Federal Energy Minister Chris Bowen has confirmed the government’s commitment to a capacity investment mechanism that is predicted will drive at least $10 billion of investment in large-scale energy storage projects that are “both renewable and dispatchable.”
Australia’s federal, state and territory energy ministers in December signed off on a Capacity Investment Scheme (CIS) to incentivise new investment in renewable energy generation backed by batteries, pumped hydro and other long-duration storage technologies to support reliability and security as the energy market transitions away from fossil fuels.
Speaking at the Smart Energy Conference in Sydney on Wednesday, Bowen indicated there will be financial support for the capacity investment mechanism in next week’s Federal Budget, with the first auctions under the scheme to begin later this year.
“I’m pleased to have had very productive conversations with state ministers who will be first cabs off the rank in terms of the rollout of the capacity investment mechanism,” he said.
“It will be conducted jurisdiction by jurisdiction. And later this year we’ll be beginning with the first auctions under the capacity investment mechanism.
“We’ve agreed with the states involved as to which they’ll be and how it will work. I look forward to providing further updates, and there will be important measures in the Budget to support that as well.”
Bowen said the CIS is “absolutely essential” to delivering on the government’s ambition to increase renewable energy to 82% of the nation’s electricity supply by 2030.
“The capacity investment mechanism is key to providing that stable and certain environment for investment in dispatchable renewable energy,” he said.
“By insisting that investments under the capacity investment scheme will be both renewable and dispatchable – it can’t be one or the other, you’ve got to be both – we are ensuring that the investment occurs in the storage which is so necessary.”
The Federal Budget, to be delivered on 9 May, 2023, will also include $314 million in tax breaks for small and medium-size businesses that invest in electrification and more sustainable and efficient energy systems, including solar and battery energy storage, during the 2023-24 financial year.
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