Victoria begins search for renewables investment to kickstart SEC

The Victorian government is progressing its plan to bring back the publicly owned State Electricity Commission (SEC) as an active energy market participant that will work with industry to invest in and speed up the delivery of renewable energy and accelerate the energy transition.

State Energy Minister Lily D’Ambrosio this week launched the Pioneer Investment Mandate which includes the project criteria and process for the reincarnated SEC’s first investment with the successful project expected to be announced before the end of this year.

“This is an exciting milestone for the SEC,” D’Ambrosio said. “We look forward to working with our partners to increase the amount of reliable, zero-emissions energy in the market by building and investing in renewable generation and storage.”

The state government has pledged that at least $1 billion will be spent on delivering 4.5 GW of renewable energy generation and storage projects that will be operated by the SEC. It is expected the state will retain a 51% stake in the renewable energy projects with “like-minded entities”, such as industry super funds, the preferred investors for the remaining share.

D’Ambrosio said the SEC has already held talks with potential investors and renewable energy companies and a Registration of Interest process, which will open on 2 May 2023, will seek to identify suitable renewable energy generation and storage projects.

The investment mandate dictates that the pioneer investment must utilise “proven” renewable energy generation and/or storage technologies, capable of delivering commercial returns.

The successful project will have a minimum generation capacity of 100 MW, with the mandate indicating a preference for larger capacity. The SEC noted that this first investment could involve a portfolio of multiple projects aggregating to larger capacity than the single project’s minimum capacity.

The SEC is also open to exploring the potential of co-located storage capacity with existing or proposed renewable projects, and standalone storage projects in excess of 100 MW of capacity with a range of storage durations.

The project or projects must be located in Victoria, with preference for those that support Renewable Energy Zone (REZ) development and accelerate the transition away from coal.

Projects must contribute to the SEC’s objectives of accelerating the transition away from coal, deliver commercial returns and begin operations and deliver electricity as soon as possible.

The SEC says it has a preference for projects with a defined delivery strategy, and which can begin operations and/or deliver electricity as soon as possible.

“The intention is to accelerate the renewable energy transition by partnering with industry and co-investors,” the investment mandate says. “We are seeking to invest in projects that can be brought forward and/or accelerated with the SEC’s involvement, while maintaining expectations of commercial returns.”

The ROI process will extend from May 2-15, followed by a more select market engagement phase targeting those projects with the potential to best meet the criteria set out by the SEC for the pioneer investment.

From late May, the SEC will invite select interested parties to submit an investment proposal and from mid-June it will commence the assessment of proposals to develop a shortlist.

The market search is also expected to help build a pipeline of longer-term investment opportunities, generating jobs and investment while helping Victoria achieve its renewable energy target of 95% by 2035.