Two large solar farms will be built in Victoria to power Melbourne's trams. The projects are critical to the government's target to increase Victoria's renewable energy level to 40 per cent by 2025. The government will seek to lock in its renewable energy target – 25 per cent by 2020 and 40 per cent by 2025 – by tabling legislation today. Currently about 10 per cent of the state's power needs are met with renewable sources. Premier Daniel Andrews said he was confident the legislation would pass.

"We expect that the Parliament will waste no time in grasping the future and making sure that we've got downward pressure on prices, more supply in the market, and creating those jobs that are so very important, particularly in many regional areas," Mr Andrews said. The government claimed the renewables boost would cut household energy bills. Energy minister Lily D'Ambrosio said modelling indicated households would save $30 a year on energy bills on average, and large companies would save $140,000 a year, over the life of the renewable energy target scheme. "We know for a fact that more supply, in a pure economics 101 sense, means cheaper prices and that's what we'll be delivering," Ms D'Ambrosio said. "We are getting solar projects built, we've already got two wind farms under way ... so the sooner we can get that in there, the sooner people will see that flow through their energy bills," she said.

Economic modelling by Ernst & Young found wholesale energy prices will rise after 2020, but the rise will be "dampened" by the boost in renewable supply. The target will not "magically drive down prices", Victorian Council of Social Services chief Emma King said, warning the scheme would hit low-income earners. "We shouldn't be building a greener Victoria on the backs on people doing it tough," she said. Energy prices and security are shaping as a battleground issue in the run-up to next year's election, following the closure this year of the Hazelwood power station, which supplied 22 per cent of the state's electricity. In summer, the Victorian government was angered when the national energy market operator proposed cutting power to Ballarat and Bendigo to cope with a surge in demand caused by a heatwave in NSW.

Spiralling energy prices were hitting businesses hard, Opposition leader Matthew Guy told Parliament on Wednesday. He cited Piedemonte's supermarkets in Fitzroy North and Pascoe Vale, which has seen its annual power bill jump 243 per cent from $144,000 a year to $494,000. "We can't march to a renewables future on the back of the poor and small business who are going to pay for it, we need to do it properly, we need to do it nationally," Mr Guy later told reporters. Gas and electricity prices have soared 200 per cent in Victoria in the past 15 years, a review published this month found. The independent review of the energy retail market, led by former deputy premier John Thwaites, identified deregulation and increased competition as much to blame for the rise.

That report found introducing a "no-frills" energy offer could save households about $200 a year on bills. The winners of a tender to build two large solar farms to power Melbourne's tram network were also announced on Wednesday. Bannerton Solar Park near Robinvale will provide 100 megawatts and Numurkah Solar Farm near Shepparton will provide 38 megawatts. Kane Thornton, chief executive of the Clean Energy Council, said the government's move to legislate its "ambitious" 40 per cent target would give the renewable energy industry more confidence to invest in Victoria. "It will deliver billions of dollars of investment and thousands of jobs into regional and rural parts of this state and help to put Victoria back on the map in terms of attracting investment back into this sector," Mr Thornton said.

He predicted renewable energy would "ultimately replace coal-fired generation" in Victoria, although Ms D'Ambrosio said coal would continue to help power the state for "many years to come". The Greens said Labor should end Victoria's reliance on coal power. Loading "The whole point of renewables is to phase out dirty coal, which the Labor government is not doing," Greens MP Ellen Sandell said. "Now we have new renewables projects coming online, we must plan for the sensible phase out of old, polluting coal stations."