The Victorian Labor Government has announced a major pre-election promise to reach 95 per cent renewable electricity in the state by 2035, and net zero emissions by 2045.
Victorian Minister for Energy, Environment and Climate Action and Solar Homes, Lily D’Ambrosio broke the news on 20 October.
“We cement Victoria as a global climate action leader. We’re bringing forward our net zero target to 2045 and slashing our emissions by 75-80 per cent by 2035 – one of the most ambitious targets in the world,” Ms D’Ambrosio said.
“By 2035 there will be no dirty coal generation in our state.:
Ms D’Ambrosio said the transition to renewable energy will “slash emissions and power bills while supporting 59,000 jobs”.
Victorian Premier Dan Andrews said they plan to “end reliance on privatised coal and transition Victoria to cleaner, cheaper renewable electricity by 2035 – creating thousands of jobs”.
Mr Andrews chastised the previous Liberal government decision to sell the Victorian energy networks to private multinationals which charged Victorians “$23 billion dollars – far more than [the private multinationals] paid”, adding that while they profited, power bills “skyrocketed”.
“Labor will bring back public ownership of energy resources by reviving the State Electricity Commission (SEC) as an active energy market participant to build new renewable energy projects,” Mr Andrews said.
“Labor will make an initial investment of $1 billion towards delivering 4.5GW of power – the equivalent replacement capacity of Loy Yang A – through renewable energy projects.
“The new SEC will become an energy market proponent under a ten-year plan to deliver cleaner, cheaper energy, with all profits invested back into the network – making sure it’s the Victorian public, not offshore coal companies, who enjoy the returns.
“We’ll invest at least $20 million to prepare the SEC for its new role in our energy market, including setting up an office in Morwell. The Latrobe Valley has always been the centre of Victorian energy generation – and we’ll make sure it’s part of our clean energy future.”
The potential deployment will build on the 9.7GW of renewable energy already powering Victoria and the recent commitment from the Victorian Government to an energy storage target. It will also deliver the new energy supply so crucial to driving down power prices, ushering in a new era for the state.
The initial $1 billion investment via an equity fund will put the state on a new emissions reduction trajectory of 75-80 per cent by 2035 and net zero by 2045.
A powerful signal
The Clean Energy Council (CEC) has welcomed the momentous announcement by the Victorian Government to significantly increase its climate change and renewable energy targets and commit to co-invest in the deployment of 4.5GW of new renewable energy over the next decade.
CEC CEO, Kane Thornton, said the target sent a “powerful signal to renewable energy investors that Victoria is determined to deploy large amounts of new renewable energy generation and manage the phase-out of coal-fired generation”.
“This is the renewable energy ambition that the Clean Energy Council has been advocating for, and Victoria is now leading the way,” Mr Thornton said.
“The Victorian Government has recognised the importance of co-investment and the critical role of the private sector when it comes to infrastructure projects of this size.
“Victoria is replacing failing, costly and dirty coal-fired power with clean, reliable, low-cost renewable energy. The announcement builds on the recently announced legislated renewable energy storage targets – 2.6GW by 2030 and 6.3GW by 2035 – and illustrates sensible planning.
“On the back of Tuesday’s announcement of a massive investment to accelerate transmission links, Victoria now has a strong roadmap for delivering the energy transition that is critical to both climate action and the state’s economic prosperity.”
The Director of Monash Energy Institute, Professor Ariel Liebman said the commitment for climate change mitigation-related commitments were “exceptionally exciting”.
“The proposed approach is extraordinary considering Victoria is the state that pioneered market reform and privatisation,” Professor Liebman said.
“It is a recognition that the current National Energy Market frameworks are not adequate to the rapid technological changes and economic complexity of investing in a high renewables grid.
“Despite much press to the contrary, Australia is already on the forefront of the grid transformation. With 25 per cent of Australia’s electricity generated by wind plus solar, both in the NEM and the Western Australian Grid. This means the AEMO is currently managing the highest penetration of these new technologies of any continental scale power system.
“If these new commitments are followed through they will truly accelerate Victoria and Australia towards becoming global leaders in grid integration of wind and solar energy. This is not without its challenges but solving these technical and market design hurdles will provide an international export opportunity for research and development knowhow.”
The spokesperson for CitiPower and Powercor said the companies “fully support the transition to renewable energy and welcome any opportunity to supply more clean energy to [the] 1.9 million customers”.
“Our understanding is that while this corporation will be called the ‘new’ State Electricity Commission, its scope will be very different to what it was before and will not include operating as an electricity distribution network.”
A “retrograde step”
The Australian Energy Council (AEC) said the plan to reinstate the SEC and expediting the exit of coal plants “will damage market and investor confidence and ignores the lessons of history, according to the peak body for energy retailers and generators”.
The AEC’s Chief Executive, Sarah McNamara, said the surprise announcement contains little detail but looks likely to chill private investment and see Victorian taxpayers carry the lions’ share of risk around the new generation.
“Our members have announced billions of dollars of investments to support the Victorian and Australian energy transition. [The] announcement will destabilise future investment plans.“
The AEC said the ARC publicly-listed energy companies have already written off $11.5 billion of shareholder value due to market uncertainty over the past five years.
“The announcement has the potential to further punish shareholders – including mum and dad investors – who have invested in the transition in good faith,” the AEC said.
“Government shouldn’t need to make direct energy investments where the private sector has demonstrated it is ready and willing to do so. The money being committed by the Victorian Government is funding that could be more effectively deployed elsewhere,” Ms McNamara said.
“The AEC also rejects the suggestion that the privatised industry has not served Victoria well. Energy privatisation was a key part of the state’s economic and fiscal recovery from its severe 1990s recession and delivered $22.5 billion (1997 numbers) of much needed capital, which enabled the development of a more reliable and innovative industry for the benefit of all consumers.”