The Victoria Labor government has unveiled a plan to dramatically expand the installation of rooftop solar in the state, pledging $1.2 billion in rebates and no-interest loans for more than 650,000 homes.

The announcement by Daniel Andrews – coming three months ahead of a state election and amid energy policy turmoil in the federal arena – will aim to install an extra 2.6 gigawatts of rooftop solar, accelerating what most people in the industry as the inevitable switch to distributed generation.

It also comes as the Australian Competition and Consumer Commission urged both the federal National and Liberal parties to abolish federal rebates for rooftop solar by 2021, as part of a 56-point package designed to address the gouging to energy consumers by networks, retailers and generators.

That proposal from the ACCC has been endorsed by the likes of Origin Energy, but Andrews says the government funding boost to solar will enable more consumers to escape the price gouging by the big energy retailers.

“Labor will put the power back in your hands,” Andrews says in a video accompanying the twee. “You will pay nothing up front you will get half the cost for free” and the rest can be paid back over four years under interest free loans.

“The big energy companies won’t like this one bit,” Andrews says in his tweet.

The program is designed around 4kW systems, and rebates will be set at a cap of $2,250 with the remainder available for homes with incomes for up to $180,000 combined income able to borrow the remainder interest free with a four-year payback.

Andrews is pitching this as a fight between consumers and big energy companies, and on the disastrous results of privatisation – under previous Liberal state governments.

“We will keep the profits out of the pockets of big energy CEOs,” Andrews says, adding that households could save nearly $900 a year through the scheme.

The project would seek to install another 2.4GW of rooftop solar on eligible households. Victoria currently has around 1.1 GW of rooftop solar, on around 330,000 homes.

The Victoria state government takes issue with the recommendation from the ACCC, accusing chairman Rod Sims of looking only at the cost of rooftop solar and not at its benefits, which including lowering wholesale electricity prices, lowering the big demand peaks and shifting those peaks into the evening.

Victoria has become the first state to require its own pricing regulator, the Essential Services Commission, to seek to attribute climate, environmental and network benefits to the feed-in-tariffs for excess solar output.

The tariff now include a social cost of climate, and are also being shaped to deliver different tariffs at different times of the day to recognise their greater benefits of exporting during the evening peak.

Rooftop solar, combined with battery storage – and other technologies such as demand management and electric vehicles – is expected to contribute up to half of all electricity demand – signalling a profound shift from a grid based around centralised generation to a decentralised model.

The Victoria government says the scheme will save the typical Victorian household up to $2,225 for installation of an average 4kW solar system and help them save $890 a year on their electricity bills.

A new independent agency, Solar Victoria, will be established to work with industry, regulators and training organisations to deliver the program, which will create almost 5,500 new jobs.

“A re-elected Labor Government will invest $9 million to support accreditation of 4,500 electricians to install solar panels. Solar panel systems will only be installed by accredited solar installers using approved products to ensure the highest safety standards,” the statement says.

“This massive investment will bring the number of homes in Victoria with solar panels to one million within ten years, which will save Victorians $500 million a year on their electricity bills once the program is complete.

“It will also cut our carbon emissions by almost four million tonnes – the same as taking one million of Victoria’s 4.6 million cars off the road – and generate 12.5 per cent of Victoria’s 40 per cent target for renewable energy.”

The Labor Government will immediately invest $68 million to launch the Solar Homes program, offering just the 50 per cent rebate, with the zero interest loans coming into effect from July 1 next year.

“Ever since Jeff Kennett and the Liberals privatised our energy market, companies have been ripping off customers and getting away with it,” energy minister Lily D’Ambrosio said in a statement. “Only Labor will give power back to Victorians with solar panels on 650,000 homes.”