One of Australia’s largest renewable energy transmission projects has expanded the planned development zones for solar, battery and wind developments with the cost of connection to almost double.
The latest version of Victoria’s 2025 Transmission Plan (VTP), released by state government agency VicGrid on Sunday, revealed a 200,000-hectare increase in area available to developers.
The plan outlines the parts of the state designated as renewable energy zones and the new transmission infrastructure needed in the next 15 years to connect them to the grid.
“The VTP is the cornerstone of a new approach – one that reflects not just engineering and economics, but also the values and voices of communities who host our energy infrastructure,” Victorian energy minister Lily D’Ambrosio says in a message in the opening pages of the new plan.
“The plan attempts to minimise the area of Victoria required for renewable energy zones and the new transmission infrastructure needed, while also providing project developers and investors with sufficient opportunity to generate the energy we need to power homes, farms, schools, businesses, hospitals and other essential services.”
The latest version takes areas of land designated as hubs for wind, solar and battery farms from the 1.66 million hectares proposed in May to 1.88 million hectares across six proposed renewable energy zones.
Source: VicGrid – click on image to enlarge
The amendment increases the footprint of these areas to 7.9 per cent of the state’s land area, up from 7.0 per cent in the original draft proposal, after industry feedback said larger areas were needed to make projects technically and commercially viable.
The number of distinct zones (see map above) has grown from seven to nine, also in response to feedback.
Source: VicGrid – click on image to enlarge
The greatest change will be in the state’s west with an expansion to the Wimmera-Southern Mallee zone, while a new area around Coleraine has been added to the South West zone.
According to the updated VTP, by 2040 the state is planning to add another up to 9.6 gigawatts (GW) of onshore wind, 9 GW of offshore wind, up to 8.9 GW of new large-scale solar and up to 7.7 GW of new short- and long-duration energy storage capacity.
D’Ambrosio says more than 42 per cent of Victoria’s electricity was produced by renewables in the past financial year, with the state reaching record levels of renewable energy generation.
The VTP says that these figures factor in new capacity from already committed projects across the state. The table below offers a breakdown of what is already installed, and where, what is in the pipeline for development and the extra capacity that is forecast across three different scenarios.
Under Scenario 2, which considers a potential future where new energy-intensive industries are established at scale, including data centres,
hydrogen production and green aluminium – new onshore wind and solar added in REZs, alone, would total around 14.2 GW.
Source: VicGrid
“Our record investment in renewable energy is paying off,” she said in a statement on Sunday.
“Victoria consistently has the lowest wholesale power prices in the country, helping to slash energy bills for families and businesses.”
Victorians paid an average wholesale price of $107 per megawatt hour, compared to $151 for NSW, $138 for South Australia, $127 for Queensland and $115 for Tasmania, according to government data.
But the latest modelling predicts the cost of connecting Victoria’s renewable energy zones could almost double.
While the government initially estimated a $4.3 billion cost, VicGrid puts the latest price tag closer to $7.9 billion, taking into account new Australian Energy Market Operator costings for the transmission lines.
The VTP report says that some of this cost would be incurred even if the optimal development pathway was not delivered, for such things as end-of-life replacement of critical assets or for transmission infrastructure needed to meet the legislated offshore wind targets.
“Because these projects must go ahead, our economic analysis adjusts for this,” the report says. “After these adjustments, and others that reflect expected escalation above inflation, the total net economic cost of the projects in the optimal development pathway is $6.6 billion, or $4.2 billion in present value terms.”
Source: VicGrid
The costs are expected to be largely recouped through higher consumer bills, although the government argues Victorians will overall be better off with wholesale energy costs lowered by the delivery of more renewable energy into the grid.
“Without the plan, we couldn’t connect new renewables to the grid, pushing up energy bills, leaving our industry, businesses and homes without secure power, and ultimately costing our economy $9.6 billion,” D’Ambrosio says in her introduction to the VTP.
The federal government has a target of 82 per cent renewable energy in the national grid by 2030, up from 43 per cent this year.
Source AAP reporter Samantha Lock with additional reporting from Sophie Vorrath
