The state that sold itself as the heartland of sustainability has been exposed as falling hopelessly behind its own renewable energy targets for most of the past decade.
Victoria's renewable energy record was savaged yesterday by the state's auditor-general, who also highlighted how the former Labor government had failed to perform basic checks on key projects.
Auditor-General Des Pearson found renewable energy generation as a percentage of power consumption had increased from 3.6 per cent to just 3.9 per cent over seven years. This compared with a target rate, set in 2002, of 10 per cent by 2010.
Mr Pearson found Labor had failed to properly assess or substantiate the cost and benefits of the key incentive mechanism for attracting private investment in solar energy generation. Nor was enough work done on the validity of the solar energy targets.
More than $270 million of taxpayer money has been poured into developing renewable energy or attracting investment.
The documented failure of Victoria's renewable sector to supply a larger share of the state's power and reduce reliance on carbon-intensive brown coal-fired plants will increase state government and industry concerns about the impact of the proposed carbon tax on electricity security.
The Australian revealed this week that electricity generators could be paid by the federal government to shut down high-emission coal power plants such as Hazelwood and Loy Yang B in the Latrobe Valley, which together generate about 40 per cent of Victoria's electricity.
The auditor-general's report noted how little of Victoria's electricity had been generated by renewable energy in 2009, with wind accounting for 1.93 per cent, hydroelectricity 0.94 per cent and solar a mere 0.05 per cent of the state's power.
Mr Pearson singled out for criticism two of Australia's key solar power projects, which had already attracted $150m of taxpayer money.
The Gillard government said last night it was still considering using some of the $1.5 billion Solar Flagship Program funds to help advance one of the projects, TRUenergy's Victorian Large Scale Solar Project, south of Mildura, in northwest Victoria.
This was despite Mr Pearson questioning the absence of documented evidence of why the proposed generator project was needed and a completed business case before state Labor approved a contingent investment of $100m.
He also questioned the way the government had assessed its second major solar project, the Solar Systems/Silex Project, which is in the research and development phase.
"While both involve public funding totalling around $150m, neither was supported by a business case that demonstrated both the need for the project, or its alignment with government policy," he found.
Mr Pearson condemned as ineffective Labor's setting of renewable energy targets, claiming that in 2002 no effort was taken to determine whether renewable energy and wind energy targets were achievable.
"In the absence of these key planning inputs, there was no evidence to show that planning was effective or the targets soundly based," he said.
State Energy and Resources Minister Michael O'Brien will review all the systems put in place by the previous government.
"Labor lied to Victorian families over the cost of its poorly planned energy policies," Mr O'Brien said. "The Auditor-General found Labor's solar sham would have cost Victorian families nearly 500 per cent more than Labor claimed and every dollar of this cost blowout would have increased electricity bills for struggling Victorian households."
Federal Resources and Energy Minister Martin Ferguson said the report was a matter for the Baillieu government.
TRUenergy declined to comment on the report.
Environment Victoria campaign director Mark Wakeham said the government's renewable energy failure had not been a surprise. "It is something we've known for a long time despite a number of promises that have been made," he said.