The Victorian Government will impose a mandatory electricity target requiring retailers to deliver 10 per cent of their power from renewable sources by 2016.

The policy is aimed at cutting greenhouse gases by creating a market for renewable energy generators.

Already Spanish firm Acciona has said the renewable target had given it enough business confidence to go ahead with the state's second largest wind farm, a $400 million project at Waubra in the state's west.

Industry sources put the cost of power produced from brown coal at $35 per megawatt hour, while wind-generated electricity costs at least twice that amount.

Nevertheless the Government says the new initiative will cost the average family as little as one dollar a month extra on their power bills in 2008.

The Energy Users Association of Australia (EUAA) today disputed that estimate, saying domestic users would pay up to four per cent extra – or $36 – on an average annual bill of $900.

An EUAA-commissioned study by Access Economics found the scheme would increase electricity prices by $3.80 per megawatt-hour and increase business power costs by up to five per cent.

EUAA executive director Roman Domanski said the renewable target would cost the Victorian economy $830 million over ten years, leading to a net loss of jobs as business moved interstate.

"It's a loss to the state overall and the community will bear the cost of that," he said.

"This is going to be a very costly scheme."

But Premier Steve Bracks said wind-generated electricity was not much more expensive than brown-coal generated power.

"It's only very, very marginally more expensive," he said today.

"That's why it's only a dollar per month. All the economic modelling shows that is the case."

A government spokesman later said the economic modelling by consultants McLennan Magasanik Associates would not be released because it was deemed confidential cabinet material.

Opposition Leader Ted Baillieu was also sceptical over government claims about the cost to consumers.

"I am sure that power bills will go up by more than the government claims," he said.

"It's fairly obvious to everybody that power bills will increase significantly."

Mr Baillieu called on the Government to cut greenhouse gas emissions by targeting Victoria's Latrobe Valley brown-coal generators.

Meanwhile, Spanish renewable energy company Acciona today announced it will go ahead with the first stage of a 128-turbine project in September.

Brett Thomas, managing director of its Melbourne arm, Acciona Energy Oceania, said the new renewable energy target announced by the Government yesterday made the project economical for the company.