Renewable Energy Action Plan

1 Bloomberg New Energy Finance, 1H 2017 APAC LCOE Update - Australia 8 CURRENT RENEWABLE FORTHCOMING FUTURE GENERATION CAPACITY PROJECTS END 2018 PROJECTS Wind Wind Wind 1,489 MW 192 MW 2,082 MW Solar Solar Solar Our future solar projects 1,001 MW 125 MW will include a commitment for 20% of VRET auctions dedicated to solar Including rooftop solar PV Large-scale Hydro Battery storage 2,296 MW 40 MW Bio Another Victorian project not yet under construction but likely to

130 MW be constructed in the next few years is the 530 MW Stockyard Hill wind farm 29MW 9.5MW 12.2MW 130MW 1502MW 29MW 60MW 180MW 135MW 6MW 160MW 4MW 7MW 9.6MW 4MW 7.3MW 131MW 310MW 510MW 10MW 10.8MW 300MW 100MW 20MW 17MW 1480MW 55.4MW 10MW 2120MW 30MW 449MW 12MW 953MW 106MW 21MW Coal Gas Wind Hydro Bio Interconnector Generation sources greater than 4MW shown, locations indicative only 9 Temp Energy Light Victoria’s energy transformation control use contro FIGURE 2 Victoria’s energy transformation Current Transition Solar Temp Energy Lig panels control use con Centralised fossil fuel production Large-scale sustainable production Centrally-located transmission and distribution Battery Solar Temp Heat Energy Ligh storage panels control pump use cont Fossil fuel Transmission Wind Solar PV Storage Hydro Wave Bio 10 Future Batte stora Clean and reliable energy generation Flexible and decentralised Fossil fuel energy gridsWind Transmission Solar PV Storage Hydro Wave Bio Consumer and community-driven energy services 11 Maximising opportunities We are already beginning to see opportunities to introduce more renewable energy in Victoria, with new technologies enabling a more integrated system at lower cost. We will work with key stakeholders to support local FIGURE 3 communities and workers to ensure a smooth transition Victoria’s average yearly wind speed to a more renewable energy system and in the process we will maximise opportunities through: • ensuring a reliable and resilient electricity supply; • building skills and capabilities to grow the sector; • investing in growing the renewable energy sector and economy; and • helping communities and businesses invest in new energy solutions and opportunities. Part of this work will also include supporting impacted industries and people as our system changes. Investing in growing the renewable energy sector Wind speed metre/sec and economy 0 3.8 4.6 5.5 6.3 7.1 7.9 8.7 Renewable energy and new energy technology is one Source: GeoVic, Department of Economic Development, of the world’s fastest growing sectors. This is why the Jobs, Transport and Resources Andrews Labor Government has identified it as a priority sector for our economy. FIGURE 4 In 2016, we released our New Energy Technologies Sector Victoria’s solar radiation data Strategy, outlining our approach to modernising Victoria’s energy sector. It foreshadows our priorities and the actions required to ensure Victoria captures the economic and environmental benefits of a transforming sector. Victoria has vast renewable energy resources that we can harness. Victoria’s wind generation currently has the strongest growth potential, particularly in regional Victoria in the Central Highlands, Gippsland and Barwon South-West regions. There are also opportunities for significant offshore wind exploration. At the same time, urbanised areas are likely to see continued growth in rooftop solar photovoltaic (PV), with significant potential in the commercial and industrial sectors. In the north- west of our state, solar PV is beginning to be rolled out at kWh/m2 utility-scale. Planned grid augmentation will help unlock our abundant natural resources well into the future. <1100 1300 1500 1700 1900> Source: SolarGIS © 2015 GeoModel Solar 12 Helping communities discover new energy Ensuring a reliable and resilient electricity supply opportunities and manage the transition In Victoria, increasing our renewable energy mix and Communities play an important role in increasing modernising our electricity system is not just about renewable energy generation by establishing grassroots building wind and solar farms. We must also make our projects that adopt new energy technologies. electricity networks affordable and reliable. Our energy market needs to be fit for purpose, supporting new ways Across Victoria, communities are already progressing of generating, distributing, sharing and using energy. projects ranging from powering primary schools with Maintaining the ongoing reliability of supply, that we have solar power to transitioning entire towns to 100 per cent enjoyed for many years is critical. renewable energy. As microgrids, peer-to-peer trading and other We must also support our communities in transition. innovations continue to emerge, enabled by smart The Andrews Labor Government has established the technology infrastructure, it will be important to work Latrobe Valley Authority to bring together local people, with industry, businesses and the broader community to councils, industry and governments to secure the maximise the benefits of the growing energy sector. economic future of the Latrobe Valley. We are introducing supply management tools to optimise It is important that economic support goes hand in hand the output of renewable energy generation and protect with investments in the infrastructure to these community supply reliability. These tools include utility, residential needs. Therefore, our package of support also includes and commercial energy storage technologies. a $174 million Community Infrastructure and Investment Fund to support the infrastructure, education and health priorities of the community. Building skills and capabilities to grow the sector We will support Victorian communities to realise their Victoria has a highly skilled workforce underpinned by a innovative renewable energy projects, incorporating world class education system. new energy technologies and business models, through programs like the Community Power Hub trials and We will meet the skill requirements of the growing the Guide to Community-owned Renewable Energy renewable and new energy technologies sector by providing for Victorians. new opportunities for workers within other Victoria’s industries, particularly the manufacturing sector. We will support industries to transition. As part of this work, we’ll support industries to transition and help impacted workers find new opportunities. Victoria has an opportunity to grow and develop its presence as a centre of excellence in renewable energy and other new energy technologies. We can build on our expertise in advanced manufacturing, including high-end specialised components, and research and development. We can also utilise our vast renewable resources and established energy infrastructure. Building collaborative relationships between research and educational institutions, and international and local businesses, is critical to capitalising on our capabilities within the renewable energy sector. 13 Photo credit top image Selandra Community Place 14 Making it happen 15 Victoria’s approach The Renewable Energy Action Plan sets out how Victoria will ensure a renewable, affordable and reliable energy supply, which uses large-scale renewable energy technology and ensures grid stability. During this time, we will support Victoria’s pathway from a carbon-intensive to net zero emissions energy sector by 2050. Victoria’s Renewable Energy Action Plan provides Energy security is a key feature of this plan, and a considered way forward. The plan describes our weighting will be provided to projects and new comprehensive set of actions designed to drive the technologies that add to overall system security. The transformation necessary to support long-term growth, Andrews Labor Government is engaged with many and complement or enhance existing network stability Australian-based and leading international businesses and security of supply. who want to invest and locate in Victoria. We must learn The Renewable Energy Action Plan relies on effective from past experiences to ensure we make the most of collaboration and engagement across all stakeholder current opportunities. groups, as we work together to transform how we generate, use and store energy in Victoria. Our approach will focus on: Creating new jobs, investment Empowering and engaging Strengthening our affordable, and energy sector growth households, businesses, reliable and resilient and communities energy system 16 Creating new jobs, investment and energy sector growth We will create new jobs, investment and energy sector growth by: Positioning Victoria as a leader in renewable energy and accelerating large-scale renewable energy generation Ensuring Victoria’s smooth transition Encouraging sector growth and investment Our approach to transitioning the energy system The transition will gather momentum as will create jobs, build skills and knowledge renewable energy generation becomes more for local application, international export of cost-effective and efficient at residential, services, and attract capital and investment to commercial and utility-scales. our state. We will actively attract jobs and investment to Victoria’s long-term electricity generation Victoria by encouraging new energy technology profile is transforming and a significant businesses to establish operations in Victoria. increase in renewable energy generation, from This process has already begun with new energy household systems to utility-scale sources software companies and large-scale energy like wind and solar farms is anticipated. Today, developers setting up headquarters and offices large-scale renewable energy is already the in Victoria. We recognise the benefits of working cheapest source of low‑emissions generation. with businesses to innovate, secure investment, build new markets and ensure a strong, coordinated supply chain. “As the world moves towards renewable energy, governments that move first will be in the box seat to maximise their share of jobs and investment in a low carbon economy. Victoria’s leadership is helping to nurture new industries in the state and return stability to renewable energy investment.” Kane Thornton, CEO, Clean Energy Council 17 “We look forward to working Action 1 alongside the Victorian Government Setting and delivering on ambitious and and the private sector to help achievable renewable energy targets transform clean energy investment, We contribute to meeting our renewable energy address financing barriers and generation targets of 25 per cent by 2020 and 40 per cent assist in attaining the objectives by 2025 through running a competitive process for new renewable energy generation projects. of Victoria’s Renewable Energy The VRET scheme will complement the Commonwealth Action Plan.” RET scheme until 2020. The design and flexibility of our Ian Learmonth, CEO, Clean Energy Finance Corporation scheme will deliver the best projects at least cost. We will also support updated technical connection FIGURE 5 standards through national processes. Delivering the Victorian Renewable Energy Target supported by competitive reverse auctions 25% RENEWABLE BY 40% RENEWABLE BY 2020 2025 18 Action 2 CASE STUDY Purchase renewable energy certificates Victorian Government supporting Under our Renewable Certificates Purchasing Initiative two new wind farms and new large-scale we will use government’s purchasing power as a solar farms large electricity user to purchase renewable energy certificates. The Andrews Labor Government is providing We are bringing forward investment in renewable $48.1 million to underpin the implementation of the projects through our Renewable Certificates renewable certificate purchasing initiative. Purchasing Initiative announced in August 2016. We will purchase renewable energy certificates from two Our two new windfarms have a total generation new Victorian windfarms with a total generation capacity capacity of around 100 MW, which is estimated of around 100 MW. to be able to supply enough renewable energy We are undertaking a second round of renewable certificate to power more than 80,000 Victorian homes. purchasing, which will bring forward up to 75 MW of large- The windfarms are expected to be operational scale solar, of which 35 MW will be used to power all of by 2018, and will be located at Kiata near Melbourne’s 410 trams. Horsham and Mount Gellibrand near Colac. We will also bring forward up to 75 MW of large- scale solar through the second round of our renewable energy certificate purchasing. We have established a renewable energy generation target of 25 per cent by 2020, rising to 40 per cent by 2025 – a significant increase from the 2016 levels of 16 per cent 19 POLICY IN ACTION Investing in large-scale solar energy to power Victoria’s trams We will back the public transport upgrade by These projects also support achieving our state’s entering into a renewable certificate agreement with renewable energy target through the second Victorian solar farms, creating a reliable revenue round of renewable certificate purchasing in 2017. source for the solar projects to be developed. The projects will provide equivalent electricity load to power Yarra Trams’ 400-strong tram fleet, and create up to 300 jobs and $150 million of investment. $150M INVESTMENT 300 CONTRUCTION JOBS 75 MEGAWATTS S TO OUR OUR TRAM LAR FARM LINKING RI AN SO

0 TONS ED V IC TO OVER 80,00 REDUCING SE GAS YEARLY DEDICAT OU OF GREENH Melbourne’s solar trams Powering Victoria 20 Action 3 Action 4 Energising our transport sector Government leading the way As we move towards a clean energy future, Victoria’s We will help new government buildings and major transport sector will experience changes. New transport projects adopt technology, including solar panels and technologies will help reduce emissions and our reliance battery storage. on oil-based fuels, and improve our energy security. We will work with the Clean Energy Finance Council Victoria’s current public transport upgrade plan will (CEFC) to help deliver projects that reduce emissions by deliver the largest program of work to create a world leveraging emerging and innovative new technology. class transportation system with accessibility, reliability, We are also establishing mechanisms to support safety and sustainability at its heart. We will support the investment. Victoria is the first government in Australia public transport upgrade plan by linking the entire tram to issue Green Bonds, raising $300 million to finance network‘s energy usage to large-scale solar farms. a range of new and existing projects that deliver This project will also contribute to our emissions reductions environmental benefits. More than $60 million of goal under the TAKE2 program. this has financed energy efficiency and renewable energy projects. 21 Action 5 We are also introducing changes so new wind farm applications will need to have noise assessments and Establishing bodies to support noise management plans reviewed and verified by the transformation environmental auditors appointed under the EPA’s statutory environmental audit system. This reform will give the community and industry greater assurance that We have established the Victorian Renewable Energy wind energy facilities will be designed and constructed to Advocate to help industry and communities navigate achieve compliance with the relevant noise standards. regulatory requirements and effectively use the range of new and existing support services and subsidies available. The Advocate will promote Victoria as a place to invest in renewable energy, and will provide advice to Action 7 government to inform key changes to improve renewable energy development in Victoria. Supporting investment in the new energy technologies sector We will also work to provide targeted support platforms for industry during the energy transition, including small and medium enterprises (SMEs). We will initiate and leverage programs such as New Energy Jobs Fund, which provides $20 million in funding for new energy technology projects, to develop and access the most efficient and low‑cost new energy Action 6 technologies in the world. Streamlining renewable energy project We are delivering the 15 goals identified in the New processes and approvals Energy Technologies Sector Strategy to support Victoria’s communities, manufacturers and service providers to capture their share of the market growth in We continue to look for ways to create a stable policy, new energy technologies. The sector strategy will continue regulatory and planning environment to encourage to focus on: investment security for Victoria. We have established a ‘one stop shop’ for wind farm planning permit matters • Investing in clean energy generation technology to ensure relevant government agencies can respond • Strengthening sector skills, collaboration and innovation promptly to issues for individual applications. We are • Encouraging development of new consumer driven also undertaking a review of the model planning permit markets conditions in the wind farm guidelines. Further, we will • Building statewide capabilities implement an end-to-end analysis of the planning process for wind farm applications. These actions will We will produce periodic reports on our progress towards result in faster and simpler approvals processes for wind achieving the sector strategy goals. farm projects. 22 Empowering and engaging households, businesses, and communities We will support and empower communities and businesses, and keep energy affordable by: Helping households and businesses make renewable energy decisions that will save energy and money Making it easier for communities to manage their energy and invest in renewable energy Reducing costs by making the energy system more efficient New tools mean consumers use and generate As new ways to manage energy emerge, energy more effectively than ever before, households, businesses and communities giving them more opportunity to control their will become less reliant on traditional energy costs. centralised electricity networks. Localised grids and microgrids will see communities and businesses take control of their energy needs, reducing their reliance on the electricity network and strengthening grid resilience. “By using new products and services to improve energy productivity, residential consumers can reduce their ongoing costs, and businesses can become more competitive and reduce exposure to future price rises. Energy productivity can also reduce the shared costs of managing energy security and emissions.” Independent Review into the Future Security of the National Electricity Market – Preliminary Report 23 Communities and businesses are Action 8 already investing in smarter energy Empowering households to take control of systems, distributed generation and their energy use energy storage. These actions assist the network and give consumers Victorian residential consumers and businesses can more control over their energy use now choose from up to 25 electricity retailers and 10 gas retailers competing for business in the market. costs, and how and when they export Consumers need to know where to find, understand, and excess energy back into the grid. choose between available energy plans to find one that best suits their needs. We have created Victorian Energy Compare, an independent price comparison website to help Victorians reduce their annual electricity and gas bills. Victorian Energy Compare is the first of its kind in Australia, and one of the first in the world to use smart meter data as a basis for comparing retail tariffs. It enables residential and business consumers to compare electricity, gas and solar tariff offers from retailers. We have committed $7.82 million to update the website and improve awareness of the services. This will include complex and innovative tariffs that entered the market on 1 January 2017, such as cost reflective pricing or demand tariffs. Victorian Energy Compare Our upgrades will ensure that the Victorian Energy Compare website continues to be a world leader in online Over 260,000 Victorians have used Victorian energy comparison. Energy Compare since its launch. Nine out of 10 users report being able to save money on their energy bills, with typical savings of $330 per year on electricity and $330 per year on gas. All it takes is three easy steps:

1 Visit victorianenergysaver.vic.gov.au

2 Answer questions about your energy usage 3 Find the best offers and save money on your energy bills “It showed I could save about $400 to $500 off my annual bill, so a pretty easy decision to make. Any small business owner should use this tool because there is a good chance you’re going to save some money. It’s a real no brainer.” Small osteopathic clinic in the city 24 Action 9 Action 10 Ensuring a fair approach for all consumers Supporting local energy projects across Victoria We have legislated to ensure households and businesses with onsite renewable energy generation are paid a fair We will establish three pilot Community Power Hubs in price for the electricity they export to the grid. We have regional areas, with a view to expanding this program also introduced a fairer feed-in tariff scheme. From 1 July across Victoria. 2017, eligible customers will receive a minimum feed-in The three hubs in the Latrobe Valley, Ballarat and tariff rate of 11.3 cents per kilowatt hour (kWh) for selling Bendigo will enable community groups to access excess electricity back into the grid, an increase on the renewable energy expertise and services for project current minimum rate of 5 cents per kWh. planning, business case development, legal, project and We have passed legislation which requires all Victorian financing advice, and to help them navigate the planning retailers to offer rooftop solar PV and other renewable and regulatory system. energy customers the same rates, terms and conditions We have provided grants to more than 40 Life Saving as they offer their non-renewable energy customers. Victoria clubs, which has seen the installation solar We have updated the energy licence exemption panels on site. arrangements to allow Victorians to access solar We have also released the Guide to Community-Owned power directly from solar businesses through power Renewable Energy for Victorians, which provides valuable purchasing agreements. information for communities interested in developing We also commissioned an inquiry by the Essential community-owned renewable energy projects. Services Commission to examine the network values associated with local generation, and to consider how these values can best be recognised and rewarded through feed-in tariffs or other mechanisms. FIGURE 6 Minimum feed-in tariff set by Essential Services Commission To 30 JUNE 2017 We have supported delivery of a new feed-in tariff 5cents /kWh minimum framework for selling excess electricity back into the grid, From 1 JULY 2017 including payment for the environmental and social 11.3cents /kWh minimum value of the energy provided. 25 Action 11 Improving processes for community renewable energy projects Victorians are telling us that they want action to support community renewable energy projects. That is why we initiated the Parliamentary Inquiry into community energy projects. We look forward to their recommendations. In the meantime, we have introduced exemptions from energy licensing solar power purchasing projects, to decrease the regulatory burden for such projects and encourage their development in Victoria. CASE STUDY We are also conducting a review of the General Saving lives and generating Exemption Order in the interests of energy consumers. The review explores matters such as customer choice, renewable energy pricing, enforcement and dispute resolution, as well as clarity of the exemptions framework. The review also Electricity represents a significant cost to lifesaving explores introducing exemptions from energy licensing clubs whose sole objective is protecting lives at for community-owned renewable energy projects. Victoria’s beaches. In January 2016, the Government announced the Community Renewables Solar Grants initiative to help ease this cost burden. POLICY IN ACTION Under this initiative, Victorian lifesaving clubs applied for grants to install solar PV systems at their Supporting local energy projects by club. The savings on their energy bills allow these creating pilot Community Power Hubs clubs to allocate more funds to their vital day-to-day services. More than 40 Life Saving Victoria clubs are Each pilot Community Power Hub will comprise currently benefiting from the use of solar renewable a roundtable of organisations that will develop energy as a result of the grants from the initiative. community energy projects. Community energy groups will bring project ideas to their Hub and receive assistance to develop them into feasible projects that are ready for capital raising. To support communities, we will help develop business cases or feasibility studies, and offer technical, legal and project coordination support needed to progress community energy projects, while also contributing to building local capacity and skills. The pilots will showcase renewable energy innovations and provide greater energy security for the Latrobe Valley, Ballarat and Bendigo. 26 Action 12 Action 14 Creating smart, solar energy schools Encouraging more efficient investment in our energy system We will assist Victorian schools to install solar systems. This assistance will be tailored to the schools need and Victoria has ample generation capacity to meet demand may include rooftop solar PV installations at primary for electricity, especially as Victorians keep improving and secondary schools across regional Victoria. Energy energy efficiency and generating more power from rooftop efficiency measures may also include opportunities for solar PV. lighting upgrades to schools as an effective measure However, supply can be tighter at times of peak demand, to reduce energy consumption. Curriculum resources when we have weather extremes. Peak demand also will be developed to support student education on drives up wholesale electricity prices, as more expensive energy consumption. forms of fast response generation such as gas may be needed to manage demand spikes. We can use demand management tools as an alternative Action 13 to increasing supply by investing in more generation or Supporting important artistic and cultural greater transmission network capacity. sustainability events We will advocate strongly in national regulatory reform processes to ensure electricity network businesses pursue demand management options ahead of more costly We will sponsor and host an internationally renowned network augmentations, extensions and replacement. sustainable design event with Land Art Generator Initiative. We will also pursue national reforms that enable other We will present an annual Minister’s Award for Community energy businesses, such as local generators and Renewable Energy Innovation to the community or local frequency control service providers, to provide demand government project that shows the best demonstration management services that support system reliability and of a new energy technology or business model manage wholesale market volatility. incorporating renewable energy and energy storage. We will leverage the immense data capability generated We will consolidate key energy project information into by Victoria’s statewide smart meters to promote new and a single digital resource that provides readily accessible innovative demand management products and services. and up-to-date information on renewable energy projects This will support efficient use of the electricity network across the state. We will establish new, consolidated and help consumers better understand their energy use. learning resources aimed at promoting these renewable energy projects and ecotourism in Victoria. We have sponsored a competition, Energy Hack 2016 and 2017, which generates ideas to promote renewable energy projects and ecotourism in Victoria. Below Selandra Community House 27 Action 15 Stimulating and attracting new Demand management options demand management services with community benefits Consumers can opt to take up direct load control services so they can operate individual appliances, such as pool pumps and air- Demand management tools and services open new and conditioners, during non-peak periods, and more efficient ways to ensure consumers have secure use smart technologies to automatically access to electricity during extreme weather. Demand manage their energy demand. Major industrial management tools can also create long-term savings for consumers can apply voluntary load reductions all consumers. during heatwaves, for financial return. We will co-sponsor a $1 million innovative collaborative trial to revolutionise future energy market trading. The dEX is a digital platform that will allow electricity distribution businesses, distributed generators and third POLICY IN ACTION parties to engage in open trading of various energy products and services to overcome grid constraints and Promoting smarter and more flexible support the integration of renewable energy sources electricity use into the network. This platform will be initially piloted in the Mornington Peninsula, to help technology services In 2017, we will explore policy options to: to assist customers to better manage summer peak • support network transformation in Victoria demand and reduce constraints on the network. by facilitating a market for grid services and removing regulatory barriers to efficient network investment; Action 16 • enable greater demand side participation in Delivering a more flexible approach to the broader energy market through policy leadership and regulatory reform; and grid connections • facilitate more efficient electricity use by consumers by enabling new demand We are creating a modern and fair regulatory framework management services and rewards. that will streamline negotiations with network service providers and investors, ensuring competitive and timely grid connections. The grid connection process is a crucial and complex stage of any generation project. Renewable energy and innovative distributed generation projects are often large enough to have grid connection impacts and small enough that grid connection costs can impact the economic viability of a project. We are now improving the process. We have passed legislation to adopt national arrangements for small- scale distributed generator connections to improve process transparency and timeliness. We are assessing the need for a review to determine reasonable network connection requirements for distributed generation in Victoria. The Government will work with distribution businesses and the commercial scale solar industry to adopt consistent requirements. 28 Strengthening our affordable, reliable and resilient energy system We will deliver a smart, reliable and modern energy system to supply Victoria by: Ensuring Victoria’s renewable energy system provides reliable supply Supporting our smart and innovative energy system Making sure we have capabilities to transition to the next generation of energy technologies A smart energy system delivers reliable, cost- We will enhance the diversity of our electricity effective supply, giving all consumers greater generation mix to increase resilience and choice and control over how they source, buy, maintain energy security and reliability. We sell and use energy. It integrates and supports are bringing forward the integration of energy new technologies for generation, storage and storage, which will align with our renewable control of energy, as well as peak demand energy targets. Building additional renewable reduction and increasing interconnection. energy storage capacity will increase energy availability. “Securing the supply doesn’t mean locking in the status quo – on the contrary, it means being able to navigate change.” Dr Alan Finkel, Australia’s Chief Scientist, Chair of COAG Energy Council NEM review panel 29 In addition to providing leadership, Action 17 policy and regulatory stability Supporting energy storage that integrates with renewable generation and innovation opportunities, the Government will take steps Storage solutions, particularly batteries, are already to address and remove barriers successfully used to modernise and strengthen energy systems around the world. that affect renewable energy The Andrews Labor Government is setting Victoria on deployment. We will shape an the path to leadership in energy storage. Energy storage approach that balances the need systems, from household batteries to grid scale facilities, improve grid reliability and lower prices by allowing low-cost for effective and stable regulation power to be stored for times of high-cost and high‑demand. with reduced red tape and improved Batteries, pumped hydro and other technologies can network performance. provide instantaneous energy during critical peak times, as well as helping to integrate renewable energy generation. When combined with renewable energy, storage will help maintain our reliable and affordable energy supply, especially in times of peak demand. We have made an overall commitment to energy storage up to $25 million, with 40 MW minimum battery storage deployed by January 2018, providing capacity of at least

100 MWh. We will achieve this by delivering a minimum of two

20 MW batteries in western Victoria, to support battery storage becoming mainstream. This will deliver utility-scale battery storage projects that optimise new or existing large-scale wind or solar farms, in line with an energy storage framework. We will also provide $100,000 towards a $150,000 pre‑feasibility study of solar pumped hydro using groundwater in Bendigo. We will engage with the sector, regulators and market institutions to develop a plan to implement new market rules to support energy storage and new technologies. We will invite other jurisdictions to work with us to resolve regulatory issues regarding the integration of energy storage into the National Electricity Market rules at a national level. Action 18 Advocate to deliver secure, reliable and fairly priced gas for renewable energy generation We will continue to use gas as a fuel to support renewable energy generation. The current upward pressure on gas prices and forecast constraints on gas supplies is the result of the commencement of exports of gas from interstate. To ensure gas is available to support renewable energy generation, we require a sufficient supply at a fair price. We will continue to work through the COAG Energy Council and with market institutions to improve transparency and competition in the Victorian and east Australian gas markets. 30 Action 19 POLICY IN ACTION Establishing the Centre for New Energy Technologies (C4NET) Establishing C4NET $5.36 million Collaborative relationships between research and C4NET will help build the skills and capabilities academic institutions, and local and international required for a modern workforce, and enable businesses, are critical to attracting and building skills, the development of tools to support a resilient capacity and jobs. As new energy technologies play a and reliable electricity grid. It will support greater role in transforming the energy sector, we need collaboration between industry and universities, research, analysis and capability to support industry as well as provide the framework for educating growth and understand trends. the next generation of industry professionals. C4NET will: C4NET will establish an innovative platform bringing together industry, universities, communities and • create partnerships with Victorian universities government to build the policies, technologies, workforce and industry; capabilities, and tools needed to understand the changes • help build new energy technologies skills underway in the sector. Through opening access to data, and capabilities; and and linking university capabilities with industry and • support better ways to unlock the benefits of community needs, we will help Victoria capitalise on the energy data. opportunities arising from our modern energy future. Opening up access to de-identified energy data Our improved and centralised expertise will ensure through C4NET will provide industry, research Victoria meets our zero-net emissions target by institutions and government the ability to 2050, and has a renewable, affordable and reliable development new energy tools, improve system energy system. efficiency and undertake critical analysis. 31 POLICY IN ACTION Setting Victoria’s energy storage direction The Andrews Labor Government will bring forward the integration of energy storage to help protect and enhance the security, resilience and reliability of the electricity grid, and ensure a modern energy system. We have practical actions to support this.

1 Next generation energy storage deployed now 2 Demonstrating new energy solutions and to strengthen Victoria’s electricity system business models We will build one of Australia’s largest battery We will invest in a series of commercial ready storage facilities. Our storage initiative will support smart, microgrid and precinct-scale energy storage development of at least two 20 MW of utility-scale demonstration projects across Victoria. These battery storage by summer 2018, providing storage commercial demonstrations will include battery capacity of at least 100 MWh. This is a first step storage and new technology solutions with the towards getting ahead of summer peak load potential to boost renewable energy dispatching demands expected early next year and supporting using smart systems. more widespread adoption of energy storage. These demonstration projects will showcase We will encourage applicants to seek funding from the use of energy storage in different settings the Australian Renewable Energy Agency (ARENA) and in combination with other complementary in parallel to the Victorian initiative, to drive even technologies. The demonstration of smart further investment in new energy technology and microgrids will help Victorians attract international energy system reliability in Victoria. interest and provide education, skills and job Additional energy storage may be deployed creation opportunities. according to future grid security, reliability and stability requirements. Energy trading Supply management Security of supply Network support Power stability Energy storage facilities, In an electricity system Energy storage provides Energy storage can Balancing of supply and such as pumped hydro, with high levels of variable backup for reductions provide a range of demand in instantaneous can allow for the purchase generation, energy in generation network support services time frames to maintain of energy in low price storage provides a way of including voltage grid frequency periods and then traded managing supply support and overcoming during high network bottlenecks Pumped Variable Electricity Distribution hydro generation transmission lines lines 32 Summer 2018 40+ mw storage 100+ mwh capacity We will make energy storage

3 Modernising energy markets and rules mainstream in Victoria through deploying at least 40 MW, with We will lead the modernisation of the energy market by engaging with the sector, regulators at least 100 MWh of capacity and market institutions to develop a plan by summer 2018. Additional to implement new market rules and change processes to support energy storage and energy storage may be new technologies. deployed according to future grid security, reliability and

4 New advanced technology opportunities stability requirements. We will explore the most appropriate long-term commercial options for Victoria that support a resilient electricity sector underpinned by renewable energy, through emerging and proven technologies like large-scale solar thermal, biomass, and wave generation for commercial applications. This will provide opportunities for energy storage to be included in new, large renewable energy procurements. Demand management New consumer products Consumers can use batteries to The emergence of new manage their use of electricity technologies, such as electric during peak price periods vehicles and smart homes enable storage to be applied in new ways Households Electric and businesses vehicles 33 Action 20 Action 21 Unlocking the potential and benefits of Exploring innovative smart grid, microgrid energy data and storage models We will work with industry to develop a new energy data We will invest $15.8 million in microgrid, smart grid and platform to gather, intersect and leverage real time renewable energy storage demonstration projects, smart meter data. The data platform aims to be a central spanning up to 10 sites across Victoria that apply new repository for energy data, including consumption, technology in innovative ways to deliver integrated voltage, tariff and other data collected by Victoria’s local energy solutions and encourage renewable smart meters. energy uptake. Better access to energy usage data will create energy- Market development of new energy technologies is critical wise consumers, increase system efficiency and drive to a resilient system based on decentralised energy innovation in the renewable energy sector. resources. Microgrids will help communities reduce reliance on the electricity network and strengthen We will provide $1.8 million to conduct a concept study grid resilience. Microgrids generally operate through to consider how the energy data platform can best connection to the mainstream electricity grid, but can be developed, built and maintained. Working closely also break off and generate their own energy for local with C4NET, we will support consumers, the renewable consumption if required, during power outages, for example. sector industry, new market participants, and research institutions to access data for modelling and forecasting, We will provide additional support for research, while ensuring robust consumer and privacy protections. development and commercialisation of new electricity grid management solutions, through smart, microgrid pilot demonstrations for decentralised energy resources. The Government will co-sponsor an innovative and “Developments in storage technology collaborative demonstration project that could allow us to use the power grid more revolutionise future energy market trading using peer-to- peer trading platforms. economically. With sound policy settings, As part of C4NET, we are working with Patterson River it is becoming possible to provide Secondary College to develop a microgrid demonstration electricity from zero emissions sources project. The microgrid may include solar, battery storage, more securely and at lower costs than shallow geothermal and back-up generations. The demonstration projects will also integrate with the school power users face today. Succeed, and we curriculum and could form the basis of a model for other will turn exceptional renewable energy Victorian schools. natural resources into foundations for We have signed Memorandum of Understandings with Monash University to collaborate on Monash’s Australia as a superpower of the low Transformative Energy Initiative and Deakin University to carbon world economy. Victoria’s leading accelerate battery research and development. role in engineering and information technology allows it to navigate the way for the integration of battery storage and renewable energy”. Prof. Ross Garnaut AO, Chairman, ZEN Energy 34 Action 22 POLICY IN ACTION Investing in emerging energy solutions Demonstrating innovative smart grid, We will work with ARENA and CEFC to ensure investment microgrid and storage models continues in the next wave of energy technologies consistent with the scale and capabilities of Victoria’s The Government will invest $15.8 million over rapidly changing energy sector. four years in a series of smart, microgrid In addition to traditional renewable energy sources of demonstration projects across Victoria. These solar and wind, newer technologies such as solar thermal projects will include battery storage and demand and bioenergy are becoming increasingly viable for management solutions being applied in different commercial scale applications. locations and network configurations, with the potential to apply grid enhancements to increase To better unlock this potential, we will implement renewable energy uptake. industry development plans to support Victorian-based Through this action, we will modernise our renewable energy sectors. These plans will support electricity grid to be a fully integrated, the growth of bioenergy and marine energy, with the intelligent system that meets the demands and potential to expand to other industries as they emerge. expectations of modern Victoria. We will provide $2 million towards the development of waste-to-energy facilities in Victoria, and investigate the potential for solar thermal and bioenergy technology for industrial heating applications to support investment in alternative technology. Action 23 Leading transition to a modern energy system We will ensure we have the capability to maintain energy affordability and modernise the energy sector to benefit consumers, the economy and the environment. CASE STUDY We are working with key stakeholders to ensure a coordinated, national approach to a more modern Mornington Peninsula Community distribution and transmission network. We acknowledge Grids project the work already completed and will support the work underway by the COAG Energy Council, energy market institutions and the Commonwealth Chief Scientist’s The Mornington Peninsula Community Grids project Independent Review into the Future Security of the NEM. is helping residents to manage their energy use and offset the need to build costly new infrastructure. We will advocate for a review of the national electricity and The Victorian Government has awarded GreenSync national gas objectives set out in national energy laws. over $550,000 in grant funding from the New Energy To support accountability and transparency, we Jobs Fund to support its digital control platform, will publish an annual statement of progress of the which coordinates and optimises renewables Renewable Energy Action Plan. The first of these connected to the grid. statements will be released towards the end of 2017. The project will involve solar PV, battery storage systems and demand response enabled device units, which allows businesses, households and community centres to reduce or shift their energy use during peak electricity demand events like heatwaves. This is one of 24 grants announced under the Government’s $20 million NEJF. 35 36 Implementing our actions 37 IMPLEMENTATION PLAN Action Action 1 Setting and delivering on ambitious and achievable renewable energy targets Action 2 Purchase renewable energy certificates Tenders and arrangements Contracts Action 3 Energising our transport sector Tenders and arrangements Contracts Action 4 Government leading the way Action 5 Establishing bodies to support the transformation Action 6 Streamlining renewable energy project processes and approvals Action 7 Supporting investment and growth in the sector (NEJF) Action 8 Empowering households to take control of their energy use Action 9 Ensuring a fair approach for all consumers Action 10 Supporting local energy projects across Victoria Action 11 Improving processes for community renewable energy projects Action 12 Creating smart, solar energy schools Action 13 Supporting important artistic and cultural sustainability events Action 14 Encouraging more efficient investment in our energy system Action 15 Stimulating and attracting new demand management services with community benefits Action 16 Delivering a more flexible approach to grid connections Action 17 Supporting energy storage that integrates with renewable generation Action 18 Advocate to deliver secure, reliable and fairly priced gas for renewable energy generation Action 19 Establishing the Centre for New Energy Technologies Action 20 Unlocking the potential and benefits of energy data Action 21 Exploring innovative smart grid, microgrid and storage models Action 22 Investing in emerging energy solutions Action 23 Leading transition to a modern energy system 38 2017 2018 2019 Progression 25% 50% 75% 100% Ongoing Calendar years shown 39 © The State of Victoria Department of Environment, Land, Water and Planning 2017 Accessibility This work is licensed under a Creative Commons Attribution 4.0 International licence. 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To view a copy of this licence, visit https://creativecommons.org/licenses/by/4.0/ DELWP Customer Service ISBN 978-1-76047-473-7 Centre on 136 186, email Disclaimer customer.service@delwp.vic.gov.au This publication may be of assistance to you but the State of Victoria and its employees do not guarantee that the publication is without flaw of any kind or is or via the National Relay Service on wholly appropriate for your particular purposes and therefore disclaims all liability 133 67 www.relayservice.com.au. for any error, loss or other consequence which may arise from you relying on any information in this publication. This document is also available on the internet at delwp.vic.gov.au 40 For more information visit energy.vic.gov.au