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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 Victorian Transmission Investment Framework to learn more.

Developing offshore wind and the next stage of Victoria’s REZs

The Victorian Offshore Wind Policy Directions Paper outlines our vision for establishing Australia’s first offshore wind sector and our targets of at least 2 GW by 2032, 4 GW by 2035 and 9 GW by 2040.

Following stakeholder engagement, we have also released the first Offshore Wind Implementation Statement. This includes details on our approach to developing the transmission network to provide offshore wind farms near the Gippsland Coast and Portland with access to the grid.

Engagement on offshore wind transmission will commence in early 2023.

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 step in developing Victoria’s REZs is underway, with $480 million from the REZ Fund to be invested in 12 projects to strengthen and modernise the state’s grid.

These projects will potentially enable up to 3,000 MW of new renewable energy generation.

The projects include:

  • Murray River REZ: A 125 MW big battery and grid forming inverter technology near Kerang to provide system strength services. The Kerang Energy Storage System, delivered by Edify Energy Pty Ltd will increase renewable hosting capacity by up to 300 MW.
  • Western REZ: A 250 MVA synchronous condenser next to the Ararat Terminal Station to provide system strength services. This project, delivered by Australian Energy Operations will unlock up to 600 MW of new renewable energy.
  • South West REZ: A project to connect the existing 500 kV Tarrone-to-Haunted Gully transmission line to the Mortlake Terminal Station. Delivered by AusNet Transmission Group Pty Ltd, it will improve voltage stability and reduce generation constraints.
  • Nine minor network augmentations in the South West, Murray River, and Central North REZs, delivered by AusNet to remove generation constraints and increase network capacity.

Stage one project milestones

Announcement about investment decisions for the last outstanding Stage One project is expected in the coming months.

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: 28/10/22