Deal for 'clean, reliable power' despite gas shortfall

The commonwealth will underwrite at least 6.5 terawatt hours of new wind and solar generation in WA.

Australia will build more wind and solar farms and big batteries, not gas or nuclear plants, under the latest federal funding agreement.

Western Australia is the latest state to sign a Renewable Energy Transformation Agreement (RETA) and has also opened bidding for the first Capacity Investment Scheme tender for the state.

Under the agreement announced on Monday, the federal government will underwrite at least 6.5 terawatt hours of new wind and solar generation in WA, as well as 1.1 gigawatts of new energy storage.

But critics say the doubling of wholesale electricity prices in WA since 2021 has put the competitiveness of businesses and industry at risk, and are more concerned about a near-term gas shortfall.

Regulators forecast a domestic gas deficit for the state between 2024 and 2029, despite the state being one of the world's biggest gas exporters.

Pledging to shut state-owned coal-fired power plants by 2030, WA will need more electricity for future green iron, hydrogen and ammonia production, which is similar to the challenges facing states such as South Australia and Queensland.

SA was the first to sign such an agreement for renewable energy development earlier this month in return for dedicated federal funding support, and agreements are being finalised with other states and territories.

Some 90 per cent of the nation's increasingly unreliable fleet of coal-fired power plants will be shuttered over the next 10 years as they reach the end of their 50-year-plus lives.

The first capacity tender in WA will target enough to power 450,000 homes or 2000 megawatt hours of dispatchable capacity in the state's Wholesale Electricity Market, which is separate to the so-called national electricity market.

Energy Minister Chris Bowen said it builds on the success of the first national tender, which received more than 25 gigawatts of bids for a 6GW tender, and was the only plan backed by experts to deliver the cheap, reliable and resilient energy system.

"This is in sharp contrast to Peter Dutton's anti-renewables nuclear fantasy which remains uncosted and unexplained," Mr Bowen said.

WA Energy Minister Reece Whitby said the state was already investing more than $5 billion in new solar, wind and battery developments, with the capacity investment scheme set to further bolster decarbonisation efforts.

"We want to continue providing WA households and businesses with clean, reliable, and affordable power," he said.

"The procurement of additional storage will be critical for firming wind and solar power during peak demand, complementing existing public and private investment in big batteries in Collie and Kwinana."

Some 18 of the 32GW offered under the federal capacity scheme will be subject to RETAs, which are intended to be tailored to the needs of each state.

State governments have been warned that some subsidies may be re-allocated beyond their borders if commitments fall short.