Renewable energy zones are set to cover eight percent of Victoria’s land after the Victorian Government increased the size of the planned zones to cover an extra 200,000 hectares of land.

And the expected cost of transmission to service the new zones has blown out by more than $3 billion.

The Victorian Government has released the final edition of the 2025 Victorian Transmission Plan

The plan sets out proposed renewable energy zones and transmission projects that the state will need between now and 2040 to deliver reliable and affordable power as it transitions away from fossil fuels.

The strategy has been released by VicGrid – the Victorian Government agency which is responsible for planning and developing the new transmission infrastructure that will transport energy generated by renewables to the state’s electricity grid.

The plan includes:

• Six proposed renewable energy zones, which have been considered to be most suitable to host renewable energy generation such as wind turbines, batteries and solar farms.
• A proposed Gippsland Shoreline Renewable Energy Zone. This will be a limited area where offshore wind developers will be able to locate infrastructure such as underground cables to connect offshore wind farms off the Gippsland Coast to the state’s energy grid.
• Transmission upgrades including four new transmission projects, reconstruction of existing transmission infrastructure and upgrades within existing terminal stations.

Several amendments to the plan have been made since a draft version was released for consultation in May.

In particular, there has been a 200,000 hectare increase in the area covered by renewable energy zones that will be available to developers.

This will take the overall area of land which is designated for wind, solar and batteries from 1.66 million hectares to 1.88 million hectares.

As a result, the footprint covered by those areas is set to increase from 7 percent of the state to 7.9 percent of the state.

(Note: the plan stresses that not all of the land area contained within the zones will be covered by renewable infrastructure. In fact, the actual infrastructure itself is expected to cover less than one percent of the state’s land. Moreover, renewable generation will coexist with other land uses such as agriculture across the zones.)

The changes responded to industry feedback, which indicated that larger areas were needed in order to make projects viable from a technical and commercial perspective.

In particular, the Wimmera-southern Mallee zone in the state’s west has been expanded.

Meanwhile, a new area around Coleraine has been added to the southwest zone.

According to VicGrid, the location of the proposed zones has been carefully selected.

Factors considered include the quality of wind and solar resources, existing land uses and how projects can connect to the grid.

In particular, VicGrid has taken feedback from the agriculture industry to ensure that the plan minimises impacts on farming and focuses development in areas where farming and renewable energy are compatible.

The plan aims to support the Victorian Government’s energy transition objectives as the state transitions its energy supply away from coal.

By 2040, the state is hoping to add capacity of between 5.7 GW and 9.6 GW of new offshore wind, 9 GW or new onshore wind, between 2.3 GW and 8,9 GW of new utility-scale solar and between 4.8 GW and 7.7 GW of new utility-scale energy storage (batteries, pumped hydro etc.)

According to the plan, this will be sufficient to power the states homes, industries and new technologies such as electric vehicles.

However, the cost estimate of the transmission infrastructure to connect the new renewable zones has almost doubled from $4.3 billion in the initial draft to $7.9 billion for the latest edition of the plan.

According to VicGrid, the costs have been revised to reflect updated inputs.

In particular, the costs have now been benchmarked against Australian Energy Market Operator (AEMO)’s recently released Transmission Cost Database.

Whilst it is likely that the additional costs will be reflected in consumer bills, Victorian Energy Minister Lily D’Ambrosio argues that Victorians will be better off overall as the delivery of more renewables into the grid will lower wholesale energy costs.

In a statement, D’Ambrosio says that renewable energy power contributed more than 42 percent of the state’s energy needs over the last financial year.

This, she claims, has delivered the lowest wholesale power prices in the country.

Over the last financial year, Allen says that Victoria’s average wholesale price was $107 per megawatt hour.

This compares to $115 for Tasmania, $127 for Queensland, $138 for South Australia, and $151 for New South Wales.

In addition, with more than 50 GW of proposed or committed renewable projects in the pipeline, D’Ambrosio says that investor appetite for more renewables is strong.

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