Labor backs wave of wind power to revive stalled power source and hit 2030 climate target
Not a single wind farm concept has progressed to a firm commitment for being built this year. Yet as wind’s fortunes sink, Labor has decided to underwrite 10 wind farms to ensure it meets its 2030 target.
The Albanese government will underwrite the construction of 10 new wind farms representing its biggest show of support yet for the divisive renewable energy source to ensure Australia meets its 2030 climate target.
Energy Minister Chris Bowen unveiled the projects on Thursday via the capacity investment scheme (CIS), the centrepiece in Labor’s plan to deliver 82 per cent of the nation’s electricity from green energy by 2030.
Almost 3 gigawatts of new wind generation were underwritten in the fourth tender round — the largest single allocation of wind capacity since the scheme began in 2023. The previous record was about 2.6GW.
Labor is staging a pivot back toward onshore wind, which is ceding ground to solar and battery projects. Wind farm developers have suffered cost blowouts, supply chain delays and rising opposition from regional communities that have made it a politically and commercially rocky prospect.
CSIRO analysis also found the capital cost of onshore wind has increased more than 15 per cent over the past three years, unlike solar and batteries which are getting cheaper. The consequent drought in new investment has made the Albanese government vulnerable, and it faces growing criticism from the Coalition over grid reliability and from the Greens over the pace of the transition.
And no wind project has reached a final investment decision so far this year — a striking failure that has put Prime Minister Anthony Albanese’s climate ambition in doubt without deeper market intervention.
Among the successful bidders is ASX-listed AGL Energy, whose proposed 600-megawatt Hexham wind farm in western Victoria secured scheme support. The project, still subject to planning approval, would be one of the state’s largest, if built.
“Wind continues to be an important energy technology for AGL as we transition our portfolio and work toward our ambition of adding 12GW of new renewables and firming capacity by 2035,” said AGL’s general manager of power development, Travis Hughes.
The CIS mechanism — in effect a taxpayer-backed safety net — is designed to de-risk investment in large-scale generation by guaranteeing a minimum “floor price” for power. If wholesale prices drop below a designated level, the Commonwealth tops up the shortfall; if prices exceed an agreed “ceiling”, developers repay the excess.
There is no way of knowing how much money taxpayers are on the hook for.
While the government credits the scheme with unlocking billions in new investment, industry figures say it is no panacea. Developers still face surging construction costs, global turbine shortages and uneven planning processes — all factors that have slowed the rollout of new capacity.
One senior executive involved in multiple CIS bids said the economics of wind remain “tough” and that solar paired with batteries “is where the capital wants to go” due to faster build times and sounder economics.
That trend is reflected in the latest tender results: of the 12 solar projects awarded underwriting support, 11 include batteries. Dispatchable, grid-balancing capacity can supply power when the sun sets and demand peaks.
While solar-battery hybrids are proliferating, energy market experts say the grid still depends on wind’s complementary generation profile, which peaks at night and during winter. Batteries can help smooth intermittency, but most installations currently discharge for only around four hours.
Mr Bowen’s move to tilt support toward wind underscores the political stakes for Labor, which faces a balancing act between its climate ambitions, its promise to lower power bills, and mounting regional resistance to large-scale renewables and transmission lines.
The government has not disclosed the contractual details of the new CIS agreements. Each project must negotiate both floor and ceiling prices, with payments contingent on future wholesale electricity trends.
And whether the 10 new wind farms advance to construction will depend on more than just Commonwealth backing. Industry insiders say Labor’s climate credibility now rests on its ability to streamline approvals, deliver new transmission and maintain investor confidence in a policy environment still scarred by a decade of political instability over energy reform.
It seeks to do that while rewriting the rules of the gas market. Labor is expected to deliver the findings of its east coast gas market review by year’s end, to head off a forecast supply shortfall from 2029.
The federal government has also introduced an emissions reduction target of between 62 per cent and 70 per cent by 2035.
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