Victoria's energy network will partially return to public hands and be powered almost entirely by renewable sources under a re-elected Labor government.
The Andrews government has set its sights on reviving the State Electricity Commission and for it to be 51 per cent public owned, with the super industry seen as the government's preferred investor for the 49 per cent minority stake.
Under the plan, $1 billion would be poured into renewable energy projects to create 4.5 gigawatts of power to replace lost capacity from the early closure of the Loy Yang A coal-fired power plant in the Latrobe Valley.
At least another $20 million would be spent on setting up the commission, including an office in the Latrobe Valley town of Morwell.
"One power station is closing. Many smaller power stations will take its place. Those power stations won't be for profit; they'll be for people" Premier Daniel Andrews told reporters on Wednesday.
"They'll be owned by everyone and everyone will benefit from that."
In September, energy giant AGL announced it would close its brown coal-fired Loy Yang power plant by 2035, up to 10 years earlier than planned.
The Hazelwood coal-fired station closed in 2017 and is being progressively demolished.
In addition, Labor has upped the ante on its renewable targets, increasing its 2030 goal from 50 per cent to 65 per cent and aiming for 95 per cent of the state's electricity to come from green sources by 2035.
New emissions reduction targets will also be legislated, with the aim of 75 to 80 per cent by 2035 and the net zero emissions target brought forward by five years to 2045.
Energy Minister Lily D'Ambrosio said the network overhaul would not affect Victoria's capacity to contribute to the national energy market.
"We continue to be the biggest net exporter of electricity to the rest of the country. That will continue to be the case," she said.
Mr Andrews described the national energy market as broken, noting the wholesale market was twice suspended amid this winter's power crisis.
"Who benefits from that? Those private companies who bought these assets that should never have been sold off," he said.
The Victorian energy network was privatised in the 1990s by the Kennett Liberal government.
Victoria Energy Policy Centre Director Bruce Mountain said private energy companies have been funnelling profits to shareholders and returning generation back to public hands was achievable.
"This is a break-glass moment," he said.
Professor Mountain said coal-fired stations won't be able to exit the market by 2035, or gas will have to fill the void, if Victoria doesn't meet the 95 per cent renewables pledge.
"That will be a policy failure," he said.
"(But) we have every reason to believe that we can expand capacity at a decentralised level, as well as big wind and solar farms, to meet that target."
Environment, climate and social advocacy groups have hailed Labor's move, including beefing up the state's renewable energy targets.
"Energy companies clearly know that time is up for coal," Climate Council's Dr Jennifer Rayner said.
Environment Victoria said the policy marked a turning point in Australia's climate fight, while Environmental Justice Australia suggested it would help make power bills cheaper for struggling families.
VCOSS Chief Executive Emma King agreed, arguing more government ownership of energy generation should provide greater market certainty.
"If executed properly, this plan will put downward pressure on power bills over the longer term," she said.
