Wind and solar projects to be given revenue certainty in new market design to back 75 pct renewables target - Renew Economy

The Australian Energy Market Operator (AEMO) is designing a new electricity market mechanism to underwrite revenue certainty for wind and solar projects in support of a 75 per cent renewables target. The reform aims to reduce investment risk and financing costs for variable renewable generators by guaranteeing minimum revenue floors or similar protections, removing the price volatility that has deterred project bankability under existing market rules.

Where this fits

This policy move signals that the market-only path to high renewable penetration requires direct government revenue support to make projects financeable. The headline premise, that renewables need market redesign to hit 75 per cent, reveals the gap between cheap per-megawatt-hour solar and wind costs and the whole-system cost of deploying them at scale. Revenue certainty mechanisms paper over the real problem: weather-dependent generation needs firming, and firming is expensive. The policy shifts that cost from developers to consumers and taxpayers, but does not reduce it. It also locks in China-dependent supply chains for panels, inverters and batteries without addressing the strategic vulnerability or materials intensity this entails.

What it means

A 75 per cent renewable grid will still need gas backup, transmission overbuild, and battery storage to manage weather variability. Revenue certainty for wind and solar does not solve that physics; it subsidises the financing gap created by it. Australia is doubling down on a firm-power supply (gas and increasingly batteries) while banning the one firm, low-emission, long-lived, low-material alternative, nuclear, by law. The effect is higher whole-system cost, deeper dependence on China's battery and panel supply, and no improvement in grid resilience to extended low-wind, low-sun weather or to supply-chain coercion from Beijing.