Changes to the Capacity Investment Scheme Tender Process: What you need to know

AEMO has announced key changes to the Capacity Investment Scheme (CIS) tender process. Current and future proponents of renewable, storage and hybrid projects wishing to bid into the scheme should be aware of these changes, which will affect tender rounds going forward.

The CIS: background

The CIS is an Australian Government revenue underwriting scheme targeting investment in renewable energy generation and clean dispatchable energy (storage). Project proponents who successfully tender into the CIS are awarded long-term revenue underwriting contracts with the Commonwealth Government known as capacity investment scheme agreements (CISAs).

The first stage of the CIS was launched in 2023. The CIS was expanded on 23 November 2023, when the Commonwealth Government announced plans to underwrite an additional 32 GW of projects nationally to facilitate the nation's clean energy transition. The CIS has now undergone four tender rounds, with Tenders 5 and 6 commencing in August 2025, and is on track to deliver 18 GW of generation and dispatchable storage projects.

On 30 July 2025, the Commonwealth Government announced a further increase in the CIS capacity target to 40GW, with an additional 5GW of clean dispatchable energy and 3GW of generation to be delivered by 2030. Tender rounds will continue to be held regularly to 2027.

There are five key changes:

Streamlining the tender process

To date, tenders have followed a three-stage process:

• Stage A – Project Bid: Project Bids submitted by proponents and assessed against defined Eligibility Criteria and Merit Criteria 1-4;

• Stage B – Financial Value Bid: Projects shortlisted at the end of Stage A are invited to submit a Financial Value Bid, together with Project Documents in the form of an offer for acceptance by the Commonwealth Government. Projects are assessed against Merit Criteria 5-7.

• Stage C – Due Diligence and recommendations: AEMO due diligences projects and provides a recommended list of bids to the Commonwealth Government. The Commonwealth Minister for Climate Change and Energy selects successful projects.

Stages A and B will now be streamlined into a single stage, which means that proponents will need to submit all aspects of their bid, including a full financial bid, at the same time. There will be an eight-week period for bid preparation and submission.

Once submitted, AusEnergy Services Limited (formerly AEMO Services Limited) (ASL) will undertake an eligibility and merit assessment of the bids and perform due diligence checks; with the eligibility assessment being undertaken first. Projects that do not pass the eligibility assessment will not be further assessed.

This process is expected to reduce the duration of tenders from approximately 9 months to 6 months; allowing certainty of tender outcomes sooner and avoiding overlapping tender rounds for the same technology.

Consolidating the Merit Criteria

The Merit Criteria will be consolidated from 7 Merit Criteria in previous rounds to 5 Merit Criteria as follows:

• MC1: Financial value, system reliability and system benefits

• MC2: Project deliverability and timeline

• MC3: Organisational, resource and financing capability

• MC4: First Nations participation and benefits sharing

• MC5: Social outcomes and community benefit sharing

The intent is to avoid duplication across Merit Criteria; the key merit elements being evaluated will remain the same as before.

The weightings to be given to each of the Merit Criteria are yet to be announced, but will be advised in the Tender Guidelines for each round. However, ASL has emphasised that there will be a strong focus on MC4 and MC5. ASL has also advised that projects with credible earlier delivery dates, particularly those with a pathway to achieving COD before 31 December 2030, will be assessed as higher merit.

Eligibility Criteria will also be streamlined where possible to remove non-essential complexity or duplication.

Imposing limits on bidding departures to the CISA

In prior tender rounds, proponents could propose commercial departures to the pro forma CISA, which would be assessed as a Merit Criterion. This is no longer the case, and proponents can only submit departures that are strictly necessary for specific project requirements. Bids with departures that increase the risks to the Government and/or administrative costs or deviate from CIS policy initiatives may be removed from the tender process.

The rationale for this change is that the pro forma CISA has been refined based on proponent feedback in previous tenders. The change also allows CISAs to be finalised and executed quickly following the end of a tender round. There will be a time limit for successful proponents to finalise and execute a CISA following the end of a tender round, and if the successful proponent fails to execute within this time limit, the Government may terminate negotiations.

Reporting on workforce arrangements

From Tenders 5 and 6 onwards, successful proponents will be required to publicly report on key labour and workforce arrangements, including those of their subcontractors. The intent is to increase transparency on labour market practices and employment conditions for recipients of Government funds. Examples of matters that may require reporting include the proportions of FIFO workers relative to local workers, conditions and wages that exceed awards etc.

Introduction of a reserve list for "next best" projects

The Government has introduced the concept of a reserve list, which may be included in future tender rounds as determined on a round-by-round basis. Meritorious projects that are not selected in a tender round (ie. "runners-up") may be placed on the reserve list for that round, and the Government may choose to award a CISA to one of these projects if any of the successful tenderers in that round fail to execute a CISA. Proponents will be notified if their project has been placed on the reserve list, and the period for which it will remain on the list.