A cornerstone of the Government’s decarbonisation strategy is its major investment in emerging technologies such as hydrogen. The $2 billion Hydrogen Headstart will offer ‘competitive hydrogen production contracts’ to counteract market-wide concerns about the commercial viability of green hydrogen. This influx of capital will be supplemented by a $38 million investment in the establishment of a Guarantee of Origin scheme. While the scheme will operate in part to verify the emissions intensity of hydrogen products, the proposed establishment of a new tradeable green energy certificate will open a new market not only to renewable energy generators but Australian-wide corporates that are interested in bolstering their green credentials.  

The Government also earmarking an additional $12 billion for priority transmission infrastructure, through the Rewiring the Nation program, signifies its commitment to supporting the transformation of our electricity grid through the development of large-scale battery projects, offshore wind, and state-led Renewable Energy Zones (REZs). The Government’s assurance of continued public investment in transmission upgrades will create future revenue opportunities for renewables developers and transmission infrastructure investors. This will:

  • operate alongside the existing state-level revenue underwriting schemes to support the bankability of major renewable energy developments; and
  • reduce existing congestion and access constraints.

This investment in transmission infrastructure operates alongside the planned acceleration of investment in the Capacity Investment Scheme to support firmed renewable capacity. While the precise scope and national rollout of the Capacity Investment Scheme remain unclear, the Government intends to deliver auctions for clean energy projects in South Australia and Victoria in late 2023, with investment in New South Wales to be incorporated into the NSW Electricity Infrastructure Roadmap.

The Government will also continue its efforts to capitalise on Australia’s ample reserves of critical mineral resources, through a $57 million investment in Critical Minerals International Partnerships (on top of, among others, a $2 billion investment in the Critical Minerals Facility). This is particularly relevant in light of the increasing pressures on the supply chain for battery manufacturing.

Ultimately, the Federal Government’s 2023-24 Budget demonstrates its commitment to the energy transition, with not inconsiderable amounts set aside to bolster existing and new policies to achieve this change.  While the investment is welcomed, there are still questions about the detail of a number of schemes, such as when they will be rolled out, and how they will work in practice, and how they will overlap with the various state-led initiatives. Further, the ambitious targets that have been set require a pace of change that will not necessarily result in a smooth or efficient transition and arguably cannot bet met given the pace to date. What is not in question, however, is that the energy transition is in full swing and the fiscal support at a federal level opens up ample opportunities for the industry at large.