Power Hungry Food Manufacturers: Why Now is the Time to Adopt Renewable Energy
As Australia’s powerhouse for food and beverage manufacturing, Victoria generates $47.6 billion in revenue, employing over 75,000 people, and supporting more than 3,900 businesses. Yet behind this success, energy use looms as both a cost driver and a risk. As energy use rapidly shifts, the urgency for manufacturers to adopt renewable energy has never been more pronounced. Here is why the move makes sound business and operational sense right now.
The Food Sector of Victoria
Food and beverage manufacturing is among Victoria’s most energy-intensive industries, and it relies on both electricity and gas to power production lines, cold storage, and logistics. These energy inputs represent a major share of operating expenses and have been subject to volatile pricing over recent years. As Victoria’s net-zero and renewable energy policies accelerate, manufacturers face rising pressure. But this also gives them a major opportunity to change their energy use.
Victoria’s wholesale electricity prices have been all over the place lately. Q1 2025 was $59/MWh, 15% up on last year. Global gas prices are going up and up and putting pressure on budgets, especially for manufacturers with gas-fired equipment. These rising costs and the uncertainty around them tell us we need to get off fossil fuels.
Policy is Shaping the Future
Victoria has a target of net zero by 2045. This climate goal is driving real market change for manufacturers as incentives and frameworks favour those who are embracing renewable solutions. The Victorian Energy Upgrades (VEU) program and targeted grant programs reward the early movers with support for energy efficiency, electrification and renewable technology adoption.
Electrification is the Game Changer for Manufacturers
Electrification replaces gas or coal-powered systems with advanced electric alternatives and delivers immediate and significant cost and emissions reductions. Victoria’s programs support electrification in food and beverage factories, targeting key processes like heating, cooling and drive systems. Technologies like high efficiency refrigeration, heat pumps and electric boilers bring performance and climate benefits.
Electrification is not just encouraged, it’s incentivised. The Victorian Energy Upgrades program has financial incentives for specific upgrades, and dedicated grant rounds like the Energy Innovation Fund provide co-investment for electrification projects up to $2 million.
Renewable Energy Integration: Cutting Costs and Emissions
On-site solar, wind and battery storage are becoming essential for manufacturers. These technologies allow factories to generate and consume their own clean energy, often replacing expensive grid power and slashing energy bills.
Victoria’s wholesale electricity prices are among the lowest in the NEM, in part due to increased renewable generation. In Q1 2025, variable renewable energy (VRE), especially grid-scale solar and wind, increased its share of supply, suppressing price spikes and creating opportunities for businesses that invest in self-generation.
Business Benefits: Why Act Now?
Switching to renewables and electrification isn’t just about being environmentally responsible; it’s good business. Here’s why:
- Lower and More Predictable Energy Bills: Renewable energy reduces exposure to volatile gas and coal prices, and gives food manufacturers long-term cost certainty.
- Competitive Advantage: Victorian government policies are increasingly favouring sustainability in procurement, exports and market access. Renewable investment signals leadership.
- Get Ahead of the Curve: Energy policy and market signals tell us that those who wait will fall behind on compliance and competitive advantage.
- Access to Incentives and Funding: Grant programs are available now to offset upgrade costs, reduce payback periods and lower the total investment required for the transition.
Tackling Practical Challenges: A Roadmap to Transition
Successful transition requires planning, but the tools, technologies, and support are here. Manufacturers moving to renewables should:
- Evaluate high-energy-use processes and identify where electric alternatives are market-ready.
- Assess opportunities for on-site generation, solar, wind, or a mix to complement grid energy use.
- Take advantage of Victorian and federal incentives actively supporting capital upgrades, feasibility studies, and new technology pilots.
By partnering with experienced EPC contractors, manufacturers also access expertise in project design, financial modelling, and application support for incentives, removing the administrative burden and ensuring projects are delivered on time and to standard.
A Sector-Wide Opportunity
With 3,900+ businesses and $12.2 billion in exports, Victoria’s food and beverage manufacturers are the backbone of the state’s economy. Going renewable won’t just save costs, it will create jobs, open up new export markets and future-proof the whole sector.
Conclusion
Victoria’s food and beverage manufacturers stand at an energy crossroads: electrify and decarbonise, or risk being left behind. By switching to renewables, with government support at unprecedented levels, the sector can lock in lower costs, stronger competitiveness, and genuine climate leadership.
For Victorian food manufacturers ready to take the next step, Melbourne Energy Group helps make the transition simple.
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