Western Australia has set a target of 75% renewable energy by 2030/31 and will support it with a new payment scheme designed to give wind and solar developers revenue certainty as the state's coal plants close.
The target, announced on Tuesday, would nearly double the state's renewable share in just five years, RenewEconomy reported. State officials estimate that around 4,000 MW of new capacity, including rooftop solar, will be needed to reach it.
A simplified version of ESEM
The new Renewable Energy Mechanism is described as a simplified version of the Electricity Services Entry Mechanism, or ESEM. The scheme is still under development, and more details are expected in the next few days.
In principle, it would provide annual payments to renewable generators when their average market price falls below the price that makes an efficient facility viable. Payments would apply only to energy actually generated, not to curtailed output, and only when average market prices are low.
For projects entering the Wholesale Electricity Market under the mechanism, the Reserve Capacity Price would be fixed for up to 15 years.
"This is to provide revenue certainty for a future with a higher share of renewable generation and low market prices," said Jai Thomas, Western Australia's co-ordinator of energy.
The PPA paradox
Thomas described the problem the scheme is meant to solve as a "Power Purchase Agreement paradox": new renewable projects struggle to get financed, yet prices cannot fall without new renewable capacity entering the market.
"Large loads or retailers are disincentivised to sign off-take agreements with new renewable energy proponents," he said.
Coal closures set the timetable
The target is closely tied to the exit of the state's coal fleet. Five wind farms have reached financial close and begun construction, and the 550 MW Marri wind project is expected to get the green light soon. According to energy minister Amber-Jade Sanderson, the projects already underwritten by the state should take Western Australia to about 60% renewables and cover the closure of Collie in late 2027.
The Muja coal generator is due to close in 2029, and the privately owned Bluewaters generator is also expected to close.
"Without the plan, we'll be reliant on aging coal-fired power stations," said Premier Roger Cook. "Ask any WA household that has solar panels or batteries, they will tell you solar is the cheapest energy that is available."
Demand is rising
Underlying electricity demand is expected to grow with electric vehicles, home electrification and new green industry such as the proposed Generation Steel mill at Collie.
At the same time, there is concern about a push for gas, in particular the proposed 870 MW Keralup energy hub, which could become the state's biggest gas generator.
The government also plans to be the first state to approve so-called balcony or plug-in solar and batteries.
What it means for Asia-Pacific developers
For wind and solar developers, the mechanism addresses the main risk of building into a market with low prices: revenue that does not cover the cost of a new project. A payment linked to the viability of an efficient facility, combined with a capacity price fixed for up to 15 years, could make projects financeable even without a corporate offtake agreement. Much depends on the final design, including how the benchmark price is set, and those details are still to come. The 4,000 MW estimate shows the scale of the opportunity in the state over the next five years.
Source: RenewEconomy, 28 October 2026
