Green bank gets $1b fund for new projects

The Morrison government says a new fund will encourage investment in power generation, storage and transmission and push down prices.

Energy Minister Angus Taylor on Thursday introduced draft laws allowing the next step for his underwriting new generation investments program to occur through a $1 billion fund.

Under its existing rules the Clean Energy Finance Corporation can only invest in energy efficient, low-emission or renewable technologies.

The changes alter the definition of low-emissions technology to allow taxpayer support for "the achievement of a low-emissions energy system in Australia".

This will allow funding to flow to shortlisted projects through the underwriting program, which Mr Taylor says are important to boost capacity in the energy system.

The shortlisted projects are mainly pumped hydro and gas, as well as a coal plant upgrade.

The upgrade to NSW's Lake Macquarie coal-fired power station includes improving turbine blades and other equipment to produce the same amount of power with lower emissions.

The CEFC still holds power to make investment decisions independent of government.

The Australia Institute's Richie Merzian says the changes will allow for dud taxpayer investments, with the CEFC allowed to put money towards potentially loss-making fossil fuel projects.

Meanwhile, the risk of summer blackouts across eastern Australia has fallen significantly, as extra power generation comes online.

An extra 4300 megawatts of energy capacity is expected to operate this summer compared to last summer, according to a report by the Australian Energy Market Operator.

This means the extra demand as people switch on their air-conditioners and run their pools is not expected to outstrip supply in any region of the national electricity market.

AEMO chief Audrey Zibelman said in future years the declining reliability of the ageing coal fleet and scheduled plant closures would put pressure on the system, particularly in NSW.

A spokesman for Mr Taylor said work was under way to address this, with a task force dealing with the planned closure of the Liddell coal-fired power station in 2023.

Investment in transmission projects identified in AEMO's latest Integrated System Plan will help address the risk.

The key developments since last summer have been 1900MW of new capacity in Victoria and investment in South Australia including generator upgrades and battery storage expansions.

The report said there were risks including fire damage impacting on transfer capability between Victoria and SA, potential delays in the commissioning of Victorian renewable power and uncertainty created by the COVID-19 pandemic.

Beyond this summer, NSW is expected to benefit from the upgrade to the Queensland-NSW interconnector and 900MW in local new renewable generation.

The Snowy 2.0 hydro project would also help alleviate supply risks.