Australians Face ‘Difficult Summer’: Minister Defends New Taxpayer Support of Renewable Scheme

High voltage electricity transmission towers near the Hunter Wetland National Park in Newcastle, Australia, on April 14, 2023. Roni Bintang/Getty Images

Australia’s energy minister, Chris Bowen, has taken a swipe at the former Coalition government, saying that its failure to develop enough renewable energy sources to replace the closure of coal power plants is one reason the country’s energy grid “could face a difficult summer.”

This comes as the Albanese government announces a multi-million-dollar expansion of the taxpayer-funded Capacity Investment Scheme (CIS) and the National Energy Transformation Partnership (NETP) supposed to “supercharge” the available power in the energy grid.

“This expansion will take the CIS from the current pilot stage to 9 GW of dispatchable capacity and 23 GW of variable capacity nationally—for a total of 32 GW nationally,” Mr. Bowen said on Nov. 23.

“This is equivalent to around half the current National Electricity Market (NEM) with its nearly 11 million customers.”

Under the expanded CIS scheme, states, and territories are expected to invest in their own energy capacity to ensure renewables are rolled out, and built on pilot arrangements in NSW, Victoria, and South Australia.

The scheme also ensures that companies receive a predetermined minimum revenue when they undertake projects.

This means that if the price of electricity generation drops below the agreed floor, the government will pay the energy provider. If the provider’s profits exceed the ceiling, they will share part of the revenue with the government.

On Nov. 22, Mr. Bowen along with the NSW government announced the bids for six major energy projects for the state, totalling 1,075 MW of reliable capacity.

The projects represent $1.8 billion in energy infrastructure, and will create 400 jobs, Mr. Bowen said.

“As ageing coal-fired power stations become less reliable and exit the grid, dispatchable power is critical for supporting renewables—keeping the lights on and prices low for NSW residents and businesses when the sun isn’t shining, and the wind isn’t blowing,” Mr. Bowen said on Nov. 22.

The first “successful” CIS pilot arrangement in NSW will deliver more than 1 gigawatt of dispatchable power across the state, Mr. Bowen added.

Contract Costs ‘Not-For-Publication’

Yet, the costs for CIS contracts with providers are “not-for-publication” with the Albanese government arguing that it is to ensure that reverse auctions achieve the “best bang” for buck for taxpayers.

“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,” Mr 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 welcomed the Albanese government’s CIS scheme.

“This is a massive win for Australia—cheaper power bills for all Australians and jobs and investment in regional communities right across the country,” Mr. Grimes said on Nov. 23.

“Today’s announcement gives the industry the confidence to invest and build, confidence for workers and investors, for regional communities, and confidence for all Australians that power bills will continue to go down.”

Meanwhile, the federal opposition has criticised the Albanese government’s CIS scheme, saying that federal Labor has essentially written a “blank cheque” to cover for its “failed” climate and energy policies.

“Instead of keeping Australians safe, building critical roads and rail and fixing its cost-of-living crisis Labor is doubling down on a ‘renewables only’ plan that has lost all credibility,” shadow minister for Climate Change, Ted O’Brien said on Nov. 23.

“Labor’s 43 percent emissions reduction target, 82 percent renewable energy target, 89 percent electric vehicle target, and the all-important $275 reduction in power bills are all set to fail.

“This risks locking Australia into a path from which there may be no return, and future generations will be destined for energy poverty and energy insecurity.”

The Albanese government is currently aiming for 82 percent of the country’s energy grid to be powered by renewables by 2030.

According to a report published by the Clean Energy Council, renewable energy currently accounts for 35.9 percent of Australia’s total electricity generation, up from 32.5 percent in 2021.

In its 2023 Electricity Statement of Opportunities (ESO) released in August, AEMO suggested the need for urgent public investment in infrastructure surrounding the national energy grid with around two-thirds of Australia’s coal-fired power generation set to cease by 2033.

Nick Spencer contributed to this report.