Renewable project withdrawals test Capacity Investment Scheme
Australia’s Capacity Investment Scheme is facing growing delivery pressure after 27 of the 109 renewable energy projects that secured government support subsequently withdrew from the program.
The departures represent almost a quarter of supported wind, solar and battery projects and raise questions about whether enough new generation will reach construction in time to replace ageing coal-fired power stations.
At a parliamentary hearing, Energy Department official Alison Wiltshire said developers had encountered material changes in capital and construction costs. She also identified difficulties securing network connections or access rights, delays involving planning and environmental approvals, and challenges obtaining power purchase agreements.
Costs and grid access complicate project delivery
The Capacity Investment Scheme provides revenue support for new wind, solar and battery developments. However, project implementation has been affected by rising construction costs and lower energy prices.
The withdrawal rate adds to pressure on the federal government’s renewable energy agenda, which includes a target for clean energy to supply 82 per cent of the electricity grid by 2030 and a goal to reduce emissions by 43 per cent by the same year.
Earlier in 2026, Energy Minister Chris Bowen changed the scheme’s rules in an effort to improve delivery and increase the number of supported projects progressing towards construction.
The government is also facing scrutiny over other energy programs, including the $25 billion Snowy 2.0 hydroelectric project and an $8.1 billion home battery rebate cited in the report.
For developers and investors, the withdrawals highlight the distinction between receiving government revenue support and successfully reaching financial close and construction. Policy backing can reduce some commercial uncertainty, but projects remain exposed to capital costs, grid constraints, approval timelines and difficulties securing customers through long-term power purchase agreements.
Major investors still see Australian opportunity
Despite those pressures, a separate report in the same edition shows major international capital remains interested in Australian renewable energy.
Brookfield-owned Neoen plans to invest a further $10 billion in Australia by 2030, more than doubling the amount it has invested in local wind, solar and battery projects since entering the market in 2012.
Neoen said it had reached a 6GW milestone across projects operating or under construction and planned to expand that portfolio to 10GW.
Brookfield acquired the French renewable energy developer in 2024 for almost $11 billion. Neoen executives said Australia remained a favourable market because of its wind and solar resources, available land, increasing power demand and the need to replace ageing coal-fired generation.
The company nevertheless acknowledged challenges affecting the sector, including planning delays, community opposition, higher wind construction costs and transmission constraints.
Neoen recently reached financial close on its 179MW Narrogin wind project in Western Australia and received approval this month for its 346MW Goyder North wind farm in South Australia.
The contrasting developments show an Australian renewable energy market in which substantial investment capital remains available, but the ability to move individual projects through financing, approvals, grid connection and construction is becoming increasingly important.
SOURCE ATTRIBUTION:
Based on reporting by The Australian Financial Review, published 27 October 2026. Source: www.afr.com