Energy
Working with industry and the community to develop a secure and sustainable energy future
Energy policy
The Victorian energy sector is undergoing a substantial transformation as part of the shift to a low carbon economy.
In June 2010, the Victorian Government released Victoria’s Energy Future, a comprehensive policy statement outlining the challenges and opportunities facing the state’s energy sector. The policy outlines why the energy sector has to change and the opportunities available to Victorian businesses and households to play a supporting role.
Four areas of strategic focus were identified:
- engaging communities
- promoting innovation
- facilitating investment
- encouraging further market reform.
DPI led a whole-of-government process to develop the policy. To support its implementation, the department prepared a communications and engagement plan that identified the interests and needs of communities in understanding changes in the energy sector.
DPI also played a significant role in the development of national policy, providing advice to the Commonwealth Government on its Energy White Paper, the design of the Carbon Pollution Reduction Scheme and the design of the Renewable Energy Target (RET).
Energy efficiency
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A key component in Victoria’s transition to cleaner energy is energy efficiency. The Victorian Government’s Energy Saver Incentive resulted in a saving of 4.7 million tonnes of greenhouse gas emissions by June 2010. Under the scheme, consumers can choose energy-efficient products and services from businesses offering special discounts or rebates.
More than 470,000 residential consumers have participated in the scheme since it was launched in January 2009, reducing their greenhouse emissions and saving on their energy bills.
A premium solar feed-in tariff for households small businesses and community organisations, including schools, with an annual consumption of less than 100 megawatt hours, came into effect in November 2009 after passage of the Electricity Industry (Premium Feed in Tariffs) Act 2009. Under the scheme, eligible Victorians receive a premium rate for solar energy fed into the electricity grid.
Victoria has more than 20,000 solar panels connected to the grid – more than any other state.
From June 2010, electricity retailers will have published “benchmarking” information on customers’ bills.
This will inform customers of both the cost and the emissions impact of their energy use in a move to enhance consumer engagement.
The rollout of the Advanced Metering Infrastructure Program (smart meters) to 2.5 million households and small businesses by the Victorian electricity industry over the next four years will bring the latest technology to the state’s energy network.
The program, which started in September 2009, will provide for more efficient planning and management of energy supply networks and will equip Victorians to better manage their electricity use. It will also allow energy retailers to develop innovative pricing plans that will provide additional ways for consumers to lower their bills.
In March 2010, the Minister for Energy and Resources announced a new governance structure for the program to ensure the capture of the program’s benefits and to make certain that the interests of vulnerable members of the community were protected.
Gas
Victoria’s standing as a gas producer gained impetus with production beginning at Nexus Energy Limited’s Longtom gas field in the Gippsland Basin, off Victoria’s south-east coast in October 2009.
The $300 million project has optimised the life of the Santos-operated Patricia Baleen gas plant at Orbost in East Gippsland and will generate significant gas supplies over the next decade with the capacity to produce up to 10 per cent of Victoria’s annual gas demand.
Santos’ $275 million Henry gas project located offshore from Port Campbell on Victoria’s Great Ocean Road started producing gas in February 2010 when the Netherby well flowed back to the onshore processing facility at TRUenergy’s Iona
gas plant.
Final commissioning of Origin Energy’s $640 million gas-fired power station under construction at Mortlake in western Victoria is expected to be completed in the first quarter of 2011. The facility’s 550 megawatt capacity can be expanded to 1,000 megawatts during its second stage of development.
Shaw River Power Station Pty Ltd, a wholly owned subsidiary of Santos Ltd, is proposing to develop a gas-fired power station near Orford in western Victoria. The proposal will also involve the development of a 100-kilometre underground gas transmission pipeline from Iona, near Port Campbell to the power station.
Renewable energy
Victoria continued to attract investment in renewable energy projects.
The key driver was Victoria’s Renewable Energy Target (VRET). The VRET scheme is a market-based measure designed to increase the share of electricity consumption from renewable energy sources in Victoria. During the year, DPI worked with the Commonwealth Government to transition Victoria’s Renewable Energy Target (VRET) into an expanded national target.
Another important initiative is Victoria’s Energy Technology Innovation Strategy (ETIS) which works with industry to ensure investment in a rang of pre-commercial renewable energy technologies including solar and geothermal.
Implementation of the Green Door for Renewable Energy initiative occurred under Victoria’s action plan for green jobs – Jobs for the Future Economy.
A single point of entry to government, the Green Door service facilitates investment and streamlines existing approval processes for renewable and low emission energy projects (below a threshold of 0.5t CO2/MWh).
Developers will benefit from the Green Door initiative and can achieve greater efficiencies by applying good practice consultation principles with local communities, such as early and inclusive engagement, and offering an open and transparent consulting process.
Wind
Victoria has some of the best wind resources in Australia. The state’s wind farms are mainly located along the southern coast, in Gippsland and in central and western Victoria.
In February 2010, Victoria had eight operating wind farms and 20 approved proposals for wind farms. The operational farms are located at Cape Bridgewater and Cape Nelson South near Portland, Yambuk near Port Fairy, Toora and Wonthaggi in Gippsland, Challicum Hills near Ararat and at Waubra, 35 kilometres northwest of Ballarat.
A $210 million, 63 megawatt wind farm project at Oakland Hills near Glenthompson in western Victoria was announced in March 2010.
Hydro
The $230 million Bogong hydro power station in the state’s north-east became operational in November 2009.
The 140 megawatt power station will deliver energy to households during high energy demand periods, producing enough power for more than 120,000 homes.
The project involved drilling a seven kilometre hard rock tunnel between the McKay Creek hydro power station and the Bogong hydro power station.
Solar
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In March 2009 the Premier announced that Victoria would provide up to $100 million, net present value, for the development of a large-scale solar power station (subject to matching Commonwealth funding).
The Victorian-based project will be capable of producing 330 gigawatt hours of electricity from solar energy a year.
Private sector interest in the project is high, with several companies acquiring options on land in northern Victoria and beginning measurement of the solar resource. Meetings in Tatura, Bendigo and Mildura in September 2009 engaged local government, regional organisations and staff from State Government departments.
DPI liaised with the administrators of the failed Melbourne-based company, Solar Systems, to advise the government on the successful sale in June 2010 of the business to Silex Systems Limited.
A $50 million grant, awarded under the Energy Technology Innovation Strategy (ETIS), was reassigned to Silex with $5 million of the grant allocated for development work, as a precursor to the next major project milestone, a two megawatt demonstration project.
Victoria and Queensland are involved in a joint project to map the solar resources in each state to help identify the best potential sites for large-scale commercial solar energy plants.
Victoria’s solar atlas is expected to deliver pre-commercial data confirming the availability of high quality solar radiation in many parts of the state.
Geothermal
An Australian company – Greenearth Energy Ltd – was selected to receive $25 million in December 2009 from the Sustainable Energy Large Scale Demonstration Program for a geothermal power project near Anglesea on Victoria’s Surf Coast. The company aims to develop geothermal resources in Australia, Indonesia and the Pacific Rim.
The first stage of the project involves work to confirm the extent and quality of hot sedimentary aquifers. A $74 million, 12 megawatt demonstration geothermal energy plant will be constructed if a commercial resource is proved in
stage one.
Collection of new data and geological modelling has supported Victorian Government funding for geothermal exploration. The close proximity of potential geothermal energy sources to the national electricity grid, an established regulatory framework, and expanding geoscience databases have helped reduce exploration and development risk.
DPI committed $500,000 to develop a geothermal atlas that involves determining the heat flowing through the ground at about 100 locations in Victoria. In the past, most geothermal energy data in Victoria came from petroleum drilling. The new data will be largely collected from an existing network of groundwater bores.
Melbourne will host the International Geothermal Association’s world congress in 2015.
Carbon capture and storage
In January 2010, five projects in the Latrobe Valley in Gippsland received $29 million from the Carbon Capture and Storage Large Scale Demonstration Program under ETIS for pre-feasibility studies.
The projects include pre-feasibility studies into the capture of carbon dioxide (CO2)before it is combusted in a coal gasification plant, the capture of CO2 in a conventional power station (post combustion), a CO2 transport and geological storage project and a novel storage project involving conversion of CO2 into a stable mineral for use in the cement or building industry.
They form part of Victoria’s carbon capture and storage network proposal or CarbonNet which was short listed for pre-feasibility funding under the Commonwealth Government’s $2.4 billion Carbon Capture and Storage Flagships Program.
The aim of the program is to accelerate the deployment of large-scale integrated carbon capture and storage projects in Australia.
Brown Coal Innovation Australia
The Brown Coal Innovation Australia (BCIA) board met for the first time in January 2010.
The Victorian Government has allocated $16 million to BCIA to encourage brown coal research.
An independent company, BCIA will manage these funds and coordinate all brown coal research and development in Australia. The funding was allocated through ETIS. The strategy has support of $390 million for clean and sustainable research and large-scale demonstration projects, with $9.43 million allocated for brown coal research over the past four years.
Another key role for BCIA is to secure funding from the Commonwealth Government’s National Low Emission Coal Council and other research and development grant programs to attract more funding for Victorian brown coal research projects.
China trade mission
A DPI-led energy industry trade mission to China in May 2010 highlighted the state’s research and development expertise, industry capability and investment opportunities in the Victorian energy industry.
More than 20 research organisations and companies operating in Victoria were included in the delegation to promote Victoria’s energy resources and clean energy technology.
Energy market
DPI took a lead role in developing new national arrangements for the electricity and gas markets consistent with the Council of Australian Government’s Australian Energy Agreement, implemented by the Ministerial Council on Energy (MCE).
DPI helped MCE develop a national framework to regulate the energy
retail sector and facilitate greater competition between retailers while ensuring that consumers are protected against unfair practices.
DPI also provided input and submissions to market reviews conducted by the Australian Energy Market Commission and assisted MCE in formulating responses to these reviews.
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Energy security
Electricity Industry Act penalties were increased on 1 December 2009 to a maximum fine of $28,000 or two years imprisonment for interfering with major electricity infrastructure. The changes followed protest action at Victoria’s coal-fired power generators.
Conferences
More than 1,700 delegates from Australia and overseas attended the All-Energy Australia Exhibition and Conference in Melbourne in October 2009. Sponsored
by the Victorian Government through DPI, the conference attracted 100 international and Australian speakers.
Held outside the United Kingdom for
the first time, the event highlighted Victoria’s leading position in a range of clean energy technologies.
The first International Symposium on the Sustainable Use of Low Rank Coal was held in Melbourne in April 2010.
The symposium highlighted the issues and challenges facing the industry globally.
The success of the symposium led to the formation of the International Industry Network to facilitate international collaboration and information exchange and to ensure the industry’s sustainability in the future.
Other conferences hosted by Victoria included the Zigbee Australia Smart Energy Forum, the International Carbon Capture and Storage Summer School, and the Victorian Coal and Energy Conference.
