Developing Victoria’s REZs

In November 2020, the Victorian Government announced a $1.6 billion clean energy package through the 2020–21 State Budget, to invest in renewables, grid infrastructure, energy efficiency and decarbonisation projects, including $540 million to establish 6 Renewable Energy Zones (REZs).

The Victorian Government, through its Climate Change Strategy, has committed to reduce emissions by 28 to 33% by 2025 and 45 to 50% by 2030, to help keep Victoria on track to meet our target of net-zero emissions by 2050.

With electricity generation accounting for more than half of Victoria’s carbon emissions, the transition to clean energy is vital to achieve our climate change targets. The development of REZs is key to this energy transformation.

By identifying Renewable Energy Zones, the Victorian Government can target investment towards strengthening the transmission network in Victoria to enable an orderly and coordinated transition to renewable energy and engage with local communities to ensure that they benefit from REZs.

Strategic investment in REZs provides a lower cost and faster way of delivering new generation to the system – helping to accelerate the process of decarbonisation and deliver affordable and reliable power.

The Victorian Government will develop the REZs to:

  • ensure that communities, including Traditional Owners, are engaged in the process
  • provide for the orderly, planned development of renewable energy resources
  • efficiently and effectively expand the grid and connect new generation
  • reduce network congestion and costs.

Where are the Victorian REZs?

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

Planning REZs and consultation process – REZ Development Plan and Directions Paper

The first step towards developing Victoria’s REZs was the release of the REZ Development Plan Directions Paper for consultation on 18 February 2021 so industry and community stakeholders could provide feedback on broadly 3 areas:

  • potential network investment projects identified in the initial REZ Development Plan (RDP)
  • potential form and function of VicGrid in planning and developing REZs in Victoria
  • broader issues for consideration when developing Victoria’s REZs.

We will keep you updated on future consultation and decisions in relation to the RDP as announcements are made.

Victorian Renewable Energy Zones Development Plan Directions Paper (PDF, 7.5 MB)

The release of the Directions Paper was a key milestone and reflected an early stage in the process for developing an RDP.

As part of this initial phase of consultation, from mid-February to 31 March 2021, the Victorian Government:

  • ran a series of online briefing forums on the directions paper, targeting a wide range of industry and community stakeholders, including renewable energy and infrastructure investors, developers, energy businesses, consumer and industry representatives, and REZ community stakeholders
  • held bilateral meetings with industry and community stakeholders
  • invited and received a robust number of submissions in response to the directions paper.

Written submissions were received from a wide range of industry and community stakeholders, including market and regulatory bodies, renewable generation developers, financiers, council representatives, business associations and energy user groups and residents located within a REZ.

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

You can view the submissions that have consented to publication.

Investing in REZ - Stage One projects

The next steps in Victoria’s $540 million Renewable Energy Zones (REZs) investment are underway, with the progression of Stage One projects that will strengthen and modernise Victoria’s electricity grid.

The Victorian Government worked with the Australian Energy Market Operator (AEMO) to identify network investments to support the timely and efficient development of REZs in an initial Renewable Energy Zones Development Plan (RDP). The 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 that require further assessment and community and stakeholder consultation (Stage Two projects).

Stage One projects

Community and industry feedback on the proposed network investments has contributed to the Government’s assessments, including technical and economic analysis, informing 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.

For more information about the projects, read the REZ Stage One Projects Factsheet (DOCX, 1.1 MB).

Project milestones

Date

Action

3 August 2021

By Ministerial Order under the National Electricity (Victoria) Act 2005, the Victorian Government directed AEMO to progress a set of 6 Stage One projects under two procurement streams:

  • A call for expressions of interest and tender process for three   projects for services to strengthen the system across the Murray River,   Western Victoria and South West REZs.
  • A non-contestable request for proposal process with relevant incumbent   network service providers for three sets of minor transmission network   upgrades across the Murray River, South West and Central North REZs.

13 December 2021

Victorian Government announced that AEMO has completed a Call for Expressions of Interest for services to strengthen the system and commenced issuing an Invitation to Tender to shortlisted respondents for the Murray River, Western Victoria and South West REZs.

11 January 2022

By Ministerial Order under the National Electricity (Victoria) Act 2005, the Victorian Government has directed AEMO to seek a proposal from AusNet Services as the incumbent Victorian Declared Shared Transmission Operator, to qualify the technical works and costs associated with a proposed Mortlake Turn-In Project.

Commencing Quarter 2, 2022

Procurement processes for  Stage One Projects are expected to progressively be completed from the commencement of Quarter 2 2022.

At that stage, the Government will be in a position to assess whether the projects will deliver clear net benefits to Victorians, and consequently begin making announcements about final investment decisions on whether to proceed to implement individual projects.

Clean Energy Finance Corporation investment focus for REZ projects

Underlining the strength of the REZ Development Plan, the Clean Energy Finance Corporation (CEFC) has recently announced an investment focus for Victorian REZ projects, allocating up to $150 million in debt financing to support the accelerated development of new renewable generation to be connected to the grid.

Read more about the CEFC investment focus.

Coordinating REZs – VicGrid

For REZs to be developed to their full potential, there is a clear need for the timely, coordinated development of large-scale renewable generation and network infrastructure, with strong community support.

VicGrid, a new body, has been tasked with co-ordinating the overarching planning and development of Victorian REZs. This body 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. VicGrid was established as a Division with the Department of Environment, Land, Water and Planning in July 2021.

The Victorian Government continues to develop the framework for determining future transmission investment in REZs, VicGrid’s proposed role in that framework, and the Government’s broader approach to developing Victorian REZs. The Government will make further announcements regarding stakeholder consultation on the development of these frameworks.

Questions and feedback

For questions and feedback, please email REZDevelopment@delwp.vic.gov.au

Page last updated: 27/01/22