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Victoria is undergoing a once-in-a-generation energy transition.

As the State’s ageing coal-fired power stations retire in the coming decades, they are being replaced with renewables. Our electricity system must also change to carry energy from where it is generated to where it is needed.

Shifting to renewable energy will deliver affordable, reliable and secure electricity. It will also help us deal with climate change by reducing our emissions.

To achieve these goals, we are developing renewable energy zones.

What are renewable energy zones?

Renewable energy zones (REZs) are areas in our state with the greatest potential for renewable energy, such as wind, sunshine, rain, tides, waves and geothermal heat. Developing these clean energy resources at scale and in a coordinated way with the batteries and high-voltage wires required to store and transport electricity will support the next-generation power grid we are building.

This is a significant transformation for our energy system.

We need good planning and management to deliver the best outcomes for Victorians. This must be coupled with genuine engagement with Traditional Owners, communities and industry. By identifying renewable energy zones, we can co-ordinate development in a way that minimises negative impacts on local communities and maximises regional development and job opportunities.

Building a clean, modern energy system is essential for Victoria’s future.

Where are Victoria’s renewable energy zones?

The Australian Energy Market Operator’s (AEMO) Integrated System Plan (ISP) identified 6 Victorian REZs:

  • Central North
  • Gippsland
  • Murray River
  • Ovens Murray
  • South Victoria
  • Western Victoria
Map of Victorian REZs. There are 6 identified REZs -  Central North, Gippsland , Murray River,  Ovens Murray, South Victoria, Western Victoria

Consultation

In February 2021, we released the Renewable Energy Zones Development Plan Directions paper. We then consulted industry and community stakeholders on 3 broad areas:

  1. Potential network investment projects identified in the initial development plan
  2. Potential form and function of VicGrid in planning and developing renewable energy zones in Victoria
  3. Broader issues for consideration when developing Victoria’s REZs.

We received written submissions from a wide range of industry and community stakeholders. These included market and regulatory bodies, renewable generation developers, financiers, council representatives, business associations, energy user groups, and residents in a renewable energy zone.

The volume and diversity of responses highlighted the importance of this initiative for the Victorian community and the energy industry.

Preliminary Victorian Transmission Investment Framework

The Victorian Government released a preliminary design of the Victorian Transmission Investment Framework (VTIF). This sets out our proposed approach to developing Victoria’s REZs that:

  • ensures the coordinated development of electricity transmission and renewable energy generation infrastructure to safely deliver energy affordability, reliability and security for Victorians
  • seeks to integrate land use, environmental impacts and community views earlier in the transmission infrastructure planning process to provide great transparency for local communities and clarity for project delivery
  • reflects local priorities, maximises the benefits of renewable energy infrastructure and minimises negative impacts
  • seeks to balance important considerations, such as environmental objectives and fostering community support for new investment.

Public consultation on the preliminary framework closed on 15 August 2022.

A report summarising feedback from stakeholder briefings, workshops and submissions will be published in late 2022.

Visit engage.vic.gov.au/victorian-transmission-investment-framework to learn more.

Offshore wind development

In March 2022, the Victorian Government released the Victorian Offshore Wind Policy Directions Paper, which outlines our State’s vision for establishing Australia’s first offshore wind sector and setting our State’s ambitious offshore wind generation targets.

The Victorian Government is considering the impact offshore wind farms will have on Victoria’s REZs. This includes considering how transmission infrastructure to service generation in REZs may be developed in a coordinated and efficient way, in order to minimise impacts on local communities and the environment, and costs to Victorians. Stakeholder consultation has encouraged Government to consider if there is opportunity to plan for appropriately sized infrastructure that helps to avoid multiple or iterative builds.

As mentioned in the Victorian Offshore Wind Policy Directions Paper, the Victorian Government will release an Offshore Wind Implementation Statement later in 2022, which will provide further details on our approach to developing the transmission network to provide offshore wind farms with access to the grid.

Investing in Renewable Energy Zones

The Victorian Government worked with the Australian Energy Market Operator (AEMO) to identify network investments to support the timely and efficient development of REZs. An initial Renewable Energy Zones Development Plan (RDP) identified:

  • 9 potential near-term projects to reduce existing constraints and support the connection of Victoria’s pipeline of renewable energy projects (Stage One projects). This included minor network augmentation works, projects to strengthen the system and larger augmentation projects.
  • 21 potential longer-term investments in REZ infrastructure require further assessment and community and stakeholder consultation (Stage 2 projects).

Stage one projects

The next steps in Victoria’s $540 million REZ investment are underway. The progression of Stage One projects will strengthen and modernise Victoria’s electricity grid.

Community and industry feedback on the proposed network investments contributed to the Government’s assessments - including technical and economic analysis. Feedback informed the Victorian Government’s decision to progress procurement of 7 Stage One projects. These projects will:

  • deliver network upgrades to address thermal constraints and strengthen the Victorian transmission system
  • by addressing network constraints, allow more generation to be exported to the existing network and assist the connection of pipeline projects
  • potentially support up to 3000MW of new and existing generation to flow through the grid and reduce constraints to renewable energy generators currently operating in these REZs
  • ultimately lead to lower electricity costs for consumers.

Stage one projects milestones

Clean Energy Finance Corporation (CEFC)

The CEFC is allocating up to $150 million in debt financing to support the accelerated development of new renewable generation connected to the grid.

Read more about the CEFC investment focus.

VicGrid

VicGrid is a new body within DELWP. It will coordinate the overarching planning and development of Victorian renewable energy zones.

VicGrid will also oversee investment decisions related to the $540 million REZ fund that will be used to strengthen the grid and unlock the potential of the REZs.

Page last updated: 27/09/22