One-sentence summary: The Capacity Investment Scheme is the largest government intervention in Australia's electricity market, delivering $67 billion of clean energy infrastructure to replace retiring coal power stations, cut power bills, and enable Australia to reach its 82% renewable electricity target by 2030.

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The Capacity Investment Scheme (CIS) is the Australian Government's response to a critical challenge: insufficient private investment in renewable energy to replace retiring coal power plants and meet Australia's emissions reduction targets. Announced in November 2023 and significantly expanded since, the CIS uses revenue underwriting agreements to guarantee investment certainty for renewable energy projects. Through competitive tender processes run approximately every six months until 2027, the scheme will deliver 23 gigawatts of new renewable generation (representing $52 billion in investment) and 9 gigawatts of clean dispatchable capacity like battery storage (representing $15 billion in investment) by 2030.

In December 2024, the government announced its first major round of 19 successful projects across New South Wales, Victoria, South Australia, and Queensland, delivering 6.4 gigawatts of capacity—enough to power three million homes. These projects include solar farms, wind farms, and hybrid projects combining renewables with battery storage, with many expected to be operational by 2028. Beyond clean energy production, the selected projects will deliver substantial community benefits, including $660 million for community development initiatives, $280 million in First Nations benefits, over $14 billion in local business investment, and $60 million for local employment opportunities.

• First national tender delivered 19 projects with 6.4GW capacity across four states

• Uses "contract for difference" mechanism to provide revenue certainty to investors

• Projects selected on merit including reliability contribution, price impacts, and community benefits

• Complements bilateral Renewable Energy Transformation Agreements with states and territories

• Targets 32GW of new capacity by 2030 (23GW renewable generation, 9GW dispatchable storage)

  
  

[1] https://oia.pmc.gov.au/published-impact-analyses-and-reports/capacity-investment-scheme

[2] https://aemoservices.com.au/tenders/-/media/0577e4b8b7044a97b1777a670112be84.ashx?la=en

[3] https://www.energy.gov.au/news-media/news/capacity-investment-scheme-power-australian-energy-market-transformation

[4] https://www.allens.com.au/insights-news/insights/2024/03/capacity-investment-scheme-now-open-for-business-will-it-solve-the-capacity-conundrum/

[5] https://www.theguardian.com/australia-news/2023/nov/23/albanese-government-to-rapidly-expand-investment-scheme-for-clean-energy-projects

[6] https://minister.dcceew.gov.au/bowen/media-releases/fixing-australias-energy-system-now-new-cheap-clean-reliable-renewables#:~:text=The%20Albanese%20Government%20is%20fixing,demand%20between%20now%20and%202030.

[7] https://www.dcceew.gov.au/about/news/australias-clean-energy-transformation-boosted-by-19-projects

[8] https://www.dcceew.gov.au/energy/renewable/capacity-investment-scheme#transcript