The news was announced by Minister for Climate Change and Energy Chris Bowen on 23 November 2023. He said the government would expand the scheme beyond a pilot programme that has been running in New South Wales (NSW) to Australia’s other states. Bowen said the move would help to “supercharge” the volume of power in the energy grid.

The CIS is a national scheme aimed at supporting renewable generation and storage in Australia by encouraging investments in renewable energy resources. The CIS provides successful projects revenue agreements from the Federal Government. The CIS will invite bids for project-specific competitive tenders which will be rolled out from late 2023 onwards.

Expansion of Capacity Investment Scheme

The expanded CIS will encompass 9 GW of dispatchable capacity and 23 GW of variable capacity nationwide. This capacity equates to around half the current National Electricity Market (NEM) with its nearly 11 million customers. The government will run reverse auctions with undisclosed winning prices to generate the best results for consumers.

Stage 1 of Capacity Investment Scheme

The first phase of the CIS commenced in late 2023 and includes a:

• Commonwealth/ NSW tender in partnership with the NSW Electricity Infrastructure Roadmap (completed); and
• Tender in South Australia and Victoria (now open).

The Australian government also announced the results of the Commonwealth/NSW tender. The six successful bids for major energy projects in the state totalling 1,075 MW of reliable capacity are:

• Akaysha Energy’s Orana Renewable Energy Zone battery, located in Wellington in central-west NSW, the largest project under the scheme pilot, with enough storage to provide power to 90,000 homes each day;
• AGL Energy’s Liddell battery, located in Muswellbrook;
• Iberdrola Australia’s Smithfield Sydney battery, located in Smithfield in Western Sydney;
• Three separate virtual power plants through Enel X Australia’s demand response project.

Registrations to apply for the first CIS tender round in South Australia are open. This first CIS tender round seeks bids for Federal support for up to 600MW of four-hour equivalent or 2400MWh of dispatchable renewable generation and storage. Applications should be made before 21 February 2024.

An investor group describing itself as “Australia and New Zealand's leading network for institutional investors' response to climate risk” welcomed the initiative describing climate change as a “systemic risk to investors” that required a “systemic response”.

The news comes as the Australian government has passed its “Nature Repair Market bill” in the Australia Senate which should help pave the way for a domestic biodiversity credit market. The new legislation means that Australia will have in place a traded market for biodiversity credits.

Next steps

Clients wishing to submit an application in respect of the CIS tender round in South Australia and Victoria should do so before 5.00pm on Wednesday 21 February 2024.

Authored by Stella Xi and Nigel Sharman.