Victorian wind and solar investment headed for “devastating” lull, report warns

A new report has warned of a potentially devastating lull in Victoria’s large-scale renewable energy roll-out, with no new wind and solar farms projected to be added to the state’s grid between 2022 and 2025.

A policy brief from Environment Victoria, the Australian Wind Alliance and Friends of the Earth Melbourne points to the state government’s own modelling from ACIL Allen that shows growth in renewables will stall within two years.

And it calls for an urgent resumption of large-scale solar and wind energy auctions, starting with a new call for tenders within two months, with the aim of signing contracts in the first quarter of 2021.

“We urge the Victorian Government to announce and deliver an expedited series of three new reverse auctions that proceed as soon as possible,” the report says.

“(These auctions should) support at least 1,000 MW of large-scale wind and solar projects, spread evenly across three auctions, over the next 18 months, helping to ensure a smooth pipeline of projects and that the industry does not come to a standstill … between 2022-25.”

Victoria has, until now, boasted one of Australia’s most ambitious and progressive renewable energy transition strategies, with its state Renewable Energy Target of 50 per cent by 2030 written into law in October 2019.

The 50 per cent target was promised by the Andrews government in the lead up to last year’s state election, which Labor won convincingly on a heavily pro-renewables platform.

It builds on the Andrews government’s original VRET legislation – to source 25 per cent of its electricity generation from renewable sources by 2020, and 40 per cent by 2025 – which saw Victoria become the first Australian state to write its renewables target into law.

But Environment Victoria says that since the state’s “first and only” VRET auction in 2018 – which drove six new wind and solar projects – progress has hit a wall.

“In June 2020, Victoria had 22 renewable energy projects either in construction or due to start soon, comprising 9 solar and 13 wind projects with a combined capacity of 3,255 MW providing more than 4000 jobs, said Environment Victoria campaigns manager Nicholas Aberle.

“But the Victorian government’s own modeling indicates that the state’s growth in renewables will stall within two years.”

Aberle says that the impact of stalling Victoria’s renewable industry now – particularly as the state struggles through stage four Covid-19 lockdown – would be “devastating” both in terms of jobs and carbon reduction targets.

“At a time when the economy is under intense strain from the COVID-19 shutdown, the benefits of supporting the renewable energy sector now would include creating much-needed new employment across Victoria, maintaining important manufacturing chains to businesses and workers, providing additional electricity generation capacity, and helping Victoria take action on climate change,” he said.

“With renewable energy jobs already at risk, there is no time to lose. The first of a series of three new VRET auctions should call for tenders within 2 months and aim to sign contracts in the first quarter of 2021.”

But a lull in state policy drivers is not the only problem facing the Victorian renewable energy industry right now. The state has also been plagued by grid congestion and “oscillation” problems that have caused lengthy delays to the connection of newly developed large-scale wind and solar projects.

As RenewEconomy has reported, the issues in Victoria, which also affect south-west NSW, are the result of complex and questionable new connection rules, and also the slow pace of grid infrastructure upgrades to address issues which have been flagged for the best part of the past decade.

And such has been the scale of the problem for Victoria that in February of this year the state government announced a dramatic intervention, in a bid to fast-track urgent grid upgrades and to unlock more large-scale renewables and encourage more big batteries. But then Covid hit.

The Environment Victoria report recognises this, and recommends that any auctions for new renewables capacity in the state be targeted at areas where there are no immediate grid constraints or where grid issues are being effectively resolved.

“The Gippsland area, for example, has excess grid capacity, existing large-scale wind and solar project proposals and a regional economy calling out for new employment and investment opportunities,” the report says.

“If expedited, a new VRET auction series will work as both a Covid-19 economic stimulus measure and a smart way to sustain and boost an industry critical to our energy transition.”