We have seen many swings between the States and the Federal Governments in energy policy over the last 30 years. It is now the turn of the Feds to lead! The Capacity Investment Scheme (CIS), drawing heavily on the NSW Long Term Energy Service Agreement (LTESA) framework, is now effectively a national framework for renewable tenders with the Federal Government expansion of the CIS to underwrite 23 gigawatts of new electricity generation. This is intended to support delivery of the national 82% renewable energy target by 2030. Stride’s clients have been successful in the LTESA framework.
While a positive signal, some in the industry suggest the attention (and funding) is misdirected. Some claim it would be better spent on the real issue for projects: transmission. While CIS is valuable for storage projects, the CIS-for-generation may only marginally improve debt finance for generators – arguably solving a problem the industry does not presently face.
Transmission is still a major bottleneck for new generation investment nationwide – with new generators facing significant curtailment in the existing network.
Merit criteria recently released for the South Australian and Victorian CIS firming tender which opened in December are streamlined compared to the NSW auction with a notable absence of local content and regional economic development requirements.