Jun 02 2022

Vic RE report card: Could do better

A state parliamentary inquiry into renewable energy in Victoria has recommended the state aims for 100 per cent renewables by 2030. The inquiry was told Victoria was on track to exceed its renewable targets so should be aiming higher.

Victoria has been steadily increasing its share of renewable energy generators in recent years, from around 12.2 per cent in 2013–14 to 29.4 per cent over the 2020–21 financial year. The Inquiry heard:

  • wind generation contributed 14.8 per cent of electricity generated
  • rooftop solar contributed 5.7 per cent
  • hydroelectricity contributed 5.3 per cent
  • utility scale (large scale) solar contributed 2.6 per cent

The Inquiry was asked only to consider 100 per cent renewable energy generation sources. Its view was that the evidence it had heard suggested renewable energy will lead to lower energy costs overall and that as renewables become more central to energy generation, economies of scale will further reduce energy prices.

However, the committee was told renewable firming tools such as pumped hydro and particularly utility scale batteries do not cover energy shortfalls for long periods of time. Gas power stations can be used for firming for longer periods but produce carbon emissions. The Australian Energy Council’s Ben Skinner told the inquiry:

“As many experts have shown, actually a much better way of decarbonising is to target a high level of renewable energy—it might even be in the 90s—but to be prepared on occasion to call on fossil fuel sources as a backup, such as natural gas or even liquid fuel, and even, if necessary, use carbon sequestration to offset those emissions.”

Dr Dylan McConnell from Melbourne University told the inquiry if the Australian Energy Market Operator’s (AEMO) Integrated System Plan (ISP) is adhered to there needs to be a substantial investment in transmission.

“In those least cost scenarios we are talking in the vicinity of—depending—$4 billion to $5 billion to develop the six renewable energy zones in Victoria, and if you are going to develop all of those, that is quite a substantial amount of investment, keeping in mind that the regulator as a base of the entire transmission system in Victoria at the moment is about $3.5 billion. So we are talking about significant transmission investments in those scenarios.”

The Inquiry’s report recommends the Victorian Government informs the public about the benefits of reducing energy consumption, continues the zero-emissions vehicle subsidy program and proposes putting in place a cut-off date for sales of new internal combustion engine vehicles. 

Gas off the boil

 The inquiry found gas use for cooking, heating and industrial processes constitutes a sizeable source of carbon emissions in Victoria and recommended enhancing programs already developed to support a move away from gas, as well as ensuring that economically disadvantaged groups are not excluded. 

It also recommends the state government considers reviewing and removing the regulations that mandate the connection of new buildings to gas infrastructure and considers enacting a moratorium on new residential gas connections. 

The report also noted community opposition to the construction of renewable energy generators and transmission infrastructure in some areas, that it understandably causes apprehension from some members of regional communities who have concerns about impacts to the environment and private properties.

It said consultation on the part of renewable energy project proponents has been deficient in the past and that measures are being taken to improve community engagement in the earlier stages of a project.


 One of the ways to create more generation and avoid land use complications was in offshore wind projects which the Committee said would relieve pressure on the number of renewable energy generators required and associated transmission infrastructure that will need to be built in renewable energy zones to meet Victoria’s zero emissions target by 2050.

In March this year the Victorian Government released its Offshore Wind Policy Directions Paper which outlined its aim to be the first state in Australia to host an offshore wind facility. Offshore wind was discussed as a pathway for jobs, particularly in the Latrobe Valley.

The state government’s targets include 13 GW of offshore wind capacity by 2040. It says the projects would generate up to 6,100 jobs in development and construction and in ongoing operational jobs. Much of this would be in the Latrobe Valley to take advantage of the existing infrastructure and workforce.

Options for Industrial emissions reductions

The Committee noted work should continue so that the economic potential of hydrogen production in Victoria can be realised, including the creation of long‑term jobs which was crucial for regions like the Latrobe Valley as its workforce looks to transition to other industries with closures of coal fired power stations close in the coming decades.

Hydrogen and biogas were discussed as a means to assist emissions reductions in industrial processes and transport. The Australian Energy Council’s Ben Skinner told the Committee that some industrial processes require highly intensive heat sources. In these cases, hydrogen is more suitable than electricity as a replacement for gas:

“We see the role of heat pump type technology as being extremely useful for carbon reduction in terms of low-intensity heat sources. So whenever you have got a temperature requirement below about 60 degrees, a heat pump is all over gas I am afraid at the moment.

“But the sorts of uses that you are referring to relate to the production of steam, which does require temperatures in excess of 100 degrees. Whilst electricity can do that, at this moment it is not economic to do it. We see that as being more or less a post‑2035 type of journey, and it could well be that that is going to be the place in future for renewable hydrogen to participate.”

The report also recommended: 

  • a strategic land use assessment in Victoria’s renewable energy zones to identify suitable sites for generators and transmission infrastructure 
  • the introduction of a Community Energy Target that includes subsidies for the growth of localised community energy projects 
  • looking at options for more varying feed in tariffs and progresses its Virtual Power Plants Pilot Program to enable state-wide delivery to enable more distributed energy resources to export power to the grid while ensuring system stability. 

Related Analysis


Queensland’s pumped hydro plans

In September 2022, then Queensland Premier Annastacia Palaszczuk announced plans to construct two new pumped hydro projects: Borumba Dam – a 2GW facility located in Imbil, 50km west of Noosa, and the Pioneer/Burdekin facility which plans to offer 5GW of storage, located 75km west of McKay. We take a look at pumped hydro and how it can support the energy transition.

Apr 11 2024

Gas outlook highlights peaking plant role in transition

Apart from raising some alarm bells over future potential gas shortfalls, the release of the Australian Energy Market Operator’s assessment of gas needs again highlighted the important role gas generation will play in the energy transition.  Gas generation is seen increasingly as a “strategic reserve for power system reliability and security” and “will be critical when it runs”. We take a look. 

Apr 04 2024

Reviewing the Reviews, Part II

The first meeting of the Energy and Climate Change Ministerial Council (ECMC) for 2024 brought to the fore the extent of change underway in the energy sector. The ECMC’s communique hints at the breadth of reviews and assessments into the energy sector and operations of the National Electricity Market (NEM). It's part of a now long-established pattern. For well over a decade, energy has been at the forefront of policy developments, largely because of the significant changes to our grid. Along with those changes has come a heightened political involvement. With political interest has come a myriad of reviews, assessments and interventions to make the NEM “fit for purpose”. We take a look at the latest ECMC work and the extent of reviews underway.

Mar 07 2024
Do you have a question or comment for AEC?

Send an email with your question or comment, and include your name and a short message and we'll get back to you shortly.

Call Us
+61 (3) 9205 3100