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As Victoria's ageing and increasingly unreliable coal-fired power stations retire, more and more renewables – paired with battery storage - will provide the State's electricity as part of our clean energy transition.

No transition without transmission

New transmission is critical to our clean energy transition.

Victoria's grid is historically the strongest in the Latrobe Valley, where our coal-fired power is mainly based. However, our renewable resources are dispersed across Victoria - from our windy coastlines to our sunny plains.

That's why we are working on transmission and network upgrades across the state. This will improve and modernise the grid in the areas where sun and wind are abundant so more renewables can flow through Victoria. This will deliver a cleaner, cheaper, stronger energy system for all Victorians.

Work to upgrade our grid will eventually unlock more than 10,000 megawatts of capacity across our renewable energy zones.

This will:

  • prepare our grid for the unprecedented volume of renewable energy in the pipeline
  • make it easier for new projects to connect to the grid
  • ensure the ongoing security and reliability of the grid, particularly as coal-fired generation ends.

How does electricity transmission work?

Transmission and distribution infrastructure – the poles and wires you see all around you - transports electricity from where it is generated to where it is used. This system is often referred to as 'the grid'.

Larger, high voltage lines transport electricity from generators to demand centres in metropolitan and regional areas while smaller, low voltage lines transport to homes and businesses.

Learn more about how the electricity sector works.

What are some of the challenges with our grid – what exactly do we need to fix?

Our electricity grid is a finely balanced system. The total amount of power that can flow through the grid at any one time is constantly monitored considering how much power is being generated and how much is being used. If this flow falls out of balance, faults, power outages, or large-scale blackouts can occur.

To allow more renewables to flow through our grid across the state while ensuring it remains a secure, reliable and affordable system, we need to:

  • upgrade existing lines, to give them more capacity
  • build new high voltage transmission lines, to add new main paths for electricity to be transported
  • build interconnectors, to enhance Victoria’s connections with the rest of the National Electricity Market
  • build other infrastructure that helps the grid stay in balance and prevent faults – such as grid-forming inverters supported with battery storage and synchronous condensers.

Who decides what transmission is needed and where – and what is the process to build it?

Building transmission projects is a complex and lengthy process that involves many organisations working together. This ensures that the projects and routes chosen are the best option for electricity customers – who eventually pay for them through their electricity bills.

Here's a snapshot of the current process in Victoria:

  • The Australian Energy Market Operator (AEMO) forecasts what is needed at a national level - and when - in its Integrated System Plan.
  • AEMO Victorian Planning (AVP) identifies the best project to meet the need through a cost-benefit analysis (the regulatory investment test for transmission or RIT-T), including a proposed location for the project.
  • AVP then runs a contestable procurement process to award a contract for the selected project's design, construction, ownership and operation.
  • The successful proponent undertakes a detailed project design and relevant planning and environmental approvals, including determining a preferred project route.

Learn more about the current process for planning and building transmission.

In some circumstances, where there is an urgent need for a project to be delivered more quickly, the Minister for Energy and Resources can use powers under the National Electricity (Victoria) Act 2005 (NEVA) to accelerate the delivery of transmission projects.

The Victorian Government's role

The Victorian Government, through VicGrid, also plays a role in transmission development in Victoria.

VicGrid is:

  • coordinating the planning and development of our renewable energy zones (REZs)
  • overseeing investment decisions related to the $540 million REZ Fund
  • working with AEMO to identify network investments
  • working on a preliminary design of the Victorian Transmission Investment Framework – (see more information below)
  • partnering with AEMO to deliver the transmission required to connect new offshore wind resources to the grid.

Current and planned projects in Victoria

Preliminary Victorian Transmission Investment Framework

In July 2022, the Victorian Government released a proposed Victorian Transmission Investment Framework (VTIF) for public consultation. The Framework sets out our approach to developing Victoria’s REZs:

  • 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 early 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 community feedback for new investment.

Visit Engage Victoria to read the Engagement Summary Report.

We are now considering this feedback to inform a final decision on VTIF.

Additional payments for landholders who host new transmission

Landholders play an important role in hosting critical energy infrastructure. New easements are crucial to the upgrades required to connect new renewable generation, which will deliver clean, cheap power to homes and businesses across Victoria as our ageing coal-fired power stations retire.

New landholder payments for communities that host new energy network infrastructure are being introduced, recognising the important role and impact of hosting this crucial transmission infrastructure.

The payments to landholders hosting new transmission projects with a typical easement area will be at a standard rate of $8,000 per year per kilometre for 25 years.

The new payments will apply to Integrated System Plan (ISP) and Victorian Renewable Energy Zone (REZ) transmission projects and are in addition to any payments under existing arrangements for transmission easements under the Land Acquisition and Compensation Act 1986.

The new payments will go to landholders who host transmission easements for the proposed Victoria-NSW Interconnector (VNI West) and Western Renewables Link transmission projects, contingent on receiving planning and environmental approvals.

The payments will also apply to the Victoria-Tasmania interconnector (Marinus Link) project and transmission links being developed by VicGrid to connect Victorian REZs and future offshore wind projects.

This will ensure a consistent and equitable approach for landholders impacted by projects across different regions within Victoria and state borders.

The Victorian Government will introduce new legislation to give effect to these new landholder payments. More information about these payments will be available on this webpage in the coming months.

Page last updated: 29/03/23