The Victorian Liberal Party plan to review the state’s transmission roadmap – including its proposed renewable energy zones – and pause major network upgrades has been called out as “wedge” politics in the lead-up to the November election, and could lead to blackouts, Labor’s energy minister has warned.
The state Liberal party revealed on Thursday that, if elected in November, it will review the newly minted Victorian Transmission Plan and pause two long-delayed grid upgrade projects, including the Victoria to New South Wales Interconnector West (VNI West), and the Western Renewables Link.
Shadow energy minister David Davis says the review would put the “spiralling cost of new transmission lines” through a rigorous assessment process while the pause on projects would allow time to “properly consider” alternatives – including the Victorian Energy Policy Centre’s “Plan B,” that was put forward in August 2023.
“The Policy Institute of Australia estimates that VNI West and other proposed transmission lines could add $600 per year to Victorian’s power bills,” Davis says in a statemet.
“VNI West was originally supposed to cost $2 billion, has grown to at least $7.6 billion and could blow out as high as $11 billion or more.”
But state energy minister Lily D’Ambrosio says the opposition’s plan to “effectively shut down the build of new transmission infrastructure” would stifle the rollout of large-scale renewables in the state, leading to grid outages and higher power prices.
“[The Victorian Liberal Party] may change the leader, but the policies are the same,” D’Ambrosio told a press conference on Thursday.
“[The opposition] will shut down the renewable energy sector. It will close down transmission, which is vital for new electricity, replacement electricity, to be built and connected to the grid. And it will lead to blackouts.
“The last time they were in government, we saw 12 wind farm projects come to a screeching halt. We saw billions of dollars of investment leave the state for other states that were more friendly and open to renewable energy. And electricity prices went up by 34 per cent.”
The Liberal Party argument extends beyond the economics of projects like VNI West, however, to the angst it has caused in the affected regional communities, that has led to a number of organised protests and left farmers feeling bullied and unheard.
The LNP argues that VNI West has no social licence and is increasingly relying on “harsh legislative changes” such as fines for farmers refusing access to their land, and compulsory acquisition of easements, to get built.
“The Labor government has ridden roughshod over regional communities with its renewables-at-all-cost energy policy,” says state leader of The Nationals and shadow minister for regional development, Danny O’Brien.
“We will give farmers their rights back while pausing projects like VNI West and properly examining the alternatives.”
But Labor’s D’Ambrosio says the alternatives have been examined and huge transmission projects like VNI West are crucial to the state and national transition to renewables – and to the replacement of coal.
“These projects do come with their challenges,” the minister said on Thursday. “No one is contending otherwise. But the reality is this that building those transmission lines will enable that new replacement electricity to be built.
“[New renewable energy projects] won’t be built unless they’ve got somewhere to connect to and send that power to – Horsham, Shepparton, Melbourne, Gippsland, all parts of our state and other states, as we rely on other states to transmit power across borders.
“It’s about having that reliable energy supply and the most affordable way that we deliver that is putting the transmission where it needs to go, because that enables those renewable energy projects, that replacement electricity.
“Because, when we talk about renewables, what are we actually talking about? We are talking about new replacement electricity for when the ageing coal-fired power stations close down, they become less reliable.
“They are closing and, frankly, [Victorian Liberal leader] Jess Wilson and her team have no solution, have no explanation for where they’re going to find that replacement electricity that will keep the lights on and keep people’s energy bills down.”
Transmission and the transition
The 240 km long Victorian section of VNI West proposes to run from Bulgana in the state’s west to a proposed new terminal station site at Tragowel in the north, before connecting with the NSW section at the Murray River north of Kerang.
The $7.6 billion project was identified by the Australian Energy Market Operator (AEMO) as a critical network upgrade that will support more than 3 gigawatts (GW) of new solar and wind generation, boost the transfer of renewables across state lines, and boost reliability and security on a troubled section of the grid.
But VNI West – or at least the $3.7 billion Victorian section of the project – has faced strong opposition from some farmers in the region, who don’t wish to host a new 500 kV double-circuit line, and by some industry analysts, who argue it is a boondoggle that could be avoided using alternative options.
Once such alternative option is the so-called “Plan B” that has been put forward by one of VNI West’s most vocal opponents, the Victorian Energy Policy Centre’s Bruce Mountain, in collaboration with transmission industry veteran Simon Bartlett.
Released in August 2023 off the back of much public criticism of VNI West – including here and here on these pages, and the response – Mountain and Bartlett’s Plan B proposes a staged and much reduced transmission upgrade, backed by the roll-out of commercial and industrial solar and storage.
Following its release, the plan received a swift rebuttal from AEMO, while an “independent assessment” of Plan B commissioned by VicGrid and conducted by Jacobs found it had made “incorrect assumptions regarding Victoria’s needs for significant battery and other storage investments and risks with construction and operation.”
Jacobs also found that Plan B falls short on many of the Big Picture needs of the national electricity market (NEM), including the need for more interstate interconnection and sharing of renewables.
“VNIW fits into an overall ‘jigsaw’ puzzle including Marinus, Project Energy Connect, HumeLink, Snowy 2.0 and ffshore wind,” the report says. “These other infrastructure pieces will have materially less value without VNIW. The identified need for interconnection that is met by VNIW is not met by Plan B.”
Since the release of the report, and the rebuttals to it, VNI West along with the Western Renewables Link and other key planks of the Victoria Transmission Plan have continued to be progressed by the new purpose-built entity, VicGrid.
This includes six renewable energy zones proposed as the most suitable to host new solar and wind generation, the proposed Gippsland Shoreline Renewable Energy Zone where infrastructure will connect offshore wind projects to the grid and a range of transmission projects needed from 2025-2040, ranging from upgrades within existing terminal stations to reconstruction of existing transmission lines.
In its statement on Thursday, Davis says the LNP review would also consider the Renewable Energy Zones and “ensure sharp cost benefit analysis to guarantee bill payers’ money is not wasted.”
And it would establish “new Urban Solar Parks to encourage solar and battery installations on commercial and industrial rooftops in urban areas, to generate renewable power closer to where it is needed.”
But critics say the Liberal Party’s plan to rethink Victorian transmission is misguided, unjustified and “definitely not good policy.”
“Energy policy as a wedge is always disappointing,” says Dennis Freedman, the managing director of Australia and New Zealand at Aquila Clean Energy – the regional arm of German giant Aquila Group.
“There are real grievances here,” Freedman writes on LinkedIn. “Landholders have not imagined the disruption. There have been cost blowouts. The process has been messy, slow and at times poorly handled. Misinformation has made an already hard job harder.
“But none of that justifies pausing the projects. And it is definitely not good policy,” Freedman says.
“The case for transmission has been made about as clearly as it can be. AEMOs 2024 ISP says the lowest cost path as coal exits is renewables connected by transmission, firmed by storage and backed by gas when needed.
“This is not ideology. It is the basic planning needed to keep an essential service working. And we are already so far behind where we need to be. The facts are that Victoria has brown coal ageing out. Data centres, electrification, industry and population growth all want power that is available, firm and delivered to the right place.
“Rooftop solar is sensible. Batteries are doing some heavy lifting. Demand response has a role. But pretending these remove the need for major grid build out misses the point,” he adds. “These reduce pressure on the system. They do not replace the system.
“Transmission projects need scrutiny. Routes should be argued hard. Communities deserve respect, fair compensation and to be heard. Costs should be challenged line by line.
“But stopping essential infrastructure because it may be politically convenient is not leadership. Electricity is an essential service. It is not a campaign tool. We need leaders prepared to explain the trade offs, wear the noise and build the kit Australia requires.”
Roger Dargaville, an Associate Professor in renewable energy and civil and environmental engineering at Monash University, says he is not convinced there is any useful information to be gained from another review of the VPEC’s Plan B for VNI West.
“VicGrid and Jacob’s evaluation of Plan B notes that the reduced transmission capacity in the plan would make it difficult to connect sufficient renewables to the grid to meet the government’s targets, and that the concept of augmenting existing transmission lines is fundamentally flawed as it would require existing lines to be replaced, leaving the system severely constrained for an extended period,” Dargaville told Renew Economy on Friday.
“I’d like to see the calculations that show that an $11 billion investment would cost each Victoria household $600 per year,” he adds.
“Simple maths shows that with a 20 year payback (and the infrastructure would obviously last much longer than that) and a 6 per cent cost of capital, across the 2.5 million households and approximately 800 SMEs in the state that would equate to $264 per customer.
“And that’s before you consider the benefits of accessing cheaper renewables across the state from building the transmission infrastructure, and given that AEMO’s RIT-T (Regulatory Investment Test for Transmission) shows the project is technically and economically viable, we can assume the benefits are greater than the costs.
“Further delays to building out the transmission network would slow the ability to connect new wind and solar plant to the grid and would reduce the benefit of smoothing the natural variability in renewables by accessing plant across a broad geographic region,” Dargaville says.
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