The Underwriting New Generation Investments (UNGI) program was established to support firm generation capacity and increase competition as part of the Australian Government's commitment to lowering electricity prices and increasing reliability in the system.
The program is technology neutral, providing a level playing field to enable the best and lowest cost generation options to be supported. All technologies allowed under Australian law are eligible under the program, including greenfield and brownfield projects, such as upgrades or life extensions of existing generators.
The program’s objectives are to:
- reduce wholesale electricity prices by increasing competition and supply
- assist commercial and industrial customers and smaller retailers to access affordable energy supply arrangements
- improve reliability by increasing the level of firm and firmed capacity in the system.
The program is a direct response to the Australian Competition and Consumer Commission’s (ACCC) Retail Electricity Pricing Inquiry which found competition in the wholesale market was not working as well as it could, detrimentally affecting electricity affordability.
The government consulted on the UNGI program during October and November 2018. Over 70 submissions were received in response to the government’s UNGI consultation paper.
For more information, see Underwriting New Generation Investments - Consultation Paper (please note, the consultation period has closed).
Registrations of interest
During December 2018 and January 2019, the government called for registrations of interest (ROI) for projects under the program. ROIs were due by 23 January 2019.
There was strong interest in the program, with 66 submissions received as part of the ROI process. The government considered all 66 submissions against the objectives of the program and the eligibility criteria proposed in the ROI guidance document and agreed to a shortlist of 12 projects representing a range of fuel types, which included:
- 6 renewable pumped hydro projects
- 5 gas projects
- 1 coal upgrade project.
The shortlist of projects represent a balance of new generation to ensure affordable and reliable power for families and businesses and ensures Australia meets its 2030 Paris Agreement targets.
For more information, see Underwriting New Generation Investment program - Registrations of Interest Guidance Document (please note, the consultation period has closed).
Delivering Affordable and Reliable Power The Hon Scott Morrison MP, Prime Minister, The Hon Angus Taylor MP, Minister for Energy, Senator The Hon Matt Canavan, Minister for Resources an Northern Australia, joint media release 26 March 2019.
Factsheet - Underwriting New Generation Investments - Shortlist.
Consideration of Shortlisted projects
In December 2019, the government announced that key initial support terms had been agreed to underwrite 2 projects:
- APA Group's proposed 220MW gas generator in Dandenong, Victoria will provide much needed fast-start, reliable generation to balance the significant increase in intermittent renewables in that state.
- Quinbrook's proposed 132MW gas generator, in Gatton, Queensland will provide new capacity to help meet peak periods in both Queensland and NSW, increase competition and compliment the Commonwealth and NSW Government's QNI interconnector upgrade.
The government is now negotiating detailed support terms with the project proponents and undertaking further due diligence work. The selection of the two projects was based on expert advice and careful assessment of potential impacts. Considerations included the benefit to energy market customers, the stage of development and financial viability.
The other 10 shortlisted projects are still under consideration for UNGI support. The government continues to work with these businesses to understand project specifications, timing and desired support, as the projects develop. These other shortlisted projects comprise:
- Alinta Energy - East Gippsland, Victoria - Gas
- Alinta Energy - Reeves Plains, South Australia - Gas
- Australian Industrial Energy - Port Kembla, NSW - Gas
- Sunset Power Pty Ltd and Delta Electricity Pty Ltd - Lincoln Gap, South Australia - Renewable Pumped Hydro
- Rise Renewables - Baroota, South Australia - Renewable Pumped Hydro
- UPC Renewables - Armidale, NSW - Renewable Pumped Hydro
- BE Power Solutions - Cressbrook Reservoir, Crows Nest, Queensland - Renewable Pumped Hydro
- Hydro Tasmania, Battery of the Nation - Tasmania - Renewable Pumped Hydro
- SIMEC Zen Energy - Eyre Peninsula, South Australia - Renewable Pumped Hydro
- Delta - Lake Macquarie, NSW - Coal Upgrade
The government will continue to engage with proponents of projects that have not made the shortlist, but may meet the program’s objectives and eligibility criteria. This will support the development of a pipeline of mature projects that the government can work with over the life of the program.
Initial support terms for two new generation projects agreed The Hon Angus Taylor MP, Minister for Energy and Emissions Reduction, media release 23 December 2019.
Grid Reliability Fund
On 30 October 2019, the government announced the Grid Reliability Fund. Projects shortlisted under the UNGI program may be eligible for support from the fund, which will be administered by the Clean Energy Finance Corporation (CEFC). The government will only refer UNGI projects to the Grid Reliability Fund that reflect the CEFC’s legislative mandate. The CEFC will not invest in coal projects.
Further announcements on shortlisted UNGI projects will be made as the government reaches agreements with individual project proponents.
In the longer term, the intention is for the CEFC to be the lead UNGI delivery agency – with the exception of coal projects. When the legislation allows, UNGI projects will be referred to the CEFC. The government will manage this transition to ensure no impact on program delivery.
For more information, see Grid Reliability Fund.