"Today's announcement of an expansion of the existing Capacity Investment Scheme (CIS) and the National Energy Transformation Partnership (NETP), will greatly expand the scope of capacity contracts from the Federal Government and looks like a very helpful step to addressing fears that inadequate supply would pose to price and reliability this decade," Innes Willox, Chief Executive of the national employer association Ai Group said today.
"Importantly, these contracts don't expose electricity users to the kinds of cost transfers that other approaches, like an expanded RET, might have involved. Competitive auctions should help ensure value for money and minimise the ultimate cost to the Budget.
"The initial results of the NSW round are encouraging, with some major and badly needed energy storage and virtual power plant projects coming forward at high speed.
"This policy leaves some major challenges still to be resolved. Financial guarantees can cut the borrowing costs and speed the progress of energy capacity only if those projects and their supporting infrastructure can actually be built.
"Social license needs to be secured and regulatory approval processes need to produce timely and definitive results. The Capacity Investment Scheme may ease this by incentivising the States to streamline planning.
"But all sides of politics and all regions of the country need to acknowledge that if we can't build big things, we will sacrifice national economic opportunity and put our present prosperity at risk," Mr Willox said.
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