‘Do not signal red lines’: Chris Bowen refuses to detail cost of landmark green energy scheme

A landmark green energy scheme to keep the lights on as ageing coal fired power generation exits the grid has been unveiled, but the government won’t reveal how much the scheme will cost.

Energy and Climate Change Minister Chris Bowen has refused to detail the cost of the government’s landmark green energy scheme amid Coalition criticism over its financial exposure to taxpayers.

On Friday, Minister Bowen announced an expansion of the Capacity Investment Scheme which will underwrite funding for 32 gigawatts of new green energy and storage projects across the country.

Companies will bid for funding under the scheme with the aim of achieving Labor’s target for 82 per cent renewable energy generation by the end of the decade.

Within the 32GW of new energy capacity, funding will be distributed between deploying 9GW of dispatchable energy, including batteries and storage, while the remaining expenditure will go towards rolling out 23GW of new green energy generation.

The Capacity Investment Scheme will underwrite 32GW of new storage and energy generation. Picture: NCA NewsWire / David Swift

Power generation from gas and other fossil fuels have been explicitly excluded from the scheme.

The scheme will provide a financial guarantee to energy companies in the event that energy prices fall below a certain threshold. Conversely, the government will take a portion of revenues should prices surge.

But on Sunday, the energy minister would not outline the scheme’s total cost, citing “commercial negotiations” associated with the proposal.

“In any corporate negotiations, you do not signal to bidders what your red lines are,” Mr Bowen told the ABC’s Insiders program.

“We will accept the bids that we choose to accept and not accept other bids and we will determine how many gigawatts we will put out to auction.

Renewable energy projects will be underwritten by the scheme. Fossil fuels, including gas-fired power, are ineligible. Picture: supplied.

By unveiling the cost of the scheme, Mr Bowen argued that taxpayers would ultimately not receive value for money.

“What we’re determined to do is maximise the benefit for the taxpayer and keep those bidders with their pencils very sharp and the way to do that is exactly the approach.”

Responding to estimates from some energy economists that the scheme would cost tens of billions of dollars, Mr Bowen said “I wouldn’t get carried away” with views of those who had no insight its development.

Mr Bowen said the rapid exit of coal fired power generation from the grid had necessitated increased government intervention.

“We had to get more renewable and dispatchable energy on to replace [coal fired power generation] before it leaves, otherwise we have a big threat to reliability in the system,” Mr Bowen said.

“We need to get more energy on quicker, a transition that is more orderly and faster, and that’s when we are delivering.”

The earlier than anticipated exit of coal fired power generators has necessitated greater intervention in the electricity market, Mr Bowen claimed. Picture: supplied.

While the expansion of the Capacity Investment Scheme has garnered broad support from industry and energy peak bodies, the Coalition have heavily criticised the government’s refusal to detail its total cost.

Earlier on Sunday, shadow Attorney-General Michaelia Cash criticised Mr Bowen for refusing to disclose the amount of taxpayer funds that would be spent under the scheme.

“(Chris Bowen) is actually writing a blank cheque to throw at energy companies,” Ms Cash told Sky News’ Sunday Agenda program, adding it could cost Australian taxpayers “tens of billions of dollars”.

“It’s an admission that the current system is not working if the government has to go down this path.”

On Thursday, the energy minister is expected to outline the government’s response to the annual Climate Change Statement.

The statement projects Australia will cut greenhouse gas emissions by 42 per cent below 2005 levels by the end of the decade – just short of Labor’s 43 per cent target.