Policy context

Last modified: 19 January 2023

In Australia, momentum is building towards a net-zero economy, with the Federal Government’s Climate Change Bill passed in 2022 and an emission reduction target of 43% below 2005 levels by 2030 now in place. In addition, the Australian National Electricity Law (NEL) have been modified to include emissions reduction goals. Electricity, currently the largest contributor to Australia’s carbon emissions, is increasingly being powered by zero emissions, low-cost renewable resources.

The integrated systems plan (ISP) developed by the Australian Energy Market Operator (AEMO) is a roadmap that provides a guide for the transition to renewables, including the total energy storage required.

Victoria Government Policy

Victoria’s Climate Change Act 2017 (the Act) establishes a long-term target of net-zero greenhouse gas emissions by 2050. Victoria’s Climate Change Strategy was released on 2 May 2021, setting out Victoria’s interim emissions reduction targets of 28-33 per cent below 2005 levels by 2025 and 45-50 per cent by 2030.

To support Victoria’s transition to renewable energy and the achievement of these emission reduction targets, the Victorian Government committed to increasing Victoria’s renewable energy target (VRET) for 2030 to 65 per cent renewable electricity generation from its current level of 50 per cent and legislating a new VRET 2035 target of 95 per cent. These targets build upon Victoria’s existing renewable generation target of 40 per cent by 2025 legislated in the Renewable Energy (Jobs and Investment) Act 2017 (Vic). In September 2022, Victoria also set new energy storage targets of at least 2.6 GW of energy storage capacity by 2030 and at least 6.3 GW by 2035.

Meeting these targets will:

  • create investment in new renewable energy projects in Victoria
  • support the reliability of Victoria’s electricity supply
  • create thousands of jobs
  • put downward pressure on electricity prices
  • reduce emissions from electricity generation.

Victoria’s $10.92 million Neighbourhood Battery Initiative (NBI) is supporting a range of neighbourhood battery models in Victoria, from feasibility to implementation. Grant programs are being delivered in stages to target funding based on lessons learnt and evolving new technology. In addition, Victoria will invest $42 million to install 100 neighbourhood batteries across Victoria.

Federal Government Policy

Most recently, in October 2022, the Australian Federal Government announced $200 million in grant funding for the Community Batteries for Household Solar Program, with $171 million to be administered by ARENA. The program will see the deployment of 400 community batteries across Australia with the aim to lower bills, cut emissions and reduce pressure on the electricity grid by allowing households to store and use excess power they produce. The first 58 of these 400 batteries will be administered by the Federal Government under their Delivery of Election Commitments Stream 1 grants, with the remaining 342 batteries administered by ARENA.

Social and environmental standards

The implementation of technologies and infrastructures have often been obstructed or delayed because of public opposition or poor performance against environmental or social benchmarks. Some examples from the energy sector include the campaign led by the No TasWind Farm Group (NTWFG) against the development of a $2 billion wind farm on Tasmania’s King Island resulted in Hydro Tasmania ultimately deciding not to proceed with the project. Snowy Hydro 2.0 is also a current example, with disagreement and frustration over the environmental impacts versus the environmental benefits of the scheme receiving significant public backlash over the last few years, contributing to significant delays of the project.

Neighbourhood batteries could provide a model for responsible innovation in the renewable energy field by setting environmental and social standards at the outset. These guidelines suggest Environmental and Social Impact Assessment tools that could help to ensure that neighbourhood batteries are implemented in ways that contribute to more environmentally and socially beneficial outcomes. We suggest these tools are used in the selection and evaluation of government-funded programs.

Formal standards and certification schemes could be developed based on the ISO 26000 (Guidance on Social Responsibility), B Corporation or Climate Bonds. An accreditation system could be established to provide confidence to communities, investors and councils who are considering neighbourhood battery projects that they will meet environmental and social objectives. Importantly, such standard setting needs to avoid box-ticking and rigid requirements, because social and environmental impacts are always complex and context-dependent.

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