21 December 2006
Key Points:
Industry developments appear to support the Bracks Government's claim that the Scheme will be economically viable.
Following the re-election of the Bracks Labor Government in Victoria, the Victorian Renewable Energy Target ("VRET") scheme looks set to commence in full force. The Scheme mandates that 10% of Victoria's consumption of energy will be generated from renewable sources by 2016, and is set to commence on 1 Jan 2007. The pre-election battle had seen the State Liberal Opposition vow to dismantle the Scheme if it were elected.
Even before Labor's re-election, key industry developments have occurred which follow the thrust of the VRET Scheme. The Australian Gas Light Company ("AGL") announced, in September 2005, plans for building Australia's largest hydroelectric power plant in Bogong, in the Kiewa Valley in Victoria. The plant, estimated by an AGL press release to cost $230 million, is intended to provide additional peak electricity generation capacity for Victoria and to increase the amount of zero-emission electricity produced by AGL's generation assets. According to AGL's CEO Paul Anthony, "[t]he VRET Scheme has been factored in to [AGL's] decision to proceed with the Bogong development."
Solar Systems Generation, the company behind a huge $420 million solar energy project in north-west Victoria, similar said that the VRET Scheme was a key factor. Despite the project having received funding from both the State and Federal governments (under the Commonwealth Low Emissions Demonstration Fund), Solar Systems stated that the project may well have not gone ahead without the Victorian Government's renewable energy policy.
Despite some industry-based criticism that the Scheme's 15-year timeframe will limit long-term planning and investment in renewables, these developments appear to support the Bracks Government's claim that the Scheme will be economically viable. The Government has claimed that the Scheme will create up to 2200 new jobs in Victoria, and up to $2 billion in capital investment, while only costing the average household less than $1 per month.
For further information, please contact Andrew Smith.
