Iberdrola has won the contract to develop the Victorian section of the Victoria to New South Wales Interconnector West, marking a major step forward for one of the state’s most significant grid upgrades and the Spanish renewables giant’s first foray into the Australian transmission market.
VicGrid on Tuesday revealed that it had selected Iberdrola as the development partner for the planned 500 kilovolt (kV) double-circuit electricity transmission line that will link Victoria’s Western Renewables Link with Project EnergyConnect in New South Wales.
VicGrid, which just last month officially took the reins on planning Victoria’s transmission upgrades, says it will lead the development of VNI West, with Iberdrola supporting project design, procurement and planning and environmental approvals.
“If Iberdrola meet VicGrid’s expectations through the development phase, they will then be appointed to build, own and operate the project with strict oversight from VicGrid,” a statement said on Tuesday.
“As the project progresses, Iberdrola’s presence on the ground will increase.”
The selection of Iberdrola comes just weeks after a preferred route for the Victorian component of VNI West was published, ahead of a final round of consultation with affected landholders and communities.
The proposed route is roughly 240km long and 70 metres wide, running from Bulgana to Tragowel, near Kerang in the state’s north, before crossing into NSW and connecting to the Transgrid network.
To date, there has been plenty of controversy stirred up by the project, including pushback from farmers and other landholders who say communication has been poor and their concerns about the impact of the huge new poles and wires have been ignored.
In 2023, a procession of tractors, utes and trucks headed to Melbourne to protest VNI West and the Western Renewables Link, which both meet at a new terminal station in Bulgana in central western Victoria.
VicGrid says Iberdrola Australia benefits from the extensive experience of its parent company in delivering and managing complex energy infrastructure projects, including community collaboration, across Australia and globally.
“Reflecting the importance of regional engagement, the tender process required proponents to demonstrate how they would work collaboratively with landholders, Traditional Owners and communities throughout the project’s delivery,” VicGrid said in a statement.
“The company’s technical and project management expertise, combined with a commitment to sustainable and transparent delivery, aligns closely with VNI West’s objectives to design responsible infrastructure that supports Victoria’s renewable energy transition.”
In its own statement, Iberdrola notes that VicGrid will lead engagement with landholders, Traditional Owners, and communities, and
remain the primary point of contact.
Importantly, Iberdrola’s selection via competitive tender signals a welcome challenge to Australia’s transmission monopoly, which has been criticised for delaying the progress of crucial grid upgrades and driving up costs at a time that consumers can least afford it.
A 2023 study commissioned by Nexa Advisory found that Australia could shave nearly $1 billion ($952m) off transmission project costs from bringing globally-proven non-incumbent transmission entities into the mix, with established scale and procurement partnerships.
In Australia, Iberdrola is well established as a developer, owner and operator of renewable energy projects, mostly wind farms but also some solar and a growing pipeline of battery storage. But it has been seeking to extend its reach into transmission since 2022.
To this end, Iberdrola is part of two different consortia in the running to construct the grid infrastructure to support the New England Renewable Energy Zone in New South Wales and the transmission line to link Victoria’s offshore wind projects with the main grid.
“The appointment of Iberdrola as the development partner for VNI West provides confidence that this critical project will continue to progress with the right expertise and focus, maintaining grid reliability and delivering genuine benefits for regional communities,” said VicGrid chief Alistair Parker.
“As Victoria reforms how transmission infrastructure is developed, VicGrid looks forward to working closely with Iberdrola and local stakeholders to deliver VNI West responsibly and ensure landholder and community voices remain central to the process.”
Iberdrola Australia chief Ross Rolfe says the company is committed to working collaboratively to meet the project’s objectives and timelines.
“VNI West is a critical project for Australia’s energy future and our global and local expertise in renewable energy, networks and large-scale infrastructure positions us well to support its successful delivery.
“We look forward to building strong relationships with local communities and stakeholders throughout this project,” Rolfe said on Tuesday.
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