Victoria faces 'significant risk' of blackouts from disorderly energy transition: Auditor-General
Victoria is at risk of ‘job losses, supply disruptions, price volatility’ and ‘community resentment’ as a result of a disorderly transition to renewable energy.
Victoria is at “significant risk” of “job losses, supply disruptions, price volatility” and “community resentment” as a result of a disorderly transition to renewable energy, the state’s Auditor-General has warned.
In a report tabled on Wednesday, Auditor-General Andrew Greaves warned Victoria would not meet its 2032 offshore wind target, and said significant delays in the construction of renewable energy projects and transmission lines would put the state at risk of blackouts when the Yallourn coal-fired power station closes in 2028. He warned Victoria’s ability to meet its 2030 target of 65 per cent renewable energy would depend on key projects being completed on time.
“While new projects will increase energy generation and storage capacity, many projects face delays,” the report says.
“This also does not allow for demand that is higher than forecast or incorporate other known risks. This includes gas shortages, which are expected from 2026, as well as planned power plant maintenance and adverse weather conditions.
“If these risks are not successfully managed, Victoria would be more likely to face electricity shortfalls after Yallourn … closes.”
Crucially, Mr Greaves warned the Victorian Department of Energy, Environment and Climate Action “has not fully considered risks in its planning, nor has it factored in contingencies should risks arise”.
Using the government’s own risk management framework, the report rated as “significant (severe/almost certain)” Victoria’s risk of a “disorderly energy transition”. “A disorderly transition to renewable energy could result in job losses, supply disruptions, price volatility for households and businesses and community resentment,” it warns.
The report revealed the government’s 2020 decision to agree to the closure of Yallourn – which currently supplies 22 per cent of Victoria’s energy – by June 30, 2028, was based on modelling that assumed several projects would be operational.
These include the VNI West and Western Renewables Link transmission lines, the Wooreen battery, and six major renewable energy projects.
As the report outlines, VNI West and Western Renewables link are not due to be completed until late 2030 and late 2029 respectively, the battery is not expected to be online until December 2027, and there is no delivery timeline for three of the six renewable energy projects, with only one currently operational. “Victoria could face electricity shortfalls to meet peak demand if these risks materialise, which could result in load shedding (planned electricity reduction to selected areas) and blackouts,” the auditor said.
“The department has not demonstrated that it considered the full extent of project delays, weather variation and contingencies in its advice.”
The report also establishes that gas shortages, limitations on access to hydro-electricity and constraints on the state’s ability to import energy from the national electricity demand during periods of peak demand mean Victoria may not be able to rely on gas and hydro-electricity when renewables underperform.
The auditor found not only that Victoria will “not deliver” on its legislated target of 2GW of offshore wind energy by 2032, but that “there is a risk of further delays” to an “optimistic scenario” of building 2GW of offshore wind capacity by the end of 2033.
Opposition energy spokesman David Davis said it was clear the Allan government had “dropped the ball”.
“This culpable failure by Labor puts the state at risk of a disorderly energy transition and risks the ability to deliver reliable sustainable and affordable energy,” Mr Davis said.
“Jacinta Allan and her Energy Minister have never released the details of the Yallourn agreement — in contrast to the Eraring contract with the NSW government — and consequently market participants cannot see the detail of this major input to Victoria’s energy markets.”
Energy Minister Lily D’Ambrosio said the Australian Energy Market Operator did not forecast energy reliability issues in Victoria over the next decade, “even in the most conservative scenario”.
“Victoria is still on track to meet its target of 95 per cent renewable energy generation by 2035. More than 42 per cent of the state’s electricity was produced by renewable energy last financial year and Victoria consistently has the lowest wholesale power prices in the country, helping to slash energy bills for families and businesses,” Ms D’Ambrosio said.
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