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Taxpayers to subsidise renewable energy projects, govt missing 2030 target

Minister Chris Bowen says Israel should comply with the ICJ's ruling on Rafah.

Minister Chris Bowen says Israel should comply with the ICJ's ruling on Rafah. Photo: AAP

Australia’s creaking electricity grid will get more government support under an expansion of a taxpayer-funded capacity investment scheme.

Federal investment in partnership with states and territories, subject to them investing in their own capacity, will also help replace the nation’s fleet of increasingly unreliable and costly coal-fired power plants.

The package, announced by Energy Minister Chris Bowen on Thursday, builds on pilot arrangements in NSW, Victoria and South Australia and is intended to share the risk of building new assets and avoid price spikes for consumers.

Other challenges include long approval times for projects, a shortage of engineers and tradies and supply chain challenges as rival nations race to electrify.

“This investment will supercharge available power in the energy grid, delivering the long-term reliable, affordable and low-emissions energy system Australians deserve as our grid changes,” Bowen said.

The failure of the former coalition government to deliver a capacity scheme is one of the reasons Australia’s grid could face a difficult summer, he said.

Federal Labor is aiming for 82 per cent renewables by 2030 – up from about a third at present – to achieve net zero emissions by 2050.

Bowen conceded Australia was doing well but not well enough.

“We’ve had some very good progress but we need more progress after making up for a decade of delays,” he told ABCTV.

“It’s also an indication that we are competing in a world very hungry for capital.”

The revenue of generators in the national electricity market is becoming more uncertain as the price of renewable energy falls and projects are falling short, prompting fresh government support to avoid failure.

The capacity investment scheme guarantees companies a pre-agreed floor for revenue when committing to projects but also allows taxpayers to share in benefits when prices soar.

The expanded scheme will include a total of 32 gigawatts of capacity or around half the current national electricity market, with competitive tenders to be run for clean renewable generation projects.

Around half the capacity will be subject to states meeting reliability criteria and improvements to approvals and permitting.

“Capacity may be reallocated from any jurisdictions that don’t make agreements to those that do,” Bowen warned.

NSW plans to have $1.8 billion worth of renewable projects operational by December 2025 after finding bidders under the state-federal incentive scheme.

Among six announced on Wednesday are two large-scale battery projects by AGL and Akaysha Energy with a combined capacity of 915MW.

“The successful projects announced yesterday will deliver more than 1GW of dispatchable power across the state,” Bowen said.

States can continue to invest in new gas generation under their own capacity plans.

The overall cost of the revenue underwriting scheme is not being released ahead of the auctions but it is expected to be negligible in the early years and ramp up later this decade.

“This is an auction and if you’re selling your house at an auction, you don’t announce in advance what you expect to get,” Bowen said.

“So we’re not going to signal to the bidders.”

A cap on spending under the scheme is yet to be disclosed.

Smart Energy Council CEO John Grimes called the announcement a red letter day for renewables.

“This is a massive win for Australia – cheaper power bills for all Australians and jobs and investment in regional communities right across the country,” he said.

Clean Energy Investor Group head Simon Corbell said the flow-on as a result of the initiative would unlock significant investment in new renewable energy generation and storage projects nationwide.

– AAP

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