Portugal’s EDP Renewables is moving to strengthen its foothold in Australia’s energy transition, with 1.7 gigawatts (GW) of new solar and battery capacity approved under the federal Capacity Investment Scheme (CIS) — a key instrument in the country’s effort to stabilize renewable generation while ensuring long-term investor confidence.
Under the CIS, EDP Renewables Australia secured generation revenue agreements for two projects — Punchs Creek in Queensland and Merino in New South Wales — representing a combined 1.01 GW of solar and 850 MW of battery energy storage capacity. The CIS provides developers with a revenue floor to protect against market downturns, while requiring them to share profits if wholesale prices exceed a predetermined cap — a mechanism intended to balance investor certainty with fiscal prudence.
The Punchs Creek project, located near Toowoomba, includes 480 MWp of solar coupled with a 400 MW battery system and is slated for financial close in 2026, with commissioning expected in early 2029. The Merino project, near Goulburn, combines 530 MWp of solar and a 450 MW battery energy storage system (BESS) and is expected to reach ready-to-build status in the latter half of 2026. Together, these projects will add roughly 2.5 terawatt-hours (TWh) of annual renewable generation capacity once operational, contributing to Australia’s 2030 goal of 82% renewable power.
Australia’s Capacity Investment Scheme, announced in 2023, is designed to unlock up to 32 GW of new renewable and dispatchable capacity by the end of the decade. Its market underwriting model addresses a structural challenge for developers: the increasing revenue uncertainty driven by volatile wholesale prices and intermittent renewable generation. By providing a guaranteed minimum revenue stream, the CIS lowers financing costs and encourages investment in both generation and firming technologies — critical to replacing retiring coal-fired capacity.
EDP’s move reflects the growing participation of European utilities in Australia’s renewables buildout, where international capital and technical expertise are accelerating project pipelines. However, execution risk remains a critical variable. Australia’s grid congestion, slow transmission expansion, and permitting bottlenecks have delayed several large-scale projects over the past three years. For projects like Punchs Creek and Merino, timely access to grid connection and supply chain stability will be decisive in maintaining the announced timelines.
Financially, the CIS backing enhances EDP’s risk-adjusted return profile in a market known for high renewable penetration but uneven policy stability at the state level. Analysts view such mechanisms as essential for capital-intensive assets like battery storage, where revenue streams depend on ancillary service pricing and arbitrage spreads that remain unpredictable. The dual structure of the CIS — compensating developers during low-price periods while clawing back excess earnings — mirrors similar instruments in the UK’s Contracts for Difference (CfD) regime and the EU’s emerging market stabilization frameworks, signaling Australia’s alignment with global best practices in renewables finance.
For EDP, whose global strategy targets 50 GW of renewable capacity by 2030, the Australian market offers diversification and high solar resource quality, complemented by an increasingly sophisticated policy environment.
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