Revenue underwriting schemes support investment in renewable generation and clean dispatchable capacity by reducing downside revenue risk for project developers. Under this model, eligible projects compete through tenders for long-term underwriting agreements that provide a revenue safety net if market revenues fall below an agreed level, while allowing government or consumers to share in upside returns when project revenues exceed agreed thresholds. This improves bankability for capital-intensive clean energy assets while retaining exposure to market signals. 

The mechanism is particularly useful where electricity systems need rapid build-out of renewables, storage and other dispatchable clean capacity, but investment is slowed by merchant price uncertainty, financing constraints, grid connection risk or policy uncertainty. By using competitive tenders, governments can target specific capacity volumes, technologies or locations, while selecting projects based on price, deliverability, system value and broader community or economic criteria. [1],[2] 

Main Outcomes of the Solution 

• Business value: Improves investor confidence and project bankability by providing long-term revenue certainty for renewable generation and clean dispatchable capacity. 
• Sustainability: Accelerates deployment of low-carbon electricity resources needed to replace fossil-fuel generation and support clean power targets. 
• Affordability: Uses competitive tenders and revenue-sharing design to reduce investment risk while limiting public exposure and returning upside value when projects perform strongly. 

Key Deployment and Scaling Factors 

1. Design competitive tenders with clear eligibility rules, bid evaluation criteria and capacity targets for renewable generation and clean dispatchable resources. 
2. Define long-term underwriting contracts with revenue floors, upside-sharing arrangements, payment triggers, settlement methods and payment caps. 
3. Integrate procurement with system planning so contracted projects support reliability, renewable integration and grid needs. 
4. Include deliverability requirements covering grid connection, land access, permitting, financing, community engagement and project timelines. 
5. Maintain exposure to market signals, including operational incentives around dispatch, availability and negative pricing. 
6. Establish transparent governance and cost-recovery arrangements to balance investor confidence, consumer protection and public accountability. 

Case Study 

Australian Government Capacity Investment Scheme (2023), Australia 

Australia’s Capacity Investment Scheme is a revenue underwriting scheme for renewable generation and clean dispatchable capacity. Successful projects receive long-term agreements with an agreed revenue floor and ceiling, reducing downside market risk while preserving exposure to wholesale market signals. If project revenue falls below the floor, government support covers part of the shortfall; if revenue exceeds the ceiling, the project shares upside revenue with the government.  

The underwriting design also accounts for negative price exposure. Tender guidance describes a zero-price floor approach for net revenue calculations, where payments linked to negative prices are excluded from the calculation. This helps avoid treating negative-price periods as lowering annual revenue for underwriting purposes, while retaining incentives for projects to manage dispatch and contracting exposure. 

The scheme was expanded on 29 July 2025 from 32 GW to 40 GW of new capacity nationally. The target increased from 23 GW to 26 GW of renewable generation capacity and from 9 GW to 14 GW of clean dispatchable capacity, with the expanded scheme to be rolled out from 2024 to 2027.  

The case shows how revenue underwriting can reduce investment risk while maintaining competitive discipline. By combining a revenue floor, ceiling and tender-based allocation, the scheme improves bankability for clean energy projects while helping Australia accelerate renewable generation and dispatchable capacity deployment. [1],[2] 

References: 

1. https://www.dcceew.gov.au/energy/renewable/capacity-investment-scheme  
2. The Capacity Investment Scheme