From Consultation to Commercial Partnership: What the CIS Set Aside Asks of Proponents

A New Requirement in the Capacity Investment Scheme (CIS)

The Capacity Investment Scheme (CIS) Tender 9, now open with bids due in late July 2026, is the first CIS tender to include a First Nations Equity and Revenue Sharing Set Aside. A dedicated 500 MW of capacity has been reserved for projects that commit to at least 5 per cent equity, equivalent revenue sharing, or a combination of the two with First Nations partners.

Participation in the Set Aside is voluntary, and projects still need to satisfy the same eligibility and merit criteria as every other bid. On the surface, that may make it appear to be a relatively modest addition to the tender framework. In practice, however, it reflects a broader shift that has been emerging across the renewable energy sector for some time.

From Engagement to Participation

For many years, First Nations engagement sat alongside project development as a parallel workstream. It was important, often highly scrutinised, and increasingly expected by governments and communities alike, but it was generally considered separate from the commercial architecture of a project. The introduction of the Set Aside is another indication that this distinction is narrowing. Governments are increasingly treating First Nations participation not simply as a social outcome, but as part of what defines a competitive and investable project.

Earlier CIS tenders already assessed the quality of First Nations engagement and the broader social and economic benefits proponents could deliver. The Set Aside goes further by creating dedicated tender capacity for projects that provide First Nations groups with a direct share in project value.

Flexibility in Participation Models

Importantly, the policy does not prescribe a single model. Equity participation, revenue sharing, or a combination of both can satisfy the requirement. That flexibility recognises the reality that communities, projects and financing arrangements differ significantly across the country. Some communities may see equity ownership as the preferred pathway because it offers governance involvement and long-term upside. Others may favour revenue sharing arrangements that provide predictable benefits without the obligations and risks associated with project ownership.

The significance of the Set Aside is not necessarily the 5 per cent threshold itself. Rather, it is the fact that direct participation is now being recognised within a major national procurement framework as a legitimate and desirable feature of project design. In doing so, the Commonwealth is reinforcing a trend already visible across a range of policy settings, where participation, benefit sharing and partnership arrangements are becoming increasingly important to how projects are assessed and compared.

What Proponents Need to Demonstrate

For proponents considering the Set Aside, the practical challenge is that qualifying arrangements require considerably more than a statement of intent.

There must be an identified First Nations partner with the authority and governance structures necessary to enter into the arrangement. The commercial model needs to be developed in enough detail to demonstrate that it satisfies the required threshold. Where equity participation is proposed, there must be a credible approach to financing the stake and managing risks through development and construction. Where revenue sharing is used, the basis for payments, timing and treatment under different project scenarios need to be sufficiently defined. Above all, the arrangement must be documented in a way that provides confidence it is genuine, deliverable and supported by both parties.

These requirements are not particularly controversial, but they do highlight a challenge that many proponents will be familiar with. Relationships, trust and commercial alignment take time to build. While legal agreements can often be negotiated within months, the foundations that make those agreements workable are usually developed over much longer periods.

Timing Matters

With Tender 9 registrations closing on 6 July 2026 and bids due shortly afterwards, proponents that have already invested in relationships and explored participation models are likely to find themselves in a stronger position than those attempting to establish arrangements for the first time in response to the Set Aside. This is one of the reasons why participation is increasingly being viewed as a strategic consideration rather than a procurement requirement.

Beyond Tender Competitiveness

The implications extend beyond tender competitiveness. Across the renewable energy sector, governments are progressively embedding community benefit sharing, workforce development, social licence and First Nations participation into the frameworks that shape project approvals, procurement and investment decisions. As these expectations become more specific and measurable, they begin to influence how projects are assessed by a broader range of stakeholders, including investors, lenders and government agencies.

For investors, the conversation is rarely about participation in isolation. The focus is typically on project certainty, risk and long-term value creation. Projects that have invested in strong partnerships and established credible pathways for participation are often better positioned to navigate stakeholder issues, adapt to changing policy expectations and maintain community support over the life of the asset. None of these factors guarantees project success, but they can contribute to the resilience and investability of a project in an increasingly complex development environment.

An Increasingly Integrated Policy Landscape

This is particularly relevant because many of the policy changes emerging across the energy transition are not occurring in isolation. First Nations participation, local content, workforce outcomes, regional development and social licence are increasingly being considered together. As a result, the most effective proponents are often those that approach these issues as interconnected elements of project strategy rather than separate compliance obligations.

A Strategic Shift for Project Development

The Set Aside should therefore be viewed as more than a one-off procurement opportunity. It reflects a broader expectation that communities will play a more meaningful role in the projects developed on their Country and that participation will increasingly be considered alongside technical, financial and delivery considerations.

For proponents and investors alike, the question is becoming less about whether First Nations participation should be incorporated into project design and more about how participation can be structured in a way that is credible, commercially robust and capable of creating value for all parties involved. Those conversations are already shaping the next generation of renewable energy projects and are likely to become even more important as the policy landscape continues to evolve.