Australia has just revealed the next round of projects under the Capacity Investment Scheme (CIS). Announced in September 2025, this major policy milestone confirms new large-scale battery systems across New South Wales, Victoria, and Queensland. For households, investors, and businesses, the scheme could redefine energy security and reshape electricity markets.
The initiative is not just about green goals—it is about ensuring reliable, affordable power as coal plants retire. With government-backed revenue underwriting, investors have certainty while consumers gain stable prices. Below, we explore the details, impacts, and opportunities behind this $10 billion-plus transition.
Australia’s Capacity Investment Scheme Projects Unveiled
- What Is the Capacity Investment Scheme?
- Key Battery Projects Announced in 2025
- 💡 Why Does This Matter for Australian Households?
- Impacts on Investors and Businesses
- 👀 How Does This Fit into Australia’s Climate and Energy Goals?
- Challenges and Criticisms
- Summary and Next Steps
- FAQ: Capacity Investment Scheme Australia
What Is the Capacity Investment Scheme?
The CIS is the Australian Government’s flagship policy to accelerate investment in clean energy infrastructure. It was designed to unlock 32 GW of new renewable and storage capacity by 2030. Unlike simple subsidies, CIS uses “revenue underwriting”—a mechanism where government guarantees a floor and ceiling price for power generation. If revenues fall short, the scheme covers the gap; if profits exceed a cap, developers return excess gains to taxpayers.
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This structure is seen as more investor-friendly than direct grants because it reduces risk while encouraging competitive tenders. The Department of Climate Change, Energy, the Environment and Water (DCCEEW) oversees the process, working with states to allocate projects.
Previous rounds focused on generation, but this new announcement puts storage front and centre. Battery Energy Storage Systems (BESS) are critical for balancing intermittent solar and wind power, ensuring dispatchable electricity supply.
- Goal: 32 GW of new clean capacity by 2030.
- Mechanism: floor-and-ceiling revenue underwriting.
- Focus of 2025 round: large-scale batteries in NSW, VIC, QLD.
Industry experts compare it to contracts-for-difference models in Europe, but adapted to Australian conditions.
Key Battery Projects Announced in 2025
The September 2025 announcement confirmed multiple BESS facilities, each ranging from 200–500 MW in capacity. These projects will store excess renewable generation during the day and release it during evening peaks.
Highlighted projects include:
| Project | Location | Capacity |
|---|---|---|
| Bulabul 2 BESS | New South Wales | 250 MW |
| Calala BESS | Victoria | 300 MW |
| Goulburn River Standalone BESS | Queensland | 400 MW |
Together, these projects are expected to add 1 GW of firming capacity. Construction will begin in early 2026, with first output by late 2027.
According to DCCEEW, this round attracted more than 40 bids, underlining strong investor appetite. Winners were chosen based on cost, grid location, and ability to deliver system security benefits.
Importantly, the CIS ensures these projects are financially viable even in volatile energy markets. This reduces the risk of delays that have plagued past renewable developments.
💡 Why Does This Matter for Australian Households?
For households, the biggest benefit is stability. As ageing coal plants shut down, the risk of blackouts and price spikes has grown. Large-scale batteries smooth supply, keeping prices more predictable.
Government modelling suggests the scheme will reduce average household bills by $150 a year from 2027 onwards. By storing cheap daytime solar, batteries cut reliance on expensive gas during evening peaks.
In addition, communities near project sites may see local job creation. Each BESS requires dozens of construction roles and ongoing maintenance crews. Local councils are already negotiating community benefit funds with developers.
- Lower bills: projected $150 annual savings per household.
- Grid stability: batteries cover peak demand periods.
- Local jobs: construction and operations roles in regional areas.
One NSW resident told ABC News: “We’ve had rolling blackouts before. Knowing new batteries are coming gives us confidence.”
Impacts on Investors and Businesses
For investors, CIS-backed projects offer de-risked entry into the booming storage market. With underwriting in place, project financing is easier, lowering the cost of capital. Several Australian superannuation funds have already indicated interest in participating.
Businesses with high energy needs—like manufacturing plants—benefit indirectly through lower wholesale electricity prices. Some may also explore direct partnerships with battery operators to secure power purchase agreements (PPAs).
For small businesses, the impact comes in the form of more reliable supply. Reduced price volatility allows better budgeting. Analysts expect retail electricity prices for SMEs to fall by 5–10% once CIS projects are operational.
International investors also see opportunity. The Australian storage market is projected to triple by 2030, making CIS projects a gateway for global capital.
👀 How Does This Fit into Australia’s Climate and Energy Goals?
The CIS announcement aligns with Australia’s new 2035 emissions reduction target of 62–70% below 2005 levels. Storage is critical for decarbonisation, since solar and wind alone cannot guarantee firm power.
By 2030, renewables are expected to supply 82% of Australia’s electricity. Without large-scale batteries, this would be impossible. The CIS therefore serves as the backbone of the transition.
The scheme also complements other initiatives such as the Cleaner Fuels Program ($1.1 billion for renewable diesel and SAF) and the Energy Bill Relief Fund (rebates for households). Together, these measures signal a shift towards a low-carbon economy with strong government backing.
- 2035 target: 62–70% emissions cut.
- 2030 renewables share: 82% goal.
- CIS is essential for integrating variable renewables.
Industry observers note that Australia’s approach is attracting attention overseas as a model for balancing investor confidence with consumer protection.
Challenges and Criticisms
Not all feedback is positive. Some critics argue that underwriting still exposes taxpayers to risk if projects underperform. Others question whether 1 GW from this round is enough given looming coal closures.
Environmental groups also warn against relying solely on batteries. They stress the need for complementary solutions such as pumped hydro and demand management. Delays in transmission upgrades could also undermine effectiveness.
Another issue is cost. While average bills may fall, upfront government commitments run into billions. This has sparked debate over fiscal priorities.
Despite concerns, broad consensus remains that storage is essential. As one energy economist put it: “The only bigger risk than spending on batteries is not building them.”
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Summary and Next Steps
The Capacity Investment Scheme is delivering tangible results with the September 2025 project announcements. New batteries in NSW, VIC, and QLD will strengthen the grid, reduce prices, and support the renewable transition.
- 1 GW of new storage capacity announced in 2025 round.
- Projects backed by revenue underwriting for investor certainty.
- Households could save $150 annually on bills.
- Investors gain stable returns in a growing market.
- Challenges include cost, transmission, and long-term adequacy.
For Australians, the message is clear: the renewable future is no longer abstract. With CIS projects breaking ground, the nation is building the backbone of its clean energy system—one battery at a time.
FAQ: Capacity Investment Scheme Australia
What is the Capacity Investment Scheme?
A federal program providing revenue underwriting to de-risk investment in renewable and storage projects. Target: 32 GW by 2030.
Which projects were announced in 2025?
Bulabul 2 BESS (NSW), Calala BESS (VIC), and Goulburn River Standalone BESS (QLD), totalling around 1 GW of storage capacity.
How will households benefit?
Greater grid reliability and projected $150 annual bill savings from 2027 onwards due to lower wholesale electricity prices.
What does this mean for investors?
Reduced risk and easier financing for large-scale storage projects. Super funds and global investors are expected to participate heavily.
Are there any risks or criticisms?
Critics warn about taxpayer exposure, transmission bottlenecks, and whether enough capacity is being built quickly enough. Still, consensus is that batteries are indispensable.
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