NSW to subsidise gas under clean energy scheme
- New South Wales will allow gas-fired power plants to tender for taxpayer-backed subsidies under its state renewable energy programme.
- The decision directly contrasts federal policy and will open the state's 2027 auction to an estimated two to four gas peaking projects.
- State ministers cited grid reliability concerns following the planned retirement of three major coal generation plants by 2033.
The New South Wales government has opened its primary clean energy subsidy framework, the NSW Electricity Infrastructure Roadmap, to back backup gas generation.
The state policy shift stands in stark contrast to the federal energy strategy, where federal minister Chris Bowen has strictly prohibited gas projects from receiving funding under the national Capacity Investment Scheme.
"While gas-fired power stations will operate only occasionally, they will play a critical role in maintaining reliability during rare periods when renewable generation is low and available storage has been exhausted," said NSW Climate Change and Energy Minister Penny Sharpe.
The state's upcoming 2027 auction is expected to contract between two and four gas peaking facilities, even as official state forecasts project that gas will supply roughly 3.9% of total electricity by 2050.
The announcement highlights growing state-level policy divergence across Australian energy markets as regional grid operators address near-term reliability constraints.
The decision follows similar policy inclusions of gas peaking capacity in Queensland and South Australia to firm up renewable grid supply.
The expansion comes as the government prepares for the planned shutdown of three major coal-fired power stations across the state over the next decade.