The Australian Government’s Capacity Investment Scheme might not sound particularly exciting – but it has the potential to deliver significant benefits for rural, regional and First Nations communities.
The Capacity Investment Scheme (CIS) is a key lynch-pin of the Federal Government’s renewable energy strategy and targets. It encourages investment in new energy generation and storage by providing a long-term safety net that decreases financial risk for investors. Ultimately, the CIS will ensure more renewable energy projects get built.
Through the CIS, the Australian Government aims to deliver a target of 32 GW of new capacity nationally, made up of 23 GW of renewable generation (such as wind and solar) and 9 GW of dispatchable capacity (such as battery storage). The projects that are successful in gaining CIS support should ensure we can meet the 2030 targets for renewable energy generation, create energy reliability and reduce emissions.
We believe the CIS also has an important role to play in enabling better practice renewables development.
Throughout 2024, the Government has been rolling out tender rounds for the CIS, and as the guidelines for each round have been released, we’ve been advocating strongly – with our colleagues at Community Power Agency – to ensure that the merit criteria and guidance for community engagement has progressively improved.
The good news is our advocacy is showing results, with the guidelines for each tender continuing to strengthen. Stronger guidelines ultimately create the environment for a race to the top of better practice renewables development. This means better outcomes for rural, regional and First Nations communities.
There have been five tender rounds so far: the pilot South Australia/Victoria Tender, the National Electricity Market (NEM) Tender 1, Western Australian Wholesale Electricity Market Tender 2 and NEM Tenders 3 and 4, which are open to projects across the country.
Through those rounds we’ve been proactively working with the Australian Government to clearly articulate that the CIS needs program settings that match our ambition that the shift to renewables should deliver lasting benefits in the regions, shaped and designed by people living there – and our engagement efforts are paying dividends.
Specifically, we’re very pleased to see that our advocacy has, progressively at each tender round, improved and strengthened language or created ‘higher merit’ opportunities for:
- Building trust, meaningful relationships, collaboration and co-design for community and First Nations engagement, benefit sharing and decision-making
- Community participation in decision-making
- First Nations engagement, guidance, economic opportunities and collaboration
- First Nations equity, ownership or energy offtake arrangements
- Considering community co-investment or co-ownership
Each round has also clarified guidance on what the assessors are looking for in order to reward higher merit to projects bidding for CIS support.
Closing out 2024, we’ve seen the successful bids from NEM Tender 1 recently announced. The bids for Tender 3 will close on 18 December, while the bids for Tender 4 opened up on 13 December.
Heading into 2025, we will stay engaged with the government’s CIS team, paying particular attention to contracting arrangements, binding commitments and further opportunities for program refinement.