The Australian Government has today invited expressions of interest (EOI) from eligible generators seeking to participate in the Contract for Closure Program. 

The Contract for Closure Program is part of the Government's Clean Energy Future package and aims to support the closure of around 2,000 megawatts of highly emissions-intensive electricity generation capacity by 2020. Under the scheme, eligible generators can seek payment from the Government as part of a competitive tender process to retire their operations by an agreed date.

This will be a voluntary process.

Transformation in Australia's energy sector hinges on an orderly transition over time to cleaner supplies of energy.

This program is designed to facilitate investment in new lower-emissions electricity generation capacity by providing certainty to future investors about the timing of closure of existing generators and, in turn, help them to plan ahead with confidence.

The Contract for Closure Program, together with the other elements of the Energy Security Fund, will minimise the risks to energy security that could arise from an unplanned exit of electricity generation from the market.

It is the Government’s intention that any Contract for Closure will ensure appropriate arrangements are put in place by relevant generators to preserve workers’ entitlements.

The Australian Government is also providing structural assistance to support regional communities if they are strongly affected by the introduction of a carbon price.  $200 million will be available specifically to help support workers and communities in the transition ahead.  That figure is on top of a much larger sum to help Australians more generally adjust to carbon pricing.

The Government has set aside a capped amount in the Contingency Reserve that is intended to be made available post 30 June 2016. As this is a competitive process, the funds available to generators under Contract for Closure have not been made public in order to preserve the Government's negotiating position and get the best value for money.

Expressions of interest are due by 21 October 2011. Material submitted to the Government will be assessed for compliance, and direct negotiations with eligible parties who submit a compliant EOI will follow.

The Government intends to enter into any Contracts for Closure by 30 June 2012.  These contracts will set out the agreed date by which capacity will be closed. The Government's preferred closure timeframe is from 1 July 2016 to 30 June 2020.

Eligible generators are those with emissions intensity greater than 1.2 tonnes of CO₂-equivalent per megawatt hour of electricity on an ‘as generated’ basis.  The Contract for Closure Program is being led by the Department of Resources, Energy and Tourism and the invitation for expressions of interest and associated documents can be found at www.ret.gov.au