Joint media release: Capacity Investment Scheme to power Victoria and South Australia with more cleaner, cheaper, reliable energy

Chris Bowen MP, Minister for Climate Change and Energy

Lily D'Ambrosio MP, Victorian Minister for Climate Action, Energy and Resources 

Tom Koutsantonis, South Australian Minister for Energy and Mining


The Albanese Government is working with the Andrews and Malinauskas Labor Governments to improve energy security and reliability by attracting investment in firmed renewables, the cheapest and cleanest form of reliable energy with the announcement of the Capacity Investment Scheme rollout in Victoria and South Australia.

The Capacity Investment Scheme (CIS) will support the development of grid-scale dispatchable renewable generation and storage to ensure more reliable and affordable electricity for Australia’s homes and businesses.

It will unlock around $10 billion of investment and add 6GW to support grid reliability and security.

The latest tender with Victoria and South Australia will target 600 MW of dispatchable capacity with 4-hour equivalent duration across the two states, in line with the Australian Energy Market Operator’s 2022 Integrated System Plan.

Bringing this new generation online will help cover the loss of capacity from the scheduled closure of South Australia’s Torrens Island B power station in 2026 and the 2028 retirement of Victoria’s Yallourn Power Station.

Successful dispatchable renewable generation and storage projects will be offered long-term revenue underwriting under the Commonwealth scheme, providing additional investment certainty.

This announcement will unlock a significant amount of firmed renewable projects and support for the grid over the long-term for both Victoria and South Australia, like new battery systems, hydrogen or pumped hydro projects.

Projects will be assessed for their ability to support reliability at the lowest cost while ensuring increased capacity is delivered in both jurisdictions.

The interconnected nature of the South Australian and Victorian grid means both states will benefit from CIS projects on either side of the border.

The Victorian-South Australian tender follows a recent partnership between NSW and the Commonwealth to add a 550 MW CIS component to the NSW Energy Roadmap’s firming tender to deliver a total of almost 1 gigawatt of additional dispatchable capacity.

A national rollout of the CIS in 2024 would include further auctions in Victoria and South Australia.

Quotes attributable to the Minister for Climate Change and Energy Chris Bowen:

“Today’s announcement will dramatically improve energy security with large-scale batteries and other zero-emission technology in Victoria and South Australia that can quickly dispatch cleaner, cheaper renewable energy when needed.

“The Capacity Investment Scheme is accelerating new investment in the ideal mix of storage and renewable generation needed by the rapidly changing energy market to put downward pressure on prices over the coming decade.”

Quotes attributable to Victorian Minister for Energy and Resources Lily D’Ambrosio:

“Renewables are the cheapest form of electricity generation, and this announcement will ensure we can bring more online, slashing emissions and lowering bills for Victorian households.”

“More renewable energy and storage capacity is critical to meeting our target of 95 per cent renewables by 2035 and energy storage targets of at least 2.6 gigawatts by 2030 and 6.3 gigawatts by 2035.”

Quotes attributable to South Australian Minister for Energy and Mining Tom Koutsantonis:

“We welcome the rollout of the Capacity Investment Scheme to South Australia.

“Our state has been a leader in renewables and is investing $593 million towards our Hydrogen Jobs Plan. We’ve been working hard to eliminate reliance on carbon while providing clean, affordable, reliable energy and we will be doing everything we can to case manage and prepare approvals to expedite investment under this scheme.”

Further information:

Victoria and South Australia:

  • AEMO will conduct the SA/VIC two-stage tender process in accordance with tender guidelines.
  • The first bids stage will provide project details before shortlisted tenderers are invited to provide a second-stage financial bid.
  • Draft term sheets and detailed tender timelines will be released in the coming weeks, with registration for the tender to open in September.
  • At the conclusion of the tender, AEMO will recommend projects to receive revenue underwriting to the Commonwealth based on a set of assessment criteria.

Future CIS tenders:

  • Any eligible projects that have reached Final Investment Decision since the CIS was initially announced in December 2022 are eligible for support, to avoid any delay in investment.