Victorian Government demonstrates commitment to renewable energy with ambitious targets

The Andrews Government has demonstrated its commitment to the renewable energy industry and combating climate change by introducing a bill to the Victorian parliament last Thursday which will legislate ambitious new renewable energy targets. Partner Meg Lee and Senior Associate Kate Kirby report.

What is the target?

The new Victorian renewable energy targets (VRETs) were introduced to the Victorian Parliament on 24 August 2017 in the Renewable Energy (Jobs and Investment) Bill 2017 (the Bill). The Bill sets a renewable energy target of 25 per cent by 2020 and 40 per cent by 2025. The Minister is required to report to Parliament on the annual progress towards meeting the VRETs and the performance of schemes to achieve those targets.

How will the targets be achieved?

In addition to introducing the VRETs, the Government has announced that it intends to create a renewable energy auction which will assist in achieving the VRETs. The Bill does not include any details of the auction. It is likely that further detail could be included in regulations which may be created under the Bill.

The Government has announced that, in the first auction, proponents will be able to bid for contracts to provide up to 650MW of renewable energy capacity. This is claimed to be sufficient power around 389,000 households.

To support the VRET, the Government has also recently announced that it has awarded contracts to successful tenderers for two solar farms (one in the Sunraysia district, the other near Shepparton) to provide around 138MW of power for Melbourne’s tram network.

What does it mean for you?

Once passed in parliament, the Bill will come into operation on 1 June 2018, if not before.

The VRETs are more ambitious, and go further, than the Federal Government’s current Renewable Energy Target (RET) of 23.5% by 2020. The Victorian Government appears to be taking a proactive approach to combat climate change and encourage investment in renewable energy, an area where the Federal Government has arguably been lagging in recent years.

The Government has suggested that the VRETs (and associated auctions) will decrease power bills for households, boost investment and create temporary and ongoing jobs, particularly in regional areas.

Proponents of renewable energy projects (including solar and wind energy companies) should monitor the progress of the bill with a view to bidding for Victorian government contracts for renewable energy.

The VRETs and the auctions will provide a much needed boost for many renewable projects that have been on hold or stuck in slow permit and approval amendment processes over recent years.