Capacity Investment Scheme - Western Australia Design Paper

16 April 2024

Office of the Capacity Investment Scheme

Department of Climate Change, Energy, the Environment and Water

GPO Box 3090 Canberra ACT 2601

Re:

Capacity Investment Scheme - Western Australia Design Paper

First Element Energy appreciates the opportunity to provide feedback on the Capacity Investment Scheme - Western Australia Design Paper.

First Element Energy (FEE) is a clean energy development company dedicated to renewable energy and hydrogen power generation. FEE is currently developing a 100MW-200MW hydrogen powered gas turbine power station in Western Australia using electricity from Southwest Interconnected System (SWIS), which is regulated by Wholesale Electricity Market (WEM) rules.

FEE support commonwealth government’s Capacity Investment Scheme (CIS) in principle, however, FEE believes that the CIS must be technology agnostic to avoid sending misleading signals to investors, by clearly including and excluding certain technologies. CIS also needs to be consistent with the use of “capacity” in the CIS to differentiate the installed (nameplate) capacity with reserve capacity (based on 4 hours storage) for clean dispatchable generation.

FEE’s recommendations and rationales are detailed below.

Table 3 - Eligibility requirements for technology contributing to zero emissions in the consultation paper specifies the fuel sources of clean dispatchable generation as either renewable energy source described in Section 17 of the Renewable Energy (Electricity) Act 2000, or electricity from WEM.

The Section 17 of the Renewable Energy (Electricity) Act 2000 does not explicitly include renewable hydrogen or hydrogen generated from grid electricity as renewable fuel source. FEE recommend to explicitly include hydrogen in the fuel source, either produced from renewable electricity or from WEM (SWIS network).

This will not only signal strong support to hydrogen production, which is a national strategy, but also expand the clean dispatchable technology choices (beyond big battery) that can provide higher quality electricity to the network and have better essential system service capability than big battery.

Section 3.6.3 Financial bid (Stage B) – financial assessment does not provide details of criteria for financial assessment. Table 4 indicated floor and ceiling cost based on capacity credit ($/MW) for clean dispatchable generation, please clarify

if $/MW will be used as a criterion for Stage B assessment,

if reserve capacity (based on 4 hours, and proportionally for less than 4 hours) will be used as basis for $/MW estimate, and

if lower $/MW has higher merit in the Stage B assessment.

Thank you for your consideration of First Element Energy’s submission. If you would like to discuss this further, please contact me at yun.tian@firstelementenergy.com.au.

Yours Sincerely,

Yun Tian

Founder, First Element Energy