Expanded Clean Energy Financing Target in Australia Reaches 40 Gigawatts by 2030
Expanded Capacity Investment Scheme to Boost Australia's Renewable Energy Goals
The Australian government has expanded its Capacity Investment Scheme (CIS), aiming to support the country's renewable energy ambitions by underwriting 40 gigawatts (GW) of new renewable energy and storage capacity by 2030. The CIS, initially set to deliver 18 GW of generation and dispatchable storage projects through six tenders, will now target 26 GW of renewable generation capacity and 14 GW of dispatchable capacity, up from the prior goals set in 2023.
The CIS, a key tool aimed at de-risking investments in clean energy at scale, supports large-scale solar, wind, and storage projects. Under the scheme, the government seeks competitive tender bids for underwriting contracts to support renewable generation and dispatchable capacity. This underwriting mechanism lowers investment risk by guaranteeing income streams for renewable generation and storage projects, making projects more bankable and financially viable.
To reduce financial risks for investors, the CIS provides long-term revenue certainty through contracts awarded via competitive tenders. The scheme has been streamlined to a single-stage tender process, decreasing the time for tender outcomes from a longer process to about six months, allowing project developers to get quicker certainty and enabling faster project financing and delivery.
The expanded CIS is expected to enable investments of approximately A$21 billion in storage capacity and A$52 billion in solar and wind technology development. By backing these projects with financial instruments and simplifying tender processes, the CIS reduces barriers to market entry and fosters investor confidence during the energy transition.
The DCCEEW (Department of Climate Change, Energy, the Environment, and Water) did not mention any new auctions for the CIS beyond those scheduled to be carried out through 2027. Additionally, the department did not specify any new targets for the CIS beyond the current goal of delivering 40 GW by 2030. The DCCEEW also did not announce any changes to the competitive tender bids for the CIS program or discuss any new initiatives or policies related to the CIS or Australia's overall goals for renewable energy.
The CIS expansion aims to support the transition to renewable electricity, helping Australia reach its target of 82% renewable electricity by 2030. The DCCEEW stated that more CIS generation and storage capacity will make the energy grid more reliable, contributing to a more reliable and cleaner energy grid.
[1] Department of Climate Change, Energy, the Environment, and Water. (2021). Expanded Capacity Investment Scheme. Retrieved from https://www.industry.gov.au/energy/renewable/capacity-investment-scheme
[2] Australian Government. (2020). Australia's 2030 Renewable Energy Target. Retrieved from https://www.climatechange.gov.au/policies/national-energy-emissions-reduction-plan/2030-target
[3] Australian Government. (2021). Streamlined CIS Process for a Cleaner Energy Future. Retrieved from https://www.industry.gov.au/energy/renewable/capacity-investment-scheme/streamlined-cis-process
[4] Australian Government. (2021). CIS Expansion to Boost Renewable Energy. Retrieved from https://www.industry.gov.au/media/media-releases/cis-expansion-boost-renewable-energy
[5] Australian Government. (2021). CIS Expansion to Support Clean Energy Infrastructure. Retrieved from https://www.industry.gov.au/media/media-releases/cis-expansion-support-clean-energy-infrastructure
- The Expanded Capacity Investment Scheme, a crucial initiative by the Australian government, targets underwriting 40 GW of renewable energy and storage capacity by 2030, supporting the country's efforts to reach an 82% renewable electricity goal.
- Science and environmental science have a critical role in ensuring the success of the CIS, as these disciplines help analyze the impact of climate change and the viability of renewable energy projects, attracting finance from the industry for implementation.
- By utilizing the CIS, the renewable energy sector can reap benefits such as long-term revenue certainty and reduced risk for investors, promoting the development and deployment of renewable energy, storage, and dispatchable capacity solutions, aiding in the transition to a cleaner energy environment.
