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Victoria aims for 40% renewables by 2025, to add 5,400MW wind and solar

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Victoria’s Andrews government says it will set a renewable energy target of 40 per cent by 2025, making it the latest state in Australia to introduce a target for large-scale renewables development more ambitious than that of the federal Turnbull government and underlining the political divide over wind and solar.

Victoria’s labor government intends to end an investment drought in the state by aiming to lift its share of renewable energy from 15 per cent to 25 per cent by 2020.

Then it will establish a new target jumping to 40 per cent by 2025, which will require some 5,400MW of large scale wind, and large and small scale solar to be built in less than one decade. That compares to its current capacity of 1,200MW of large-scale wind and 930MW of small-scale solar.

The new targets were announced on Wednesday by Victorian Premier Daniel Andrews, along with his minister for energy and climate Lily D’Ambrosio, while they were marking the arrival of the first turbine blades at the Ararat Wind Farm.

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The targets will be met with the help of reverse auctions modelled on the successful scheme pioneered by the ACT government which aims to reach 100 per cent renewable energy by 2020. Details will be released later this year and the legislation enacted in early 2017.

Some 1,800MW of large-scale wind and solar will need to be built by 2020, although D’Ambrosio insists it will not come at an extra cost. The 2025 target will be met by reverse auctions and will be “additional” to the national target, and D’Ambrosio says the costs will be limited to just a matter of “cents per week” to consumers.

Victoria’s move highlights a growing division between Labor and the conservative parties on renewable energy. On the national level, the federal Coalition has cut the target and caused a near three-year drought in investment, which D’Ambrosio said the state is now trying to break.

South Australia and Queensland – as well as the ACT – also have more ambitious renewable energy targets, although D’Ambrosio says Victoria will be the first to put theirs into legislation. The conservative states of NSW and Western Australia base their policies on the national target, with NSW recently rated the worst state for renewable investment.

The Victorian government auction schemes will be split into “solar only” auctions and others that will be technology neutral, but will most likely favour wind energy. The exact share is yet to be decided.

In an interview with RenewEconomy on Wednesday, D’Ambrosio said the first round of auctions were expected to be held in 2017, with the goal of generating 1,800MW of new capacity and getting it built by 2020.

“We think it is ambitious. And very achievable, and is what we need,” she told RE.

For the Victorian economy, D’Ambrosio said the scheme was expected to generate 3,000 jobs by 2020, before any costs were imposed, and then another 4,000 additional jobs by 2023/24.

In terms of emissions, the scheme is expected to deliver around a 12 per cent reduction in electricity sector greenhouse emissions by 2034-35, the government said.

In broader terms, the announcement of the new VRET means that Australia’s three mainland Labor states – Victoria, South Australia (50 per cent by 2025) and Queensland (50 per cent by 2030) – now have markedly more ambitious targets than the federal government.

South Australia is expected to pass its 50 per cent renewable energy target this year, in fact it effectively reached that target in May – nearly a decade ahead of schedule – and the state’s Labor government has pledged to focus all efforts on getting the state as close to 100 per cent renewable energy as possible.

Queensland’s Labor government has set a 50 per cent renewable energy target by 2030, and recently doubled its short-term large scale solar target to 120MW, and already leads in rooftop solar, with 1.5GW of installed capacity – making it the second biggest power station after the Gladstone coal generator.

The ACT, meanwhile, leads the country on renewables ambition, while Tasmania is already there, given the right hydro conditions.

Federal Labor, too, has promised to set a national target of 50 per cent renewables by 2030 – a goal the Turnbull government has repeatedly attacked as economically “reckless” and described as an effective tax on electricity.

For Victoria, D’Ambrosio said that making the state’s scheme complementary to the Commonwealth’s was also about helping to save the national RET.

“Investors have lost faith in the national target, but we are restoring the confidence needed to invest. We’ve developed Victorian renewable energy targets that generate thousands of new jobs, particularly in regional Victoria, while also cutting Victoria’s greenhouse gas emissions,” she said.

“Growing renewable energy means growing jobs, and we want a big boost to both right here in Victoria,” Andrews added.

“The world is shifting to renewable energy – it creates jobs, drives growth, and protects our environment – and Victorians want to be at the forefront of that.”

Energy analysts agreed that the scheme was likely to keep a lid on wholesale electricity prices. Morgan Stanley analyst says it will be a negative for brown coal generators, including AGL Energy, which owns Loy Yang A and is the only listed company with a major share of the brown coal generation fleet.

“This development reinforces our view of the long-term supply-demand outlook in the NEM, with our view of flat nominal pool prices into the long term,” Koh wrote in a note to clients. “We therefore view this development as a longer term negative for AGL and a positive for (Origin Energy).

Green groups welcomed the Andrews government’s ambition on renewables.

“The targets announced today by the Premier and energy minister will see Victoria double its wind power capacity by 2020 and quadruple it by 2025, as well as supporting large-scale solar projects in the north of the state,” said Environment Victoria CEO Mark Wakeham.


“(The) VRET provides a lifeline for manufacturing in Portland, Glen Waverly, Geelong and the western suburbs of Melbourne,” said Friends of the Earth spokesperson Leigh Ewbank.

“With an estimated 10,000 jobs created in renewable energy, this is what the transition looks like.

“All available polling shows strong community support for renewable energy. Creating jobs, cutting pollution and acting on climate change is something all parties can support,” said Leigh Ewbank.

The Clean Energy Council also welcomed the 40 per cent VRET, particularly from a state that is home to some of the world’s most heavy polluting coal-fired power plants.



“Victoria faces many challenges in transitioning away from emissions-intensive forms of generation towards new renewable energy, and it’s vital for the community that the shift is managed well,” said CEC chief Kane Thornton.

“Victoria’s ambitious target to reach 40 per cent renewable energy by 2025 makes the state a very attractive destination for clean energy investment at a time when activity in the sector is ramping upsignificantly.

“We have seen about 450 megawatts of projects committed nationally in the past three months alone, so this move by Victoria is smart timing – and should see Victoria claim a big share of the renewable energy pie out to 2025 and beyond,” Thornton said.  

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  • MaxG

    It is all not fast enough… move quicker…

    • Sarab

      Yes surely it can be done earlier from Engineering point of view.

  • Axl D

    If Victoria, Queensland, SA and ACT are pulling more than their weight, does that mean NSW and WA can slacken off even more?

    • hydrophilia

      That depends…. but I think their voters, seeing lower energy prices, higher employment, better wages, and less pollution MIGHT put some pressure on.

      On the other hand, as long as the voters get their news from pro-ff sources, they will keep believing the propoganda that the sky is actually green.

    • Alastair Leith

      Well Yes2Renewables which lead the community campaign to reinstate the VRET, possibly using strike-price reverse auctions or some other mechanism that avoided the federal RET clause prohibiting duplication will be active in WA so let’s hope that WA ALP Party get up to speed with the Andrews government.

      At least the Liberal Party in WA has conceded that fossils can be subsidised any long as it’s hurting the state budget too much and RE is cheaper for new generation. Unfortunately that’s just an observation and no plans have been forthcoming about how to roll out large scale RE generation.

      Treasurer and Energy Minister Mike Natan has suggested ‘the market’ in rooftop solar and batteries will have the job done in ten years time. I beg to differ if ‘the market’ doesn’t get some clear direction from government. More here:
      100% Renewables is doable, but when will we see it done?

  • Ken Dyer

    Hooray hooray. At last, the bloody labor politicians are seeing the light. More please. Victoria has to get that pesky bloke, Jobson Groth off his backside at the Adani mine site where he has been hanging out with Derek Taction, the best mate of Greg Hunt.

  • Ian

    Last I looked there were 2.5GW of wind projects already approved in Victoria. Are these to be moved into the construction phase?

    The Victorian Labor government plans to promote distributed solar. Will they revise tariffs and FiT’s to inherently support the uptake of solar.

    There is already enough electricity generation capacity in Victoria given the fossil fuel assets that have so tenaciously hung on. New renewables generation capacity will have to displace old coal generation. How is Victoria going to retire it’s Brown Coal generation capacity?

    Part of any renewables generation system are dispatchable sources of electricity. Victoria has access to plenty of hydro capacity. The water storage capacity should be reserved for times complimentary to solar and wind generation. How will the Victorian Government reward or otherwise hydro operators so that they forfill that dispatchability function and not waste water storage on continuous electricity generation?

    • Alastair Leith

      Solar Tariff announcements to come later apparently. I hope they improve the situation of declining rooftop installations, plus kick start the 10-2000 kW installations on commercial and light industrial properties that would see rooftop solarPV grow again.

      Yes I hope many of these shovel ready projects will get a green light once the reverse auctions (or whatever mechanism it becomes) occur later this year. Also for many smaller community power projects to get financing as a result, perhaps special community power reverse auctions also.

      Peak maximum demand in Victoria was 8 GW in 2014 so 2.5GW would take us past the 2020 25% target easily if all go ahead. Plus there will be big solar, presumably at least 20%. Imagine if Vic got the first CST with thermal storage after all the years of talk in Port Augusta, SA and the huge community campaigning going on there.

  • Andrew Woodroffe

    Retiring old coal is key – LGCs are already double what a proponent could expect and could remain so for a few years. Along with low interest rates and bigger turbines, things have never been so economic. We need the retailers to start PPAs with the existing fleet of proposed windfarm projects. Phasing out La Trobe, Hunter and Collie is way overdue. And there are plenty of jobs in rehabilitation. Note also that 200MW of coal plant (assume 80% CF) will require around 500MW of wind (assume 40% CF) or 800MW of largescale solarfarm (assume 20% CF) to replace the annual output of around 1400 GWh/year.

    How, exactly, is Victoria going to close old coal?

    • Alastair Leith

      It takes two years to build a set of wind farms and as long as it takes to bang some heads together to close coal. The more the coal plant CFs drop due to displacement by wind, the more the owners will be desperate to negotiate closer and rehabilitation and restoration with the Government. At the moment they are still making too much money (and pollution) to come to the table from what I hear.

  • David Osmond

    Victoria should be congratulated for its clever policy. And I think once the other states see the bargain that Victoria has achieved, they will kick themselves they didn’t try something similar earlier.

    To illustrate the bargain, let’s look at the ACT wind auction results. The ACT is paying between $77 and $92 per MWh for its wind. Victoria is likely to pay similar. For Victoria’s 2020 goal, it appears that Victoria is planning to sell the renewable energy certificates on the spot market (ACT has chosen to cancel its certificates). The certificates are currently selling for a little over $80, and are expected to remain at high levels till 2020. So Victoria will pay about $80 per MWh for the wind, but for each MWh it buys, it will be able to sell a LGC for about $80. So Victoria will end up getting its electricity for free!

    This is why the Vic Government is saying the policy will cost nothing before 2020 – it will be getting a complete bargain!

  • Robert Majic

    Labor idiots will damage Victorias stable baseload power supply with this outrageous aggressive renewable target. South Australia’s blackout will happen here as well due to this pandering to the green lobby. Lets continue to work on new power sources that are actually cost effective and reliable but not at the cost of our security.