Costs threaten connections


Hey Reader, in today's edition:

  • How the CIS works
  • AEMO's latest jaw dropping report dump
  • Getting consensus on rules for life support

Capacity for shovel-ready investment

Australia’s 2030 climate targets may be on shaky ground, but there remains a solid base for renewable energy investment in the form of the Capacity Investment Scheme (CIS).

The scheme’s underwriting approach, popular in many parts of the world, has seen many tender rounds significantly oversubscribed.

This week’s expansion of the CIS, to incentivise 40GW of new capacity, is the most significant change made to the program since it started, but it’s not the only change underway to the scheme before it winds down in 2027, to be replaced by a mechanism that better incentivises long-term investment.

From August, bidding for a contract in a CIS tender round will be a one-step process, which is expected to result in each tender round taking less time to finalise. The government is also considering allowing aggregations of smaller projects to bid into CIS tender rounds.

Costs threaten connections

The Australian Energy Market Operator (AEMO) released a slew of reports marking the halfway point to the 2026 Integrated System Plan (ISP), including a warning that costs have increased by as much as 100% for some transmission projects.

AEMO said this “important finding” indicated transmission projects in the NEM were experiencing very strong competition - within Australia and globally - for workforce and resources. The 2026 ISP will “re-visit” all transmission network projects previously identified as needing to proceed, with the exception of projects that have already advanced to anticipated or committed status.

Meanwhile the Commonwealth has extended the deadline for politically deadlocked Tasmania to take Final Investment Decision (FID) on Marinus Link to August 2. The business case has still not been released, nor has an independent peer review.

On life support

A reliable energy supply is critical for those who rely on life-support equipment and other medical devices in their homes, and energy businesses need to maintain a register of their most vulnerable customers to keep them safe during planned and unplanned outages.

“This is particularly important during extreme weather events and emergencies. Emergency services can direct their limited resources more effectively when they can prioritise residents who have critical life-support needs.”
Gerard Brody
Chairperson, Essential Services Commission

In the wake of the outage review sparked by a February 2024 storm event, Victoria’s Essential Services Commission is reviewing the state’s energy rules to improve how energy businesses register customers who rely on life-support equipment.

The consultation on better protections will run until September 4, with national implications as the federal energy department and regulators want consistency across jurisdictions. A draft decision is expected to be published by December.

Catch Up

Capital

Renewable energy company Frontier Energy (ASX: FHE) confirmed in a market update it would bid in the 2025 Wholesale Energy Market (WEM) CIS tender that is expected to open in August. After missing out on AEMO Reserve Capacity Credits in 2024, Frontier will submit bids for both the energy generation from Stage One of the Waroona 120MW solar facility and the Stage Two expansion. If successful, that would put the Waroona Renewable Energy Project, located 120km south of Perth, back on track to become one of the largest renewable energy projects in Australia, with 830 hectares of freehold land under Frontier’s control.

Oil and gas group Beach Energy (ASX: BPT) flagged a $474 million impairment charge on the back of lower commodity prices as it posted its fourth quarter activities report. Sales revenue of $455 million was 17% below the prior quarter due to lower realised oil and LNG pricing and one less Waitsia LNG cargo lifted. Despite the challenges, Beach Energy chief executive Brett Woods said the company was ready to pursue acquisitions again. He will deliver the company’s full-year results on Monday. (AFR)


Projects

The Victorian Farmers Federation (VFF) urged the Australian Energy Market Operator (AEMO) to scrap VNI West and start again after the Electricity Network Options Report estimated the project’s estimated cost had more than doubled since May to $7.6 billion and could climb as high as $11.4 billion. VFF said the state government had been “incredibly clumsy, particularly in how they engage and partner with rural communities” on both VNI West and the Western Renewables Link (WRL) projects.

“Owning their mistakes and starting again with landholders and community as partners is the only way to deliver a smooth and timely transition.”
Brett Hosking
VFF President

Santos (ASX: STO) CEO Kevin Gallagher said the Pikka Phase 1 Project in Alaska together with the Barossa LNG project were expected to deliver around a 30% increase in production by 2027, providing enough long-term cash flow to support returns to shareholders and future production growth.

The Scottish government granted a consent order for the SSE Renewables Berwick Bank offshore wind farm to be located just off the Firth of Forth. At a capacity of 4.1GW and 307 turbines it will be one of the world’s largest.

5 reasons why wind farms are costing more in Australia - and what to do about it. (The Conversation)


Policy

The federal parliament established an inquiry into misinformation and disinformation on climate change and energy, after a motion by Greens Senator Peter Whish-Wilson. The scope of the select committee inquiry includes the origins, growth and prevalence of “astroturfing”; connections between Australian organisations and international think tank and influence networks; and the role of social media, including bots and trolls.

Meanwhile Greens Senator Sarah Hanson-Young’s Senate Order for the production of documents on the North West Shelf extension’s approval conditions was postponed until August 25, as was Independent Senator Lidia Thorpe’s Order for documents from Beetaloo Energy Australia and consultancy Good Advice.

A bill currently before Victoria’s parliament shifts responsibility for planning the state’s transmission network from AEMO to VicGrid and gives the state agency responsibility for developing renewable energy zones. It also creates two new funding streams to support communities affected by the construction of energy projects and legislates financial incentives for landholders, who will receive $8,000 per km of infrastructure on their land - annually. Controversially, VicGrid and their contractors would gain the power to access private land without consent when required to construct energy infrastructure. (Guardian) (AAP)

New Zealand will re-open for petroleum exploration after passage of the Crown Minerals Amendment Bill, with operators able to apply for new exploration permits as early as September - and be liable for decommissioning. During the progression of the Bill, a gap was identified in the existing Act that would have allowed parent companies of permit-holders to sell up, leaving the Crown exposed to the fiscal risk of clean-up costs.

“Together with changes to the decommissioning regime that better balance regulatory burden and risk to give operators the clarity they need to invest in exploration and development wells, we have introduced ministerial discretion to assign liability for decommissioning costs to former permit-holders and others who have held interests in a permit.”
Shane Jones
NZ Resources Minister

Former NZ energy and resources minister, Labour’s Megan Woods, said the repeal of the ban was a “very potent symbol of the shambles that this government is when it comes to energy policy”. (RNZ)

Will China win the renewables race while the US pivots to fossil fuels and nuclear? (South China Morning Post)


Regulation

AEMO’s new unit-level availability data and other Short Term Projected Assessment of System Adequacy (STPASA) changes went live on July 31, as promised. (Watt Clarity)


Technology

Businesses and technology providers will look to other countries if Australia does not build digital infrastructure - and a broader ecosystem - to support artificial intelligence, experts warn, at a price tag of $1 billion for a 100MW data centre. “So when you see people throwing around numbers like 300MW, 500MW, that's a significant amount of investment,” Firmus Chief Technology Officer Daniel Kearney told a panel discussion in Canberra. (AAP)

"If we're going to keep pace and get productivity like the government and everyone wants, we need to invest in the infrastructure that's going to power that.”
Simon Dubois
KPMG's national technology lead

Meanwhile “Secure Power as a Service”, which removes the need for a business to run its own cooling systems and power infrastructure for increasingly large data loads, is becoming a product in itself. For example, one of Australia’s largest super funds UniSuper has partnered with Schneider Electric to ditch traditional infrastructure for a fully managed digital model.


Climate

Most governments have failed to act on the pledge to triple the world’s renewable energy capacity by the end of the decade, according to an analysis by Ember that warns on current forecasts the world will have a continued reliance on fossil fuels that is incompatible with the target of limiting global heating to below 1.5C. (Guardian)


People

The TAFE Centre of Excellence Clean Energy Batteries, which is a $20 million joint initiative between the Australian and Queensland governments, flagged a series of roundtables to gather industry input on the training needed to support the booming battery technologies sector. The group is investigating options for degree-level apprenticeship pathways.


Research

Biomethane could meet up to 96% of East Coast demand, according to a report, Biomethane Opportunities to Decarbonise Australian Industry, released by Blunomy and Energy Networks Australia. The first 50 PJ per annum of biomethane could be brought to market at between A$10 and $A27/GJ. But government support would be required to bring biomethane costs down, increase supply potential and create a market.


Random

NZ mechanics are reporting a spike in rats chewing through the wiring of cars. (RNZ)

What's On

August 5-6
NEA/UNSW Nuclear Futures Event

Nuclear Energy Agency Director-General William D. Magwood will deliver the plenary address at this Sydney event where featured panel experts include US Department of Energy Deputy Assistant Secretary Aleshia Duncan, former Chief Scientific Adviser to both the UK Ministry of Defence and the Foreign and Commonwealth Office Sir Robin Grimes, and Australian Nuclear Science and Technology Organisation CEO Shaun Jenkinson.


August 6
The NEM review - what it's shaping up to mean

NEM review Chair Tim Nelson, Clean Energy Investor Group Head of Policy and Advocacy Marilyne Crestias and Baringa's Peter Sherry will speak at this webinar moderated by The Energy's Advisory Board Chair Simon Corbell.


August 7-8
2025 ACCC/AER Regulatory Conference

Former chair of UK energy regulator Ofgem Professor Martin Cave, AEMC Commissioner Sally McMahon, Treasury Assistant Secretary - Competition Taskforce Anna Barker, Essential Services Commission Chair Gerard Brody, and Marinus Link Chair Sandra Gamble are among the speakers at this event in Brisbane.


August 11
RE-Alliance Briefing for Industry and Government

Bridget Ryan, author of the RE-Alliance report Retirement age renewables – delivering for Australian communities, will discuss required management responses at this online event.


August 13-14
2025 Australasian Emissions Reduction Summit

Victoria’s Minister for Climate Action, Energy and Resources Lily D’Ambrosio, Climate Change Authority Chair Matt Kean, Carbon Market Institute Chair Dr Kerry Schott, Co-Founder and CEO of CORE Markets Chris Halliwell, Investor Group on Climate Change CEO Rebecca Mikula-Wright and BHP Australia President Geraldine Slattery will speak at this event in Melbourne.


August 14-15
First Nations Clean Energy Symposium

Government, industry, academics and regulators will join over 200 First Nations leaders from around Australia at this event on Kabi Kabi country (Sunshine Coast).


August 18
National Press Club

Productivity Commission Chair Danielle Wood will speak on the “Growth imperative: How to fix our productivity problem” at this event in Canberra.


August 26-27
Australian Renewable Heat Conference

Climate Change Authority Chair Matt Kean, ARENA investment manager Peter Haenke, and AGL sustainability expert Brendan Weinert will speak at this event in Sydney.


August 26-28
2025 New Zealand Wind Energy Summit

NZ Minister of Energy Simon Watts, Secretary-General of the World Wind Energy Association Stefan Gsänger, Global Wind Energy Council CEO Ben Backwell, Commerce Commission Chair Dr John Small, and Transpower Executive General Manager - Future Grid John Clarke headline this event in Wellington, NZ.

The Energy

The Energy is dedicated to covering the business of energy and in particular the people, capital, projects and emerging technology behind the energy transition.

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