Australian Victoria to become the first State to legally bind its renewable energy targets

Victoria’s State Parliament introduced a legislative package to legally secure its renewable energy targets and send a clear message to markets.

The Victorian government is also seeking to establish a reverse auction mechanism to procure 650MW of new renewable energy projects.

If the premier, Daniel Andrews, manages to negotiate the package past the Upper House, Victoria will become the first state to enshrine its renewable energy targets in law and make its commitment to renewable energy legally binding.

Lily D’Ambrosio, Minister of Environment, underlined the importance of the legislative act for the investors, offering a strong signal to the electricity market and providing secure environment to both the energy industry and the consumers.

The Minister said: “These are ambitious yet achievable targets and this is the policy certainty and it’s the right policy that industry has been deeply searching for to make sure they can actually make the right decisions to invest in our state”.

Victoria State’s renewable energy targets (VRET) are 25 percent by 2020 and 40 percent by 2025, and were announced in June 2016.

According to D’Ambrosio, VRET will encourage the construction of wind and solar power projects through a reverse auction, saying that government modelling has showed that household electricity bills can be reduced by $30 per year over the life of the scheme, and greenhouse gas emissions will be reduced by 16 percent by 2034.

For medium business, a saving of $2,500 is promised, and for larger companies $140,000 in savings is expected.

She said: “In a pure economics sense more supply means cheaper prices and that’s what we will be modelling it on”.

After the latest tender, 100MW of solar power will be produced in Bannerton Solar Park near Robinvale in north-west Victoria, and a 38MW solar farm will be constructed at Numerka, near Shepparton.

Expressions of interest for the reverse auction for 650MW of renewable energy power generation will open in October and are expected to power 389,000 homes.

Under the new reverse auction, the industry is expected to come up with proposals for renewable energy projects, with the ones with the best value for money and local jobs and procurement proposals to be awarded contracts.

According to the Victoria State Government, the auction is expected to stimulate $1.3 billion of investment and create 1,250 construction jobs over two years, and 90 ongoing jobs.

The deployment of renewable energy projects in Australia is associated with the gradual coal phase out.

MP Ellen Sandell said: "Now that we have new renewables projects coming on line, we must plan for the sensible phase out of old, polluting coal stations".

Premier Daniel Andrews also denounced the Turnbull Government for failing to implement a long-term national renewable energy target.

"In the absence of policy certainty and leadership from Canberra, it is up to states like Victoria to fill that void to make sure that we are doing everything we can to drive the transition that is incredibly important to create jobs, to create more electricity in the market and to drive down prices”, he said.

Audrey Zibelman, Energy Market Operator Chief Executive welcomed the legislative initiative by saying:

"The promise of the future can happen. The emergence of renewables can be and will be, if operated correctly, the choice that is not only best for the environment but best for affordability and can also produce sustainable jobs”.

Matthew Guy, leader of the Victorian Parliamentary Liberal Party has opposed to the proposal, saying that the initiative will not solve soaring energy prices, and that any renewable energy target must be through a national approach.

"Daniel Andrews' renewable energy target is political vanity at the expense of consumers", he said.

However, Premier Andrews said he was confident the laws would pass Parliament, with key Upper House crossbencher James Purcell present at the announcement.