Energy industry leaders have advocated for fossil fuels, particularly fast-start gas generators, to be included in the market reforms aimed at increasing “firming” capacity, pointing out that big batteries can supply the grid for only a few hours at a time. However, the prospect of including fossil fuels in the scheme sparked significant pushback from the Victorian government, clean energy developers, and climate campaigners, who dubbed the policy “Coal Keeper” as they feared it may be used to artificially prolong the lives of fossil fuels in the grid.

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The Australian Energy Council, representing large energy suppliers including Origin Energy and AGL, said its members looked forward to consultations on the scheme’s design, but pointed out that it appeared markedly different from other capacity mechanisms around the world that include existing dispatchable technologies and were “not limited to new entrants”.

“The design will be critical to how this alternative approach will work in practice,” chief executive Sarah McNamara said. “It will be important that the proposal doesn’t actually impact reliability by triggering disorderly closures of existing capacity sources.”

Bowen on Thursday said the Commonwealth would call auctions for bids for dispatchable, renewable energy that it will underwrite from next year.

Renewable energy industry leaders on Thursday described the move as a “win for investors” and said it would help shield consumers from high and volatile power prices.

“The Clean Energy Council has long advocated for sensible policy measures like this that accelerate Australia’s shift to renewable energy and energy storage,” said Clean Energy Council chief executive Kane Thornton. “This decision will help unlock the next wave of renewable energy projects.”

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