Victoria’s renewable push gets positive response from industry

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The Australian Industry Group (Ai Group) has welcomed the Victorian government’s decision to increase renewable power generation targets in the state to lower power prices.

Yesterday, the Victorian government announced details of the winning bids for the state’s first renewable energy auction, which will generate more than 900 megawatts (MW) of new clean energy, exceeding the original target of 650MW.

Under the new contracts, six new wind and solar farms will generate renewable energy for the state, at guaranteed minimum prices by the state government.

Ai Group’s Chief Executive Innes Willox welcomed the additional electricity generation capacity by the Victorian Government today, saying it will help energy users.

“With electricity prices still far too high following the sudden closure of Hazelwood and the surge in gas prices, more supply is needed to get prices down. And while the winning wind and solar farms are not dispatchable, they will provide an extra buffer to keep expected levels of unserved energy demand within the reliability standard,” Willox said.

Victorian Premier Daniel Andrews said the positive response from energy generators and the low prices proposed had prompted the decision to increase the renewable energy generation capacity.

Together, the six new projects will generate $1.1 billion of economic investment in regional Victoria and create more than 900 jobs, including 270 apprenticeships and traineeships. The winning projects are the:

  • Berrybank Wind Farm west of Geelong, which will produce 180MW
  • Carwarp Solar Farm south of Mildura, which will produce 121.6MW
  • Cohuna Solar Farm north-west of Echuca, which will produce 34.2MW
  • Dundonnell Wind Farm north-east of Warrnambool, which will produce 336MW
  • Mortlake South Wind Farm south of Mortlake, which will produce 157.5MW
  • Winton Solar Farm near Benalla, which will produce 98.8MW

The auction is the latest initiative in the Victorian’s government’s target of 25 per cent renewable energy by 2020 and 40 per cent by 2025 under its Victorian Renewable Energy Target (VRET).

The projects will not supply electricity to the government, but under an agreement known as a “contract for difference”, the Victoria government will guarantee the projects receive a minimum price.

This was set last November at $56/MWh for wind, $53/MWh for solar PV and $56/MWh for solar PV with tracking. If the actual wholesale price is higher than those numbers, then the wind farm owner returns the difference to the government.

Willox also emphasised the need for coordinated effort between the states and energy market authorities, arguing that the VRET would not have been possible without the Renewable Energy Target (RET) program and policies such as the National Energy Guarantee (NEG).

 

“It is worth noting that long-standing bipartisan national energy policy, in the form of the RET, has helped make today’s announcement possible: the first stage of the VRET is assisted by the RET. Without the NEG or other national energy policy, future State targets and auctions will be harder. Coordination between States and with the energy market authorities will be essential. But with national uncertainty inhibiting needed investment, even second best options are frankly welcome,” Willox said.