Victorian state energy developer vows to accelerate transition

The Victorian state-owned energy developer wants to fast track renewable energy projects and make them bigger as it chases the country’s most aggressive energy transition timetable.

The Victorian state-owned energy developer will accelerate the development of renewable energy projects and even allow them to increase in size, hastening the transition away from coal, the head of the State Electricity Commission has said.

Victoria has set the country’s most aggressive timetable to switch to renewable energy, a plan that will require a significant increase in the number of zero emission projects being developed.

Victoria plans to have zero emission sources account for 95 per cent of its energy needs by 2035 and to be net-zero by 2045.

The target looks increasingly precarious as Australia’s Energy Market Operator this week warned renewable energy developments are not being built quickly enough, but Chris Miller, the interim chief executive officer of the SEC said the agency will be a critical enabler.

“The SEC will be looking to participate in projects where our involvement allows a project to come forward more quickly or to be delivered bigger,” Mr Miller said in one of his first public remarks as he gave a speech to the Energy Week conference in Melbourne.

“In the first quarter of this year, there were no new financial commitments across the nation despite a strong pipeline of projects. We believe the SEC … can make a difference in accelerating investment across the state.”

The SEC has been allocated $1bn to develop 4.5GW of generation and storage capacity, enough to replace the state’s dominant source of electricity — AGL Energy’s Loy Yang A coal power station — which will close in 2035.

The SEC has invited submissions of interest, which closed late last month. Mr Miller said the agency is working through those and would then make a shortlist.

Industry sources said the SEC received significant interest for seed capital, but said the agency is still in its embryonic stage and it was still unsure of its own remit.

The SEC has in recent weeks invited market figures to discuss how the agency can aid the renewable energy market. But sources invited to speak with the SEC said the agency is still working through key elements such as investment criteria and key staffing — stoking uncertainty about when investments could be decided.

The SEC has yet to set a timetable for when it will begin investing in renewable projects, but Victoria can ill-afford any delays if it is to meet its ambitious targets.

There is also growing alarm from within Australia’s energy industry about the pace of building new renewable energy sources. If Australia does not accelerate building, it risks further price increases or even blackouts, executives have warned.

Nearly all of Australia’s fleet of coal power stations are on course to be retired in little more than a decade, requiring a massive build of renewable energy generators and utility-scale storage facilities such as pumped hydro or batteries.to compensate.

While Australia has seen a wave of new renewable energy developments, the pace remains too slow as new developments are hampered by transmission issues and supply chain disruptions.

Renewable energy developers will not proceed with a project until work on transmission — high-voltage poles and wires — has advanced, But transmission lines have been hampered by funding constraints and community opposition.

To break the impasse, states and territories have pledged tens of thousands of dollars to land owners who agree to host the transmission infrastructure, though opposition remains.

Australia is also struggling to increase the role of gas in its electricity network. Gas is typically used as a so-called peaker, with gas generators only fired up when there is peak demand or when there is limited generation capacity elsewhere. When coal exits the system, Australia envisages relying on gas to support renewables, which can have volatile production.

But the role of gas in Australia’s transition away from fossil fuels is highly contentious. Climate advocates have called for a ban on new developments, and the recent federal government move to cap prices led to many projects being temporarily shelved.

As a result, few new gas power stations are being built as developers struggle to obtain supply agreements, stoking concern within Australia’s energy industry about what will supplement renewables, which are expected to account for more than 80 per cent of the grid by the end of the decade.