Filling the post-2030 energy policy vacuum

As Australia’s grid shifts toward renewables, the next great test for energy policy is no longer ambition but continuity.

With the Renewable Energy Target (RET) approaching its legislated end in 2030 and the Capacity Investment Scheme (CIS) designed as a time-limited intervention, the electricity sector is confronting a growing post-2030 policy vacuum - one with direct consequences for investor confidence, financing costs and the pace of final investment decisions.

For a system dominated by long-lived assets -generation, firming, storage and transmission - the absence of a durable signal beyond the end of the decade is not an abstract concern. It goes directly to whether capital can be mobilised at the scale and speed required to replace retiring coal capacity while also meeting the rising electricity demand profile created by electrification.

From ambition to bankability

Over the past two decades, Australia’s renewable build-out has been underpinned by explicit policy mechanisms. The Large-scale Renewable Energy Target (LRET) provided a clear, legislated demand signal, while more recently the CIS has offered revenue underwriting to de-risk investment in firmed renewables and storage.

But both mechanisms now have defined endpoints.

According to the Clean Energy Regulator, the RET, including the LRET, and Small-scale Renewable Energy Scheme (SRES), will cease operating at the end of 2030 - marking a fundamental shift in market conditions beyond that date.

Similarly, the federal government’s own description of the CIS frames it as a transitional tool rather than a permanent market feature.

The CIS “provides a long-term revenue safety net that decreases financial risk for investors. This ensures more renewable energy projects get built,” the Department of Climate Change, Energy, the Environment and Water states.

 

What it does not do is extend that certainty indefinitely. For many, this creates a looming cliff edge. 

A policy-free space beyond 2030

Tony Wood, Energy Program Director at the Grattan Institute, said the implications of this gap are now unavoidable.

“The recommendations of the NEM Review are now in the hands of the bureaucracy to create a detailed work program that provides confidence on future investment in the electricity system as coal closes and renewables dominate supply,” Wood told Energy Insights.

“The cessation of the RET mechanism that has driven renewables’ investment for more than 20 years and the more recent CIS that is being used bolster investment in renewables and storage make the post-2030 period a policy-free space that needs to be filled.” 

The risk, he suggests, is not a lack of capital per se, but the absence of credible, durable policy architecture capable of supporting investment horizons that stretch well beyond electoral cycles.

That assessment is echoed in national policy analysis. The Productivity Commission has warned that “to continue reducing emissions post-2030, new mechanisms may be needed to create ongoing investment incentives to drive deeper decarbonisation”. In a separate interim report, it goes further, noting that “neither [the RET nor the CIS] will support new investment in renewables after 2030”.

Financing costs and delayed decisions

For investors and lenders, uncertainty does not simply delay projects - it reprices them. Higher perceived policy risk translates directly into higher financing costs, particularly for capital-intensive assets such as long-duration storage, offshore wind and system-strength infrastructure.

Tim Buckley, Director at Climate Energy Finance, argues that this risk is amplified by the scale of the transition now required.

“Australia needs policy certainty to ensure we build enough new replacement electricity capacity to both cover the inevitable capacity reductions from retirement of end-of-life coal-fired power plants, and to accommodate the now growing electricity demand profile resulting from the progressive electrification of everything,”  Buckley told Energy Insights.

Growth is now being driven by household electrification, electric vehicles, and the early stages of industrial electrification - while coal exits accelerate.

In this context, Buckley said the CIS has played a valuable but limited role.

“The CIS is helping underwrite new firmed renewable energy capacity at the scale and speed required in the medium term, but there is a policy vacuum for meeting the needs of zero-emissions generation capacity post-2030 as the CIS and then the RET expire.” 

Are current mechanisms sufficient?

The question facing policymakers in 2026 is not whether the CIS works, but whether it can - or should - be evolved into something more durable.

The Climate Change Authority has been explicit about the need for continuity. Its June 2025 report Unlocking Australia’s Clean Energy Potential states: “The Authority’s view is that there is a need for a continuing mechanism to draw in new assets”.

The same report flags the importance of what comes next, noting that “the post-2030 future market review will recommend future market settings to promote investment in firmed, renewable generation and storage capacity in the National Energy Market following the conclusion of CIS tenders in 2027.”

Buckley believes the answer is likely to involve both extension and integration rather than wholesale replacement.

“The federal government needs a clear policy to support replacement capacity to cover demand growth and end-of-life retirements post 2030,” he said.

“This is likely to be a mix of the CIS extension incorporating the Nelson Review recommendations to support the mid-to-longer duration capacity underwrites.”

From review to roadmap

The NEM Wholesale Market Settings Review - finalised in late 2025 - provides the analytical foundation for this next phase. But as multiple stakeholders have noted, analysis alone will not unlock capital.

The Australian Energy Market Operator has framed its NEM Reform Implementation Roadmap as a mechanism to de-risk delivery, inform implementation timing and minimise costs. The challenge now lies in translating review recommendations into sequenced, legislated actions.

For Wood, this translation task is the real institutional test.

Without a clear work program - including timelines, responsibilities and interaction with existing schemes - the risk is that Australia drifts into a period of discretionary underwriting and ad-hoc interventions, rather than a coherent market framework capable of supporting long-term investment.

Carbon pricing by another name?

One option increasingly examined within market design and finance circles is the introduction of a formal emissions constraint in the electricity sector beyond 2030, as a means of improving long-term investment certainty.

Buckley points to the scheduled 2026 Safeguard Mechanism review as a potential inflection point that is likely to include an expansion of the Mechanism into the electricity sector from 2030, “thereby providing an explicit carbon emissions pricing signal to level the playing field and boost investor confidence in the growing role of firmed renewable energy capacity”.

From a market perspective, such an approach would address a core investment challenge in a post-coal, post-RET environment; an explicit emissions constraint would function as a forward carbon price signal, improving revenue predictability and lowering risk premiums for long-lived, zero-emissions generation and firming assets.

The stakes for 2026

As the electricity transition enters its most capital-intensive phase, the absence of a credible post-2030 framework risks becoming a self-inflicted constraint. Capital will not disappear - but it will wait, reprice or flow elsewhere.

The challenge for policymakers and market institutions in 2026 is therefore less about designing new ambition and more about proving institutional capability: taking the NEM Review’s recommendations, aligning them with existing mechanisms, and articulating a durable investment signal that extends well beyond the end of the decade.

In a system built on assets measured in decades, policy certainty - not rhetoric - will determine whether Australia’s energy transition accelerates or stalls.