Victoria has become the first Australian state to introduce a mandatory renewable energy target for power utilities. The Victorian Renewable Energy Target (VRET) scheme will require electricity retailers purchase a minimum of 10% renewable energy by 2016, up from the current level of around 4%.
The move came as part of the state government’s Environmental Sustainability Action Statement announced by Premier Steve Bracks. With around 1 GW of new renewable energy capacity expected to emerge from the scheme environment minister John Thwaites said the programme would result in an additional 3,274 GWh of renewable energy saying: “It will also deliver up to A$2 billion of new investment in clean energy.”
An independent review will assess the progress of the scheme, which is expected to run through to 2030, in 2011 and the state government will invest A$1.5 million ($1.15 million) to establish the scheme.
Renewables developer Pacific Hydro welcomed the move, which follows the failure of the federal government to expand its national Mandatory Renewable Energy Target (MRET) scheme. Pacific Hydro, like other renewable energy companies, had increasingly invested in overseas markets due to the MRET being filled five years ahead of schedule with no other carbon price signal in place to encourage investment.
Rob Grant, Pacific Hydro chief executive, commented: “Pacific Hydro’s half a billion dollars worth of projects in Victoria faced an uncertain future with MRET effectively filled. Without a carbon price signal to level the playing field between carbon intensive electricity producers and those that are emission-free, there was nothing to support new investment. The Victorian legislation provides the market mechanism that will support clean energy investment in the state.”