Australia's peak industry lobby group fears Victoria's decision to go it alone and pursue a 40 per cent renewable energy target within eight years will push up prices that are already hurting business.
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The Andrews government tabled legislation on Wednesday that set a statewide renewable energy target of 25 per cent by 2020 and 40 per cent by 2025.
In doing so it snubbed calls by the Turnbull government for states to join it in a nationally consistent approach to energy policy, prompting an angry rebuke from federal energy minister Josh Frydenberg.
The Matthew Guy-led state Coalition has already pledged to abolish the Victorian renewable energy target if it takes government next year.
Tim Piper, Victorian head of the Australian Industry Group, said hitting the 25 per cent target within three years would be simple, but there was no clear pathway to reaching 40 per cent without imposing extra costs on energy users.
"We've got low-hanging fruit that will enable the 25 per cent target to be achieved, with wind and solar but ??? to get to 40 per cent within another five years is going to require significant investment," Mr Piper said.
"That might mean that we are looking at higher priced electricity."
The head of the Victorian Chamber of Commerce and Industry, Mark Stone, also said its members were hurting due to skyrocketing energy bills.
"The target must not put upward pressure on prices and put Victorian jobs at risk," Mr Stone said.
"What we need is a coordinated national approach to deliver emissions reductions and new energy supply in the most efficient way."
The industry groups' concerns echo claims made by Mr Frydenberg on Thursday that Victorians face higher prices and reduced energy security due to the Andrews government's policy move, designed "to win green votes".
The Turnbull government wants states to sign up to a national agreement on energy policy, although it has not agreed to the central recommendation from the Finkel review to adopt a clean energy target.
Mr Frydenberg told ABC Radio that Victoria's decision to set its own target risked "balkanising the system, with states going alone competing against each other to provide the biggest subsidy to renewables".
The Andrews government announced it would boost renewable energy by asking industry to provide the state with 650MW via a "reverse auction" that will see the bidder with the lowest price win.
This 650MW could help to raise the proportion of green energy supply in Victoria to more than 30 per cent by 2020, well above the state target, according to analysis by Tristan Edis, a director at Green Energy Markets, an advisory business.
Mr Edis said the state would likely need to add a further 3 million MWh of renewable energy into the system by 2025 to reach its 40 per cent target.
"That isn't all that challenging when we consider that what has been committed to construction or contracted over just the past 12 months of 3.5 million MWh substantially exceeds that amount," Mr Edis said.
The Andrews government says power prices will fall by an average $30 a year for households as more renewable energy enters the system and increase overall supply.
