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The Capacity Investment Scheme: What do commercial-solar installers need to know?

  • Post category:News

Australia has committed to raising renewables to 82 per cent of the energy mix by 2030, and last week, Chris Bowen announced some changes to make sure we reach our renewable-energy targets.

The announcements will likely impact larger-scale projects. Significantly, this signals the end of the current Renewable Energy Target, which won’t be extended beyond 2030.

What’s happening?

The Capacity Investment Scheme (CIS) and the National Energy Transformation Partnership are being expanded. 

After successful pilots in NSW and ACT, Bowen’s Capacity Investment Scheme will be ramped up from 6GW of storage to more than 9GW of dispatchable capacity, and will add 23GW of variable capacity (wind and solar). 

The federal government says it will achieve this with an auction model, starting with a first auction in April next year and followed by a new auction every six months until 2027. 

It will only be eligible to projects not regarded as “committed” as of 23 November 2023.

What does this mean?

The expansion of the CIS scheme will effectively replace the current Renewable Energy Target scheme, which is due to end in 2030.

These changes are expected to soften the market value of LGCs (for systems over 100kW), which will alter the value proposition for businesses seeking to install larger renewable energy systems.

The increased capacity from batteries and large-scale renewable energy installations should contribute to downward pressure on electricity prices.

Key takeaways for Channel Partners

  • Following successful pilots in the ACT and NSW, the government has decided auctions are the best way to get new large-scale projects moving.
  • The states will work together to manage the auctions.
  • Installations impacted are 100kW+.
  • Projects below 30MW are explicitly excluded from participating in the initial underwriting mechanism.
  • Guaranteed minimum revenue streams will be replaced by revenue floors and a ceiling.
  • Barriers to renewable investment, such as workforce and supply chain constraints, will be considered along with other project criteria.

As the scheme continues to roll out, we’ll keep you updated on further developments and the impact they’re likely to have on your commercial-solar business.

Want a deeper understanding of how legislation changes might affect your pipeline? Schedule a call with your Sales Director today.