The Smart Energy Council’s view is that the Capacity Mechanism is not fit for purpose. It is neither timely nor consistent with Australia’s emissions reduction target (43% by 2030). It doesn’t incentivise what’s really needed – rapid investment in new, zero emissions renewable energy & renewable energy storage.
The Capacity Mechanism will not fix today’s energy crisis and will not prevent a recurrence when it comes into force in 2025. Urgent investment in zero emissions renewable energy and energy storage is needed right now.
The National Electricity Objectives need to be urgently reformed to ensure a core objective is meeting Australia’s national emissions reduction targets. That will also ensure that the work of energy market institutions prioritise emissions reductions. That hasn’t been done so far.
The Capacity Mechanism also provides no pathway to deliver the Australian Government’s target of 82% renewables by 2030 and instead will impede investment by establishing a convoluted process to bring on new energy generation.
Instead of pursuing the proposed Capacity Mechanism, all governments should be prioritising investment in renewable energy storage through their own funding and financing programs and through the work of the Energy Ministers’ Council and energy market institutions.
The Australian Government should immediately instruct the Clean Energy Finance Corporation and the Northern Australian Infrastructure Facility to prioritise financing for renewable energy storage at all scales.
The Australian Government should also examine options for tweaking or amending the Renewable Energy Target to encourage renewable energy storage, including the potential establishment of a Renewable Energy Storage Target.