Submission: Unlocking electrification with privately leveraged capital
5 September 2023
IGCCs submission to the Department of Climate Change, Energy, the Environment and Water's (DCCEEW's) consultation on the Capacity Investment Scheme emphasises the importance of strategic policy to leverage private capital with public funds. The submission considers how the CIS fits within established policy at State/Territory and Federal levels, and where, as a relatively small scheme, it is of most value to de-risk emergent technologies needed to create a dynamic, future-proofed electricity market.
IGCC supports the establishment of a national policy for renewable electricity, to deliver net zero emissions by 2050 and electricity grids powered by 82 per cent renewables in Australia by 2030 and >90 per cent by 2035.
The Capacity Investment Scheme (CIS) enters the market at a time when investment levels are 50 per cent below, or a billion dollars less, than the rolling 12-month quarterly average[1]. Decarbonising the electricity sector over the next 10–15 years is central to achieving net-zero emissions for Australia. Around 6GW of additional capacity is required annually to 2035 to be in-line with least-cost national emissions pathways to net-zero emissions[2]. Only 699MW have been committed this year.
IGCC supports the awarding of CIS tenders to projects that have received Australian Renewable Energy Agency (ARENA) and Clean Energy Finance Corporation (CEFC) support, so long as this leverages private funds and does not undermine support from grid-firming projects that otherwise have no government support. IGCC views a key strength of the CIS to be its potential for bringing commercially inviable technologies into the market; those that currently fall outside of the risk appetite of the CEFC.
IGCC also emphasises the need for the CIS to be responsive to and supportive of demand-side actors in electricity markets. We encourage DCCEEW and the Australian Energy Market Operator (AEMO) make demand-side projects eligible under the CIS, so long as they are scalable and can provide grid-firming and reliability functions.
Read the full submission.
[1] Renewable Projects Quarterly Report
[2] Accelerating our energy transition with a credible 1.5°C scenario