Australia Renewable Target Expands With 25% Hike In Capacity Scheme

The Australian government has announced a significant expansion of its flagship renewable energy underwriting program, aiming to accelerate the nation’s clean energy transition and address mounting concerns over its ability to hit 2030 climate targets.

Climate Change and Energy Minister Chris Bowen revealed on Tuesday that the Capacity Investment Scheme (CIS) will increase by 25 percent. This move raises the government’s goal to underwrite the construction of 40 GW of large-scale solar, wind, and storage by 2030, nearly double the combined capacity of Australia’s current coal-fired fleet.

Pushing Toward the 2030 Renewable Target

Labor’s expanded investment is central to delivering on its legislated target - 82 percent of grid electricity from renewables by 2030, up from roughly 42 percent over the past year. Achieving this target is critical for meeting the country’s commitment to cut emissions 43 percent below 2005 levels by the end of the decade.

However, progress toward the 2030 goal has been challenged by planning approval delays, grid connection issues, and local opposition in some regions. While some official projections have indicated Australia is roughly on track, analysts have voiced skepticism due to slower-than-expected renewables deployment and gaps in broader decarbonization policies.

Details of the Scheme Expansion

Under the new CIS settings, the government will underwrite 26GW of new large-scale solar and wind generation plus 14GW of storage or dispatchable clean capacity - technologies such as large-scale batteries that can deliver power when renewables are offline. That’s up from earlier commitments of 23GW and 9GW, respectively.

The scheme works by offering competitive contracts that guarantee revenue floors and ceilings for developers. 

That is, if market prices fall below the floor, the government pays for the shortfall. In case they rise above the ceiling, developers pay back a portion. Crucially, the scheme is open only to renewables. Thus, fossil fuel projects, including gas, are not eligible.

Minister Bowen noted the scheme has been massively oversubscribed in its first six competitive rounds, which have already attracted $17 billion in investment and will deliver over 6GW of new clean generation and 2GW of dispatchable capacity.

Citing data from the national science agency CSIRO, Bowen highlighted that costs of both solar panels and batteries have fallen faster than expected, down 8 percent and 20 percent respectively in the past year, creating an opportunity to “supercharge” Australia’s energy transition.

Political and International Context

The announcement came as debate intensified over Australia’s post-2030 climate direction. Some Coalition MPs are promoting legislation to scrap government climate programs, while civil and climate groups hosted events in Canberra on Tuesday, urging the government to set an ambitious 2035 emissions target.

On Monday, UN climate chief Simon Stiell labelled the coming 2035 target ‘a defining moment’ for Australia and urged the government to exceed incremental ambition. Bowen welcomed Stiell’s endorsement of Australia’s progress on renewables and batteries, reiterating that upcoming targets would be set “informed by the expert advice in the national interest.”