{"id":158226,"date":"2025-08-04T03:58:03","date_gmt":"2025-08-04T03:58:03","guid":{"rendered":"https:\/\/www.pv-tech.org\/?p=158226"},"modified":"2025-08-04T03:58:05","modified_gmt":"2025-08-04T03:58:05","slug":"australia-clean-energy-subsidies-should-be-replaced-with-market-based-incentives-from-2030","status":"publish","type":"post","link":"https:\/\/www.pv-tech.org\/australia-clean-energy-subsidies-should-be-replaced-with-market-based-incentives-from-2030\/","title":{"rendered":"Australia: Clean energy subsidies should be replaced with market-based incentives from 2030"},"content":{"rendered":"\n
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The report said market-based incentives should replace schedmes such as the Capacity Investment Scheme (CIS) from 2030. Image: Lumea.<\/figcaption><\/figure>\n\n\n\n

Australia\u2019s Productivity Commission (PC) has suggested that the country phase out green subsidies for clean energy and replace them with market-based incentives starting in 2030.<\/p>\n\n\n\n

Detailed within the Investing in cheaper, cleaner energy and the net zero transformation<\/a><\/em>, although green subsidies have succeeded in spearheading the energy transition in Australia, market-based incentives must be introduced to help guide future investment in renewables. <\/p>\n\n\n\n

According to the report, Australia should enhance incentives in the electricity, heavy industry, and transport sectors to facilitate an efficient transition to net zero emissions. Together, these sectors represent 79% of Australia’s total gross emissions.<\/p>\n\n\n\n

The Productivity Commission is an Australian government research and advisory body focused on economic, social, and environmental issues.<\/p>\n\n\n\n

Specifically, the report suggests implementing market-based incentives in the electricity sector to replace the Renewable Energy Target (RET) and the hugely successful Capacity Investment Scheme (CIS)<\/a>, with the PC stating that neither will support new investments in renewables after 2030.<\/p>\n\n\n\n

The CIS aims to promote new investments in reliable clean energy generation, enhance system reliability, and mitigate the risk of price fluctuations in Australia’s evolving energy market. Its successes thus far recently saw the federal government upsize its 2030 target from 32GW to 40GW<\/a>.<\/p>\n\n\n\n

Successful projects in the CIS are offered long-term Commonwealth underwriting agreements with an agreed-upon revenue \u201cfloor\u201d and \u201cceiling.\u201d<\/p>\n\n\n\n

Commissioner Barry Sterland said reaching net zero at the lowest possible cost is central to the PC\u2019s productivity challenge.<\/p>\n\n\n\n

\u201cWith the right policy settings, we can limit the costs of decarbonising and speed up our approvals to unlock the opportunities of lower-cost, more abundant clean energy. We can also boost our resilience to the effects of climate change and minimise their human and economic costs,\u201d Sterland said.<\/p>\n\n\n\n

Policy frameworks driving renewable energy expansion<\/strong><\/h2>\n\n\n\n

Australia\u2019s renewable energy sector has benefited from various supportive policies, and the report underscores the importance of maintaining and expanding these frameworks.<\/p>\n\n\n\n

The Commission highlights the need for robust policy mechanisms to incentivise investment in clean technologies, particularly in regions with high renewable energy potential.<\/p>\n\n\n\n

Renewable energy zones (REZs)<\/a> have been identified as a critical tool for facilitating large-scale solar PV development<\/a>, providing the infrastructure needed to connect new generation capacity to the grid.<\/p>\n\n\n\n

The expansion of REZ across the National Electricity Market (NEM)<\/a> is expected to reduce curtailment risks and improve energy distribution efficiency, making it a key enabler for solar PV growth. Developers and investors are advised to closely monitor the rollout of these zones, as they will dictate the geographic focus of future installations.<\/p>\n\n\n\n

Additionally, the report calls for streamlined regulatory processes to accelerate project approvals and reduce barriers to entry for new market participants. Planning delays were referenced as one of the biggest obstacles to clean energy investment in the NEM<\/a> in a report released by advocacy and engagement platform Clean Energy Investor Group (CEIG) last month.<\/p>\n\n\n\n

To address delays in energy infrastructure development, the report proposes the creation of an independent Clean Energy Coordinator-General. This role would oversee priority renewable energy projects, ensuring they are assessed and approved more efficiently.<\/p>\n\n\n\n

The Coordinator-General would be supported by a specialist \u201cstrike team\u201d tasked with breaking through regulatory and logistical roadblocks. This initiative could significantly reduce project timelines, benefiting developers and investors in the renewable energy sector.<\/p>\n\n\n\n