Legislation to be introduced in parliament this week would set renewable energy targets for the state of 25% by 2020 and 40% by 2025.
State governor Daniel Andrews also announced an auction for 650MW of renewable energy capacity, the largest renewable reverse energy auction to date, which the state government expects to attract A$1.3 billion ($1.02 billion) worth of investment.
The Victorian Renewable Energy Target (VRET) scheme comes two years after the Australian parliament controversially cut the country’s Renewable Energy Target from 41TWh to 33TWh by 2020.
The cut came after a fierce political debate, which took place while development of wind projects practically froze for more than a year.
Victoria vowed to set its own state targets to restore investors’ confidence after former prime minister Tony Abbott made the cut in June 2015.
The state’s legislation introducing the VRET scheme, announced today, would need to be passed in the state’s upper house to become law.
Victorian premier Daniel Andrews said: "More renewable energy means more jobs for Victorians — that’s why we’re setting these ambitious targets and promoting investment in this growing sector.
"Renewable energy creates jobs, drives growth, and protects our environment — and most importantly, helps drive down power prices for Victorian households and businesses."
Lily D’Ambrosio, Victoria’s minister for energy, environment and climate change, added: "The renewable energy sector will now have the confidence to invest in renewable energy projects and the jobs that are crucial to Victoria’s future."
Industry association the Clean Energy Council (CEC) welcomed today’s announcements.
Chief executive Kane Thornton said: "Victoria is realising an immense opportunity to grow its economy and preserve its future energy security through the establishment of a strong and long-term VRET scheme, which will ensure the roll-out of renewable energy projects well beyond 2020.
"Today’s announcement will help Australia move away from high-emissions power generation to cleaner renewable energy, which is in line with our emissions reduction commitments under the global climate agreement negotiated in Paris several years ago," he added.
Australia’s renewables industry is expecting a bumper year in 2017, the CEC announced in February.
The trade body said the country had 22 projects with a combined capacity of 2.25GW either under construction or ready to begin installation this year.