Third (or thirtieth?) time lucky?
On Friday last week (4th August 2023) the federal Department of Energy* published its public Consultation Paper on the proposed ‘Capacity Investment Scheme’:
* these departments change their names every time they gain a new Minister – which, given we’ve been serving many clients (including many departments) for 20 or more years, gets quite confusing in terms of their names. So we’ve a shorthand habit of just calling them ‘Department of Energy’.
| Department Consultation Page Capacity Investment Scheme |
26-page Consultation Paper Capacity Investment Scheme |
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In days gone by, this consultation might have been run out of the Energy Security Board (ESB now abolished). It’s now been run out of the Department of Energy in Canberra:
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The 26-page consultation paper is linked here:
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On that site, they note: ‘… The CIS expects to bring on at least $10 billion of new investment and 6 GW of clean dispatchable capacity by 2030. A series of competitive tenders for this capacity will be rolled out from 2023. We will be seeking bids for clean renewable generation and storage projects to help fill expected reliability gaps. Projects selected will be offered long-term Commonwealth underwriting agreements for an agreed revenue ‘floor’ and ‘ceiling’. The first phase of the CIS is proposed to be delivered in 2023, and will involve: (a) Partnership with NSW Electricity Infrastructure Roadmap – Commonwealth support for up to 550MW of firmed capacity, in addition to 380 MW already committed by NSW. (b) South Australia / Victoria tender – Tender arrangements to be announced by October 2023. Further details on the national roll out of the scheme will be outlined by the end of 2023.’ The Government asks you to provide your submission here by 17:00 AEST on Thursday 31st August 2023. |
In this consultation paper, they illustrate the floor and ceiling arrangement here:
… and drill into details of how this might work. The paper notes: ‘As per the 8 December Energy Minister Meeting Communique, eligible projects will include those that achieve financial close from 8 December 2022 onwards.’ Of course, there’s more detail to be read here … . |
(A) Brief background
Back on 14th May we noted how ‘We’re not building enough replacement dispatchable capacity’ … referencing analysis compiled for GenInsights Quarterly Update for Q1 2023:
In that analysis we looked at ‘Aggregate Scheduled Target‘ (AggSchedTarget) as a measure of how much dispatchable/firming capacity is still required – and how that is trending over time with the rise of ‘Anytime/Anywhere Energy‘ that’s carving a large slice out of the shape (but not necessarily the peak) of this requirement.
Having worked through numerous iterations of an approach to deliver this new dispatchable/firming capacity in the past (including via the NEG, and a Capacity Mechanism at the ESB) this current approach is another iteration on how to meet this challenge. Will it land successfully?
(B) Key Dates
Two key dates jump out at me…
?? August 2023 = a webinar at a date to be confirmed
31st August 2023 (at 17:00) = submissions due and consultations closed.
That’s all for now…
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