Victoria’s new public energy utility begins search for first renewables and storage deal

Victoria’s Labor government has launched a market search for a large-scale renewable energy generation and/or storage project to kickstart its revival of the publicly owned State Electricity Commission.

Labor’s election promise to revive the SEC put forward a 10-year plan to invest “at least” $1 billion re-establishing the generation (and possibly retail) utility, based in the Latrobe Valley to give the state’s coal centre a key role in the energy transition.

Under the plan, Labor has said the SEC will hold a controlling interest in an initial rollout of up to 4.5GW of new zero emissions power generation – enough to replace the Loy Yang A coal plant. The projects would be 51% owned by the Victorian taxpayer and 49% owned by a investment partner – yet to be decided upon.

This week, state energy minister Lily D’Ambrosio released a Pioneer Investment Mandate, detailing the project criteria and process that will guide the SEC’s first strategic investment.

The Registration of Interest process, opening next week, will target “proven” renewable energy and/or storage technologies, capable of delivering commercial returns and with construction to begin as soon as possible.

The successful project would have a minimum generation capacity of 100MW, the documents say, “with a preference for larger capacity.” This could include a portfolio of multiple projects aggregating to a larger capacity.

According to the mandate, the SEC is also open to co-located storage capacity with existing or proposed renewable projects, and standalone storage projects in excess of 100MW of capacity with a range of storage durations.

“The intention is to accelerate the renewable energy transition by partnering with industry and co-investors,” the Investment Mandate says.

“We are seeking to invest in projects that can be brought forward and/or accelerated with the SEC’s involvement, while maintaining expectations of commercial returns.”

On location, the mandate specifies that the successful project would have to be in Victoria, and preferably sited within one of the state’s designated Renewable Energy Zones.

On timing, the government says it will preference projects with a “defined delivery strategy,” and which can “begin operations and/or deliver electricity as soon as possible.”

In a Tweet announcing the market search, D’Ambrosio said the government was also looking for an investment partner to help deliver the pioneer project as soon as possible.

“We’re getting on and delivering cheaper renewable energy – owned by Victorians, to benefit Victorians,” the minister said.

The ROI process, itself, will run from May 02 to May 15, followed by a more select market engagement phase targeting those projects with the potential to best meet the criteria set out by the SEC.

From late May, the SEC will then invite select interested parties to submit an investment proposal and from mid-June it will get to work putting together a short list of preferred investment/s to put to government.

And while main game right now is to make a first investment, the ROI process is also expected to help establish a longer-term pipeline for SEC investment, and to determine how it can work with industry to accelerate the state’s transition to renewables.

“This is really exciting, and marks the beginning of the SEC’s first project,” said D’Ambrosio on Twitter on Thursday.

“It will bring more affordable renewable energy for Victoria – as we accelerate our transition to 95% renewables by 2035.”