differences” that share the risks between investors and taxpayers.
Story was adapted from the Guardian.
