Considerable investment required to achieve Victoria’s renewable goals

The draft plan, released by VicGrid, offers insight into future renewable energy projects, with 5.8 gigawatts (GW) of new onshore wind, 9GW of offshore wind, 2.7GW of ‘utility-scale’ solar and 3.4GW of new short and long duration storage capacity planned for by 2040. These figures include new capacity from already committed or funded projects across Victoria, alongside new generation and storage.

A final VTP will be released later in 2025 after public consultation, which will “set out the plan for Victoria’s renewable energy zones and the transmission infrastructure required to enable an orderly energy transition”, before an updated VTP is released in 2027 and every four years after.

The plan identifies seven proposed renewable energy zones: the Central Highlands, the Central North, Gippsland, the North-West, the South-West, the Grampians Wimmera and Wimmera Southern Malee, covering 7% of Victoria’s land area.

The access schemes for the renewable energy zone will place a limit on the connections, effectively overriding the traditional open access regime and reserving capacity for projects within the zones. Technology limits will also apply within the renewable energy zones to ensure a diverse range of generation and storage is developed, with onshore wind the initial priority for the state. For project proponents, the renewable energy zones will provide much needed certainty in relation to their access to the grid, and therefore their route to market.

People living in communities based in a renewable energy zone will have access to ‘Renewable Energy Zone Community Energy Funds’, proposed to support projects that “improve energy supply, reliability, efficiency and affordability for businesses, communities and household”.

Priority programs

The plan also designates seven “priority programs of transmission upgrades”, which VicGrid believes are essential to ensuring for a smooth transition to renewable energy as coal-fired power plants close by a designated year. These are in addition to the already announced VNI West, Western Renewables Link and Gippsland offshore wind transmission projects.

Western Victoria reinforcement program

A collection of four network augmentations and upgrades to existing infrastructure that will support the connection of onshore wind and solar generation from several proposed renewable energy zones by 2028.

Eastern Victoria reinforcement program

Network augmentations and upgrades of existing infrastructure to meet existing demand in Eastern metropolitan Melbourne and to ensure the connection and security of supply from the Gippsland and Central North renewable energy zones, and the Gippsland offshore wind area, by a proposed date of 2028-29.

North West strengthening program

The replacement of sections of existing single circuit transmission with high-capacity double circuit line to support generation in the Wimmera Southern Mallee, Grampians Wimmera and North-West proposed renewable energy zones by 2035.

South West expansion program

A new double circuit 500 kilovolt line in South West Victoria to meet demand for wind generation in western Victoria, including additional generation in the South West and Central Highlands draft proposed renewable energy zones by 2033.

Stage two of the Gippsland offshore wind transmission program

A new transmission loop that expands on the First Gippsland offshore wind transmission project that is required to connect additional generation from 2033 to 2038.

Latrobe Valley strengthening program

The introduction of new power flow controllers and dynamic load rating devices to allow for the easier integration of wind and solar into the grid.

Offshore wind upgrade

The upgrade of existing lines from Heywood to Portland so that they can be connected from the Southern offshore wind area.

A new shoreline renewable energy zone in Gippsland is also being proposed in the VTP to ensure that the onshore connection infrastructure for offshore wind is coordinated to minimise the impact on local communities. The Gippsland renewable energy zone will not initially be available for the construction of new generation assets. The VTP will also designate areas where offshore wind export cables are able to cross the shore to better protect environmentally and culturally sensitive areas along the coast.

"It is also disappointing that the VTP does not propose streamlined planning and environmental assessments and approvals for projects in the relevant zones," Riviere said.

"This is a missed opportunity considering the level of engagement, assessment and strategic planning efforts expanded prior to the release of the draft VTP.”

It appears that the VTP is good news for offshore wind, but not for onshore wind. Other concerns for industry include the significant gaps and uncertainties in both the grid impact assessment and access rights frameworks, and an insufficient amount of transmission capability.

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.  While engagement and social licence are crucial, payments to landowners and community groups have the potential to increase the cost of the energy transition and energy prices for consumers down the line.

The closing date for submissions and feedback is 24 June with the Government confirming that the final VTP is expected to be released on 31 July.