New plan charts path forward for Victoria’s renewable energy transition

Released by VicGrid, the Victorian Transmission Plan (VTP) sets out the renewable energy technologies and transmission which are required to meet the State’s energy needs over the next 15 years.  The VTP highlights that a considerable amount of investment in renewable energy generation, storage and upgrades are required to achieve the state’s goal of 65% of electricity coming from renewable energy by 2030, 95% by 2035 and net-zero by 2045.

Lily D’Ambrosio, Minister for Energy and Resources, said that the release of the 2025 VTP is a “major milestone in Victoria’s energy transition.”

“As coal-fired power stations close and we move further toward a future powered by renewables, we need to support this transformational change with a plan that balances the long-term interests of all Victorians,” she said.

“The VTP is the cornerstone of a new approach – one that reflects not just engineering and economics, but also the values and voices of communities who host our energy infrastructure,” she said.

The VTP designates seven priority programs for transmission upgrades, in addition to the already announced VNI West, Western Renewables Link and Gippsland offshore wind transmission projects. These include a second radial line and tie in loop in Gippsland to facilitate offshore wind, a new line between Sydenham and Tarrone, a new line between Truganina and Deer Park, and an additional short line between Hazelwood and Yallourn.

The Wimmera Southern Mallee REZ and the Grampians Wimmera REZ have been combined into a single REZ with two sections, called the Western REZ, after public consultation on the draft VTP, meaning that there will now be 6 proposed REZs: The Central Highlands REZ, Central North REZ, Gippsland REZ, North West REZ, South West REZ and Western REZ,and a proposed Gippsland Shoreline REZ to support offshore wind connection assets.

Leanne Olden, an expert in energy law at Pinsent Masons, said: “The Victorian government is planning to deliver between 5.7 and 9.6 gigawatts (GW) of new onshore wind and 9GW of new offshore wind by 2040, creating opportunities for investment in the state’s renewable future."

"It has also announced that it is planning for between 2.3 and 8.9GW of new utility-scale solar and between 4.8 and 7.7GW of new short and long duration storage capacity during this period," she said.

"The VTP makes clear that offshore wind is key to the state government’s renewable energy goal and transition, which will give greater certainty to the industry despite recent setbacks in projects.”

The VTP also establishes new benefits arrangements for communities that host REZs, with a new community energy fund created in each region “to support projects aimed at improving energy supply, reliability, efficiency and affordability for businesses, communities and households.”

Florence Riviere, an expert in planning and environmental law at Pinsent Masons, said: “The VTP does not streamline planning and environmental assessments and approvals for projects in the relevant zones. This is a missed opportunity given that more needs to be done to achieve timely delivery of renewable energy projects."

"AEMO’s draft 2025 Electricity Network Options Report indicates that the cost of new transmission projects has increased by up to 55% over the past two years, making the streamlining of planning and environmental assessments and approvals for projects in the relevant zones an important step," she said.

“Despite some REZs being expanded compared to the draft VTP, the zones, covering 7.9% of Victoria, are still smaller than the potential area identified within AEMO’s 2024 Integrated System Plan, which covered 37% of the state." 

VicGrid explained that in light of the trade-off between smaller REZs with more concentrated infrastructure development and larger REZs that have less concentrated development, a decision was made to keep the REZ areas as small as possible based on feedback received and its assessment of different land use considerations.

Under proposed reforms, VicGrid will be responsible for coordinating the procurement of VTP transmission projects.  VicGrid is also in the process of proposing changes to procurement of major transmission projects in Victoria “to ensure that the procurement approach is flexible enough to support the pace required to meet the State’s emissions reduction commitments, deliver value for money for Victorian energy consumers and minimise impacts on power bills”.

Following the release of the VTP, the Minister for Energy and Resources can decide whether or not to proceed with a formal declaration of a proposed REZ.  There will be further community and industry engagement opportunities during this process.

An updated VTP will be published in 2027 and every four years after that, or more often if required, to ensure that the VTP remains up to date with technological developments and changing energy demand, according to VicGrid. Subsequent VTPs will take a 25-year view, rather than 15-years.