Greater ACT power reliability promised in new clean energy up-sizing

It comes amid an attempt to drive down power prices and ensure benchmarks are hit as renewable energy sources are rolled out in the states.

With costs withheld for commercial reasons, Climate Change and Energy Minister Chris Bowen will on Thursday announce the government is working with the states and territories on expansions of the existing Capacity Investment Scheme (CIS) and the National Energy Transformation Partnership (NETP).

The move, just a week out from the start of the COP28 climate conference, is designed to drive down carbon emissions as the government seeks to meet its legislated 43 per cent emissions reduction target, as well as the target to achieve 82 per cent renewables on the grid nationally.

Mr Bowen said this policy is about working towards net zero "hand in glove" with the states and territories and will show "real progress towards the 2030 target and will assist in us determining our 2035 target."

Australia's 2035 emissions reduction target is due to be sorted out by February 2025

The Albanese government estimates that the move will expand the capacity of the National Electricity Market (NEM) by 32 gigawatts in aggregate. The current NEM has a total electricity generating capacity of more than 65 gigawatts.

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Nine gigawatts would be of dispatchable capacity and 23 gigawatts would be of variable renewable capacity.

Half of the extra capacity would be subject to bilateral agreements with the states and territories.

For the ACT, which champions 100 per cent of electricity coming from renewable sources, the move is about shoring up reliability as renewable power is drawn from the surrounding NSW region.

As well as the ACT electrifies households and keeps its fast take up of electric vehicles, the ACT will need to procure more renewable energy to meet the demand and keep down power prices.

The ACT investment in renewables have largely shielded territorians from some of the recent national jumps in power prices.

It is understood there are also prospects through this expansion of significant storage facilities being put in place within the ACT.

The CIS started in December 2022 as a way to incentivise the establishment of clean dispatchable generation and storage on the energy grid. The scheme is about replacing the existing thermal generation assets such as coal and gas and getting more renewables into the system. It will not support new gas builds.

In an alternative policy push to the Renewable Energy Target (RET) which uses market incentives to encourage renewable energy production, the expanded scheme has national power auctions where the government underwrites new renewable generation and storage. When revenues are high, the taxpayer-funded money is returned.

The results of the first CIS pilot auction in NSW were announced on Wednesday and it is delivering more than one gigawatt of dispatchable power across the state.

Mr Bowen and assistant minister Jenny McAllister will lead the Australian delegation for COP28 which starts on November 30.

The 2023 Emissions Gap Report by the UN Environment Programme (Unep) states that 2030 net-zero pledges are not currently considered credible. It states none of the G20 countries, including Australia, are reducing emissions at a pace consistent with their net-zero targets.