Capacity Investment Scheme
On 8 December 2022, Commonwealth, state and territory ministers agreed in principle to establish the Capacity Investment Scheme. The scheme will provide a national framework to encourage new investment in clean dispatchable capacity to support reliability and reduce the risk of price shocks in Australia’s rapidly changing energy market.
The Capacity Investment Scheme will involve competitive tenders seeking bids for clean renewable generation and storage projects to fill expected reliability gaps. Projects selected through open tenders will be offered long-term Commonwealth underwriting agreements for an agreed revenue ‘floor’ and ‘ceiling’.
The Capacity Investment Scheme will unlock at least $10 billion of new investment and 6GW of dispatchable power by decreasing financial risks for investors and encouraging more investment in capacity when and where it is needed.
First stage of the Capacity Investment Scheme
Stage 1 of the Capacity Investment Scheme was announced in the 2023-24 Budget and will be rolled out in 2023, involving:
- a tender in South Australia and Victoria, to be delivered by AEMO
- a Commonwealth/NSW tender in partnership with the NSW Electricity Infrastructure Roadmap
Further detail on tenders in 2023 and consultation on future delivery of the scheme will be released in the coming months.
Capacity Investment Scheme to power Australian energy market transformation
Energy Minister’s Meeting December 2022 Communique
Australian Energy Market Operator