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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 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

Project

VNI West (KerangLink)

Description

Proposed new high capacity 500 kV double-circuit overhead transmission line between Victoria and New South Wales, running from Dinawan NSW via a new substation near Kerang to a terminal station connecting into the Western Renewables Link.

Status

In the planning stage by AEMO Victoria Planning (AVP) and Transgrid.

In February 2023, the Victorian Minister for Energy and Resources made a Ministerial Order on VNI West and the Western Renewables Link (WRL).

This enabled AVP to conduct an additional assessment on alternate VNI West options, including the connection point into WRL, which could minimise delivery and timing risks to enable acceleration.

AVP’s additional assessment was supported by a six-week consultation with Traditional Owners, local community, regional and industry stakeholders. This helped build project understanding and gather important social, heritage, environmental and economic feedback to inform the preferred option.

As a result of the additional assessment, AVP recommended Option 5A to the Victorian Minister for Energy and Resources. Option 5A connects from the WRL via a new terminal station at Bulgana and runs to a terminal station near Kerang before crossing the Murray River into NSW north of Kerang. Option 5A would relocate the proposed WRL terminal station at Mount Prospect (north of Ballarat) to Bulgana and uprate the voltage of WRL from 220 kilovolts (kV) to 500kV from north of Ballarat to Bulgana (WRL Uprate)

In May 2023, the Minister accepted AVP’s recommendation of Option 5A and made a second Ministerial Order confirming this option. The Order also enables AVP to progress investigative activities for the WRL Uprate through the current WRL Environment Effects Statement (EES) and to commence activities to procure the WRL Uprate.

Visit AEMO’s website to learn more and read the VNI West Project Assessment Conclusions Report.

Planning and environmental approvals are yet to commence.

Benefit

Allows for approximately 3.4 GW of additional renewable generation to be built across the solar-rich Murray River Renewable Energy Zone (REZ) and wind-rich Western Victoria REZ.

Connects Victoria to electricity supply and storage in NSW ensuring reliable electricity access during high demand periods.

Enables export capacity to other States, particularly for offshore wind.

Project

Western Renewables Link

Description

A 190km high voltage overhead transmission line from Sydenham to Bulgana in Victoria’s west.

Status

RIT-T completed by AEMO.

In the planning stage by AusNet.

Currently undergoing an EES.

Benefit

WRL connects VNI West to the Victorian electricity grid including major load centres and increases hosting capacity.

Project

MarinusLink

Description

A proposed 1500 MW undersea and underground electricity connection to further link Tasmania and Victoria.

Status

In Design and Approvals phase by Marinus Link Pty Ltd.

Benefit

It will provide access to 1500 MW of capacity from Tasmania, including pumped hydro storage to provide base-load electricity when needed.

Project

Offshore Wind Transmission

Description

Development of transmission infrastructure to provide coordinated connection points for offshore wind developers in Gippsland and Portland to enable the first target of at least 2GW of offshore wind by 2032, as a starting point.

Status

Consultation on the Options Assessment Method

Benefit

Connecting around 5 GW of new offshore wind generation in Portland and Gippsland, providing a major new energy source that helps secure Victoria’s energy future. Government-led development will ensure that the investment reduces overall costs to consumers and impacts on local communities.

Consultation

VicGrid consultation is underway for new transmission infrastructure needed to help achieve Victoria’s offshore wind targets.

We will coordinate development of a transmission solution that avoids multiple transmission lines overlapping the landscape from offshore wind projects.

A coordinated approach will reduce duplication, minimise impacts to regional communities hosting the new transmission, and avoid unnecessary energy costs for Victorian households and businesses.

Traditional Owners, communities and regional stakeholders across Gippsland and Portland will be at the heart of our work.

Phase 2 of engagement will continue to raise awareness of the Offshore Wind Transmission Development and Engagement Roadmap, and will publish a Draft Options Assessment Method based on community and stakeholder feedback from phase 1. This is a design tool that will be used to assess and decide on shortlisted project options for new transmission infrastructure for offshore wind in Gippsland and Portland.

To learn more about the assessment method and approach, visit Engage Victoria.

Project

Kerang Energy Storage System

Description

A 125 MW big battery and grid forming inverter technology near Kerang to provide system strength services.

Status

Works commenced by Edify Energy Second REZ Stage 1 Projects Ministerial Order.

Benefit

Will increase renewable hosting capacity by up to 300 MW in the Murray River REZ.

Project

Synchronous condenser

Description

A 250 megavolt amperes synchronous condenser next to the Ararat Terminal Station to provide system strength services.

Status

Works commenced by Australian Energy Operations. Fourth REZ Stage 1 Projects Ministerial Order.

Benefit

Will unlock up to 600 MW of new renewable energy in the Western Victoria REZ.

Project

Mortlake Turn-In

Description

A project to connect the existing 500 kV Tarrone-to-Haunted Gully transmission line to the Mortlake Terminal Station.

Status

Works commenced by AusNet. Third REZ Stage 1 Projects Ministerial Order.

Benefit

Will improve voltage stability and reduce generation constraints in the South-West Victoria REZ.

Project

Minor augmentations

Description

Nine minor augmentations

Status

Works commenced by AusNet. Third REZ Stage 1 Projects Ministerial Order.

Benefit

Delivered an innovative solution to projected problems of system reliability to increase the capability of VNI West and respond to unexpected network outages, particularly in summer months when demand is higher.

Common questions about transmission

Understandably, many people have concerns and questions about new transmission – particularly those who are hosting this infrastructure on their land. The following links provide more information about these topics from the regulatory bodies that are responsible for the governing frameworks and planning of transmission infrastructure.

Energy Safe Victoria works to ensure increased energy safety in Victoria.

Transmission Company Victoria has been created by the Australian Energy Market Operator to work with the community on the VNI West transmission project:

Victorian Transmission Investment Framework Final Design

We’re changing the way we plan and develop electricity transmission infrastructure in Victoria to ensure it benefits all Victorians.

The Victorian Government is introducing new legislation into the Victorian Parliament in early 2024 to establish the Victorian Transmission Investment Framework.

The new framework has five core elements:

  1. A Victorian transmission planning objective that incorporates environmental objectives and the State’s needs in response to the transition to renewable energy.
  2. A planning process for new major transmission infrastructure and REZs that looks ahead to the next 25 years. As a result of this process, a Victorian Transmission Plan will be published every 4 years. This Plan will prepare Victoria for a range of possible future scenarios in a way that minimises the risk of both under-investment (not being prepared) and over-investment (building more than is necessary).

    Importantly, Traditional Owners, local communities, landowners and other regional stakeholders will feed into this planning process early, well before transmission routes are determined.
  3. A new approach to specifying and procuring projects to meet Victoria’s transmission needs, ensuring timely delivery and value for money.
  4. New arrangements (access scheme) to encourage more renewable energy developers into Victorian REZs by making it easier for new projects to connect to the grid, and providing greater certainty that renewable electricity generated can get to homes and businesses where it is used.
  5. Place based approaches to engagement and benefits for impacted Traditional Owners, local communities and landowners. The focus is on collaborative, long-term approaches to build thriving communities delivered in a defined geographic location.

The new framework has been developed following public consultation in 2022, which demonstrated broad support for change.

To learn more about the framework and see the next steps, visit Engage Victoria.

New payments for landholders who host new transmission

Landholders play an important role in hosting critical energy infrastructure. New easements are necessary for new transmission lines 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 electricity transmission infrastructure are being introduced, recognising the important role and impact of hosting this crucial infrastructure.

Payment rates

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, indexed to inflation.

Payment application

The new payments will apply to Integrated System Plan (ISP) and Victorian Renewable Energy Zone (REZ) transmission projects and are separate 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 affected by projects across different regions within Victoria and state borders.

Next steps

More information about these payments will be available on this webpage in the coming months.

Page last updated: 01/08/23