The Albanese administration plans to quickly increase the funding program for eco-friendly energy initiatives.
The Albanese administration plans to significantly increase a program that is funded by taxpayers to aid in the development of clean energy production and storage. This decision recognizes the necessity of meeting their goal of Australia using 82% renewable energy by 2030.
The minister responsible for climate change and energy, Chris Bowen, is expected to announce on Thursday that the capacity investment scheme will be expanded. This decision comes after government officials advised that additional measures were necessary in order to reach the electricity target and stabilize the grid as older coal plants are phased out.
According to Bowen, the government plans to financially support the addition of 32 gigawatts of electricity, which will be made up of 9GW of storage and 23GW of fluctuating renewable energy sources. Traditional fuels, such as gas-fired power, will not be considered for this support.
The main objective of the government is to reduce the risk associated with investing in clean energy and protect consumers from fluctuations in prices while transitioning to a net zero emissions economy.
Based on data, there has been a significant decrease in investments towards large solar and wind energy projects this year. The Clean Energy Council has cautioned that the first half of 2023 has seen the lowest amount of financial commitments towards major clean energy developments since 2017.
Experts suggest that even though solar and wind power are the most cost-effective options for new energy production, there may not be enough farms being constructed at the necessary rate to reach the 82% goal and fulfill climate obligations without further policy assistance. The government is also under pressure to address the United States’ Inflation Reduction Act, which includes A$560 billion in funding for renewable energy and has intensified global competition for investments in environmentally-friendly initiatives.
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The exact cost of the capacity investment scheme, which will take the place of the federal renewable energy target, is uncertain for the period leading up to 2030. Likewise, the projected revenue from this scheme is unknown.
The plan includes the government guaranteeing new investments in renewable energy production and storage through a “contract for differences” that distributes the risks between investors and taxpayers.
Contracts within the scheme are won through a competitive tender and include floors and ceilings for revenue earned by a development. If the revenue is higher than agreed, the proponent pays the commonwealth a percentage of the proceeds. If it is lower than agreed, the commonwealth pays the difference to the proponent.
The government has stated that the expenses associated with the contracts will not be revealed in order to avoid compromising the competitive bidding process.
The plan has been tested in New South Wales, South Australia, and Victoria. On Wednesday, it was announced that there are six successful projects in NSW, consisting of three large batteries and three virtual power plants. These projects have a total capacity of 1GW. The expansion is set to start in April and will continue with auctions every six months until 2027.
In addition to fulfilling its share of the underwriting, the national government will also engage in discussions with individual states and territories to support a smooth shift towards achieving net zero emissions by 2050.
These agreements will cover a range of issues, including ensuring there are sufficient strategic reserves of generation in the market. Commonwealth underwriting will only support renewable projects but the states can determine the form of the strategic reserve.
The significant growth of the insurance program is occurring prior to Australia’s involvement in the UN climate discussions in the United Arab Emirates this month. Cop28 will involve a worldwide evaluation of advancements in reducing emissions. As nations get ready to convene, the UN has issued a dire public message that the planet is heading towards a “hellish” 3C increase in global temperatures.
Next week, before leaving for the Cop, Bowen will present a yearly statement on climate change to parliament. Additionally, he will release a separate evaluation from the Climate Change Authority on progress made domestically. On Friday, he will also hold a meeting with energy ministers from various states and territories.
During his address at the Lowy Institute, Bowen stated that achieving the renewable energy goal in the electricity industry would give Australia a “strategic edge in terms of energy” due to the ample supply of wind and solar resources. He also mentioned that these resources are sufficient to power the economy multiple times.
He observed that there is no political crisis powerful enough to prevent the sun from shining or the wind from blowing.
In 2022, Bowen reported that the coal power fleet experienced numerous instances of unplanned shutdowns, resulting in a significant decrease in expected coal-based electricity production for almost a quarter of the year.
“The minister stated that this is not a political opinion but rather a practical fact that emphasizes the need for a shift towards renewable resources.”
However, the Labor party is currently under increasing criticism from the Coalition for the effects of widespread renewable energy production and infrastructure on nearby neighborhoods.
The joint resistance effort involves protesting against the proposed windfarm location near the coast of the Hunter region in NSW. The Coalition has suggested constructing small, modular nuclear reactors on the land where old coal power plants have been shut down, in order to supplement renewable energy sources in the power grid.
Unfortunately, the Australian opposition’s claim of a growing nuclear industry based on the approval of a small modular nuclear power plant in the US does not hold up as the company responsible for the project has cancelled it due to increasing expenses.