Australia will step up spending to underwrite new wind, solar...

Australia will step up spending to underwrite new wind, solar and battery projects, Energy Minister Chris Bowen said on Thursday, looking to lure investments to stabilise the energy grid as coal-fired plants retire.

Bowen did not specify how much the government expects to spend on the programme, designed to drive investment in 32 gigawatts (GW) of new capacity, or around half the national electricity market's existing capacity.

The move comes as the industry is struggling to meet the government's target for 82% renewable power by 2030 from around 40% now due to challenges in expanding transmission networks to handle new renewable projects located far from demand centres.

"We're doing well, but not well enough, we need to do better to reach that target," Bowen told ABC television.

The programme, which will be run by auction, expands on a scheme the Labor government agreed with states in December 2022 that aimed to spur investment of at least A$10 billion ($6.5 billion) in renewable projects.

"We are competing in a world very hungry for capital, hungry for supply chain elements where every country in the world really is on the same journey as us, moving to a very high proportion of renewables," Bowen said.

The government plans to hold tenders for the capacity and agree floor and ceiling revenue for the projects. If revenue is below the floor, the government will pay the difference, and if the ceiling is exceeded, it will share in the profits.

"We want to ensure that the taxpayer gets best value for money, so we're not going to signal to the bidders, and we want them to have their pencils really sharp and put in really sharp bids," Bowen said.

Australia's Clean Energy Council, which represents the renewable energy industry, called the government's decision "a significant commitment" that would facilitate the investment required to transition the energy system.