The release of the Victorian Government’s energy plan – Cheaper, Cleaner, Renewable: Our Plan for Victoria’s Electricity Future, outlines the Government’s roadmap and what will be needed to reach an ambitious emission reduction target. Victoria is targeting net zero emissions by 2045 – five years earlier than the national target. Like the Australian Energy Market Operator’s (AEMO) 2024 Integrated System Plan (ISP), Victoria sees wind and solar as key pillars to their transition, along with battery storage. So, what does Victoria believe it will need to achieve net zero, and how does this differ from the ISP? We take a closer look below.
The Victorian Approach
As mentioned, Victoria has set an ambitious target of reaching net zero emissions by 2045 and has also committed to renewable energy targets of 65 per cent by 2030 and 95 per cent by 2035. For the state to achieve those goals, it will require a significant increase in wind and solar generation, backed by storage. It means that by 2035, Victoria will need to have 11.4GW of new grid-scale renewable generation installed, including 4GW of offshore wind as well as 6.3GW of new short and long duration storage in place.
Wind
As of April 2024, Victoria had 4.3GW of onshore wind capacity, while it had no offshore wind capacity. By July 2035, 9.7GW of onshore, and 4GW of offshore wind capacity is expected for the State to achieve its 95 per cent renewable energy target. This rise is expected to see an additional 900 wind turbines be built and made operational across Victoria by 2035, equating to just less than 82 new turbines each year. Currently, Victoria has approximately 715 onshore wind turbines across the state in operation, meaning the state will need to see a more than 130 per cent increase in onshore wind capacity to meet the 2035 target. Additionally, 222 offshore wind turbines will need to be developed and in operation by 2035 for the 4GW target to be met, with 111 of them needing to be online by 2032 to meet the 2GW target.
Solar
Currently[i] , Victoria’s solar capacity is 6GW – 5GW of rooftop solar and 1GW of utility-scale solar. By July 2035, this capacity will need to expand to 15.6GW, including 12.6GW of distributed rooftop solar and 3GW of utility-scale solar. This will represent 37 per cent of Victoria’s installed energy capacity, an increase of eight per cent on today’s figures. Meeting this target will require around 27 million more solar panels to be installed across the state, averaging around 2.45 million new panels each year. It is also important to note that these figures do not include the number of solar panels that may need to be replaced.
Storage
Victoria’s utility-scale battery capacity is currently at 375MW, including the 300MW Victorian Big Battery. By 2035, battery storage capacity in the state is expected to rise to 4.1GW – an almost 1000 per cent increase. This will require more than 3,600 battery installations across the state for the target to be met. As of April 2024, Victoria has 1.95GW of storage projects in operation or in the pipeline, including the Yallourn 350MW four-hour battery, the 600MW 2.4-hour battery at the Melbourne Renewable Energy Hub, and the 365MW allocated to the State’s VRET2 program. An extra 2.15GW of utility-scale storage will need to be approved and brought online for the State to meet its target. Additionally, the Government has set a target of at least 6.3GW of storage online by 2035, including home battery systems. Victoria’s current storage capacity, excluding hydro, is around 800MW.
Figure 1: Victoria’s installed capacity outlook (GW)
Source: Cheaper, Cleaner, Renewable: Our Plan for Victoria’s Electricity Future, 2024
The National Outlook
The Federal Government has reaffirmed its target to reach net zero emissions by 2050 and is aiming for a 43 per cent reduction in emissions on 2005 levels by 2030. The Government also set an ambitious plan to reach 82 per cent renewable energy by 2030. As with Victoria, these targets rely heavily on a swift transition to renewable energy and battery storage, reducing our reliance on emission intensive fuels such as oil, gas and coal. AEMO’s 2024 ISP expects Australia to have almost 200GW of energy capacity across the National Electricity Market (NEM) by 2034-35.
In 2023, renewables accounted for almost 40 per cent of total electricity delivered through the NEM, an increase of 12 per cent from 2020-21. This needs to more than double in the next 7 years to meet the Government’s 82 per cent renewable energy target.
Wind and solar
Renewable energy, including hydro and biomass, reached a share of 32 per cent of the NEM’s annual generation in 2021-22. This share is expected to rise to almost 70 per cent in 2027-28 in AEMO’s ‘Step Change’ scenario, reaching 99 per cent by 2049-50. Currently the NEM’s wind and solar generation capacity is 42GW, including 21 GW in utility-scale solar and wind, and 21GW of distributed solar PV. By 2030, the NEM will need to increase by more than 115 per cent to reach targets of 55GW of utility-scale wind and solar and 36 GW of solar PV. Comparatively, Victoria will need to see an increase of more than 200 per cent in wind and solar generation to reach its target, however this is for 2035, not 2030.
Figure 2: NEM installed capacity outlook (GW)
Source: AEMO Integrated System Plan, 2024
Storage
Similarly to Victoria, storage capacity across the NEM is expected to increase dramatically over the next decade and beyond. The NEM’s current capacity of 3GW – which includes batteries, virtual power plants and pumped hydro, will need to increase to 36GW in 2030 (1100 per cent increase) before reaching 49GW by 2050 (a 1500 per cent increase). This capacity includes Snowy 2.0 and Borumba Dam, as well as existing pumped hydro storage facilities. The Victorian approach does not include hydro as a storage option, instead relying solely on household and utility-scale battery storage. The ISP outlook includes Consumer Energy Resources (CER) in its modelling, with coordinated and passive CER accounting for more than 40 per cent of storage capacity across the NEM by 2035.
Figure 3: NEM’s installed storage capacity outlook (GW)
Source: AEMO Integrated System Plan, 2024
Conclusion
Across the NEM, solar will account for most of its generation, whereas in Victoria, with a lower solar resource compared to other states, wind is expected to play a comparable role to solar. While the Plan for Victoria’s Electricity Future and 2024 ISP slightly differ in their renewable generation targets, they both outline extremely ambitious and demanding increases in wind, solar and battery storage. As we are already seeing there are a range of obstacles that will need to be overcome to get there, amongst them any supply chain, approval or social license constraints.
[i] Currently refers to all figures used in the report which are as of April 2024
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