The federal government is massively expanding a taxpayer-funded scheme to subsidise and underwrite new renewable energy projects, in an admission that Australia is not currently on track to reach its 2030 target for the power grid.

Within seven years, the government wants 82 per cent of Australia's power to come from renewable sources, including wind, solar, batteries and pumped hydro — up from about 35 per cent now.

But progress has been slow: The share of renewables has only been increasing by about 4 per cent each year, largely because of the cost blowouts and delays new generation and transmission projects are facing.

With private sector investment flagging, Energy Minister Chris Bowen is announcing further federal intervention by expanding, and re-jigging, the Capacity Investment Scheme which was introduced last year to "firm up" the electricity grid, or keep the lights on, as coal-fired power stations close.

Under the scheme, the Commonwealth underwrites new renewable projects through contracted revenue floors and ceilings, removing some of the risk by covering a company's costs when wholesale power prices are low, and recouping that money when prices are higher.

The initial aim was to drive investment in six gigawatts of "dispatchable" clean power projects — energy that can be stored and used on demand like batteries and pumped hydro. 

That ambition will now be lifted to 32 gigawatts of electricity and expanded to include "variable" renewable projects like wind and solar farms. 

"This will see Australia get to our target of 82 per cent renewable energy but will see our transition become more reliable," Mr Bowen said. 

"It means our energy transition will be on track." 

The government will not say how much the expanded Capacity Investment Scheme will cost taxpayers or whether there is any cap on commonwealth spending between now and 2030.

Opposition energy spokesman Ted O'Brien said the intervention was an admission the government's climate and energy policies were failing.  

"How much will it cost? Labor refuses to say. In other words, it’s a blank cheque," he said. 

The bottleneck in the transition

 

Jim Chalmers has warned Australia needs to do more to meet its energy targets.(ABC News: Luke Stephenson)

Treasurer Jim Chalmers was the first to publicly acknowledge the government was on track to miss its 82 per cent target earlier this month when he warned: "We will need to do even more to secure sufficient renewable energy generation, transmission and storage to meet our ambitions."

The target is fundamental to achieving the legislated and mandated goal of cutting emissions by 43 per cent by 2030.

By opening its cheque book, the federal government is asking for an agreement from the states and territories to fast-track planning and approvals processes for new generation, storage and transmission projects.

"The Commonwealth will also consider barriers to renewable investment such as workforce and supply chain constraints," Mr Bowen said, referring to the global race for materials such as wind turbines and towers that are contributing to increasing costs and delays.

The biggest bottlenecks in the clean energy transition are the regulatory barriers and grassroots resistance to new transmission lines that are needed to connect far-flung renewable energy projects to consumers.

The Grattan Institute's Alison Reeves said the expanded Capacity Investment Scheme would help drive investment in renewables but the tricky part would be resolving the issues around transmission. 

"The thing that's going to be tricky is getting the transmission lines built so that generation can start contributing to the energy market," she said.

"There's still a lot of bottlenecks around that from community opposition to supply chains to labour shortages and those are the things that'll hold up these projects, as much as the lack of capital." 

The Australian Energy Market Operator has mapped 10,000 kilometres of transmission lines that will need to be built to support the clean energy transition but, as it stands, only one of the so-called "priority projects" is under construction.