Victoria would have 40 per cent clean electricity in less than a decade – nearly tripling the current level – under an ambitious plan announced by the Andrews government.
The government has set targets to ramp up wind power and large-scale solar power, paid for through an increase in household and business electricity bills and spending from the budget.
With private spending on clean electricity largely stalled due to a lack of confidence in federal government support for a national renewable energy target, the Andrews government believes its policy will make Victoria the centre of a revitalised industry.
It estimates that, at the peak of construction in the middle of the next decade, there will be about 4000 workers helping to build the target’s 5400 megawatts capacity of clean energy.
To put that in perspective, there are 18 wind farms with planning approval in the state, but not built.
The government says its target will improve the viability of the industry enough to build all of them – and nearly as many again – within nine years.
On top of this, one-fifth of the new generation capacity built would be solar plants in the state’s north.
In a statement, Premier Daniel Andrews said meeting the targets – 25 per cent by 2020 and 40 per cent by 2025, up from 14 per cent today – would bring about $2.5 billion of clean energy investment into the state.
“The world is shifting to renewable energy. It creates jobs, drives growth and protects our environment, and Victorians want to be at the forefront,” he said.
The government estimates the policy will push up electricity bills $26-30 a year, averaged over the next two decades.
The increase in bills is not expected to kick in until after 2020.
With Australia currently generating more electricity than it needs, in the short-term new wind farms will further increase competition and theoretically push prices down. But it means the yearly increase in bills next decade would be more than the average.
The clean energy policy is the first explanation of how the government plans to meet its target of Victoria having no carbon dioxide emissions by 2050. That target, announced last week, would mean no more burning coal for power.
The policy announced on Wednesday makes no mention of the future of the Latrobe Valley’s four ageing brown coal plants, which deliver about 85 per cent of Victoria’s electricity, emit half the state’s greenhouse gas and employ thousands.
It is widely assumed that at least one of the four – Hazelwood, sometimes described as Australia’s “dirtiest” power plant – will not be operating into the next decade whatever the government does.
Its majority French owner, ENGIE, recently said it was considering closing or selling the plant as it moves away from coal.
Opposition renewable energy spokesman David Southwick welcomed the investment in clean energy, but said the press release issued by the government had little substance and raised more questions than answers.
Estimating it would cost households $65 million a year, he said the state needed to spell out the future for coal and the cost of moving to clean energy.
“Signalling to the market that we need more renewable energy is fantastic, but something’s got to give and coal is the obvious one,” Mr Southwick said.
“It’s all very well to beat up on coal, but it’s a key part of our energy mix at the moment. The government should be sitting down with the valley and working through a transition plan – we need timeframes, plans and to make sure it doesn’t come at huge expense to households.”
The Victorian clean energy scheme is in part based on a model used in the ACT.
Companies bid at auctions for funding; the cheapest project wins. Victorians will be paying an extra cost on top of an existing incentive from the national renewable energy target to get stalled projects built.
Most auctions will be “technology neutral”, which means they will build wind farms – the cheapest clean electricity.
Twenty per cent will be set aside for big solar plants only.
In addition, an unspecified sum from the state budget will be dedicated to clean energy projects to power government operations.
The government estimates the policy will cut Victoria’s emissions from electricity by about 12 per cent by 2035.
Energy and Climate Change Minister Lily D’Ambrosio said it would also save the national renewable scheme.
“Investors have lost faith in the national target, but we are restoring the confidence needed to invest,” she said.
The government said it would consult with the clean energy industry and consumer groups before holding the first auctions next year.
A more detailed renewable energy action plan is promised later this year.
Praise for jobs boost, concern over cost
Clean Energy Council chief Kane Thornton welcomed the announcement, saying it would particularly benefit regional areas.
“The Victorian government has recognised the massive opportunity for renewable energy to transition the state,” he said.
But Australian Industry Group Victoria director Tim Piper said he was concerned the cost would hit existing businesses in Victoria while competitors in other states would not face the same increase.
“The government must consider how it treats energy intensive industries,” he said.
Green group Friends of the Earth said the policy would make the state the national leader on renewable energy, providing a lifeline for manufacturing in Portland, Glen Waverly, Geelong and Melbourne’s western suburbs.
Spokesman Leigh Ewbank called for it to be followed with a ban of onshore gas development and a plan to phase out coal power.