With the Andrews government backing renewables for Victoria's energy future, the chance of a modern brown coal power station being built in the Latrobe Valley hinges on the federal government's response to the Australian Energy Market Operator's new report.
Minister for Energy and the Environment Josh Frydenberg told The Express the government was looking for the most cost-effective energy sources, whether that be clean coal, renewables with storage, gas or hydro.
"Coal is absolutely critical to Australia's energy security mix today and into the future," he said.
"The Turnbull government's approach to energy policy is technology-neutral and non-ideological - we are guided by engineering and economics."
The AEMO report showed that power reserves had reduced to the extent there was a heightened risk of "significant" blackouts over the next 10 years compared with recent levels. It called for 1000 megawatts of strategic reserves of electricity for Victoria and South Australia.
The risk was greatest in Victoria this summer, the report said, but would progressively decrease over the following four summers as more renewables came on line.
However the risk of further blackouts is expected to rise in New South Wales and Victoria after AGL, the owner of Loy Yang A, closes the NSW Liddell power station in 2022.
Prime Minister Malcolm Turnbull is holding talks today with AGL chief Andrew Vesey on the future of Liddell.
Mr Frydenberg said the government had introduced new legislation this year to allow the Clean Energy Finance Corporation to invest in carbon capture and storage.
"On the other hand, the Andrews government has tripled the coal royalty in Victoria and put in place new obstacles hampering the development of coal-fired power stations, with its so-called Future Uses of Coal Policy," he said.
State Minister for Energy and the Environment Lily D'Ambrosio told The Express banks and investment groups had stated they would not finance new coal projects in Australia.
"We are supporting jobs and investment in the Latrobe Valley through our $266 million package," she said, replying to a query whether the government would support a new brown coal station in the Valley, a project urged by the Committee for Gippsland earlier this year.
The Committee for Gippsland report said a new brown coal station based on the newest Germany technology would dramatically lower greenhouse emissions, lower energy prices and provide reliable electricity supplies.
The state government last month introduced legislation into parliament that sets renewable energy targets for Victoria of 25 per cent by 2020 and 40 per cent by 2025.
"The renewable energy sector will now have the confidence to invest in renewable energy projects and the jobs that are crucial to Victoria's future," Ms D'Ambrosio said.
The government also announced the winners of a tender to build 138 megawatts of large-scale solar projects in Robinvale and Numurkah.
It maintains the renewables policy will cut the average cost of power by about $30 a year for households, $2500 a year for medium businesses and $140,000 a year for large companies, and also cut greenhouse emissions by a further 16 per cent by 2034-35.
A report by BA Economics said government renewables subsidies were not transparent and amounted to $3 billion annually, while a recent analysis by The Australian newspaper found that federal renewable energy subsidies would cost taxpayers more than $60 billion by 2030.
The Member for Narracan, Gary Blackwood, speaking in parliament, said power prices had skyrocketed since Hazelwood power station's closure earlier this year.
"I have been inundated with concerns from local businesses about the increase in their electricity costs," Mr Blackwood said.