Victoria relying too heavily on offshore wind, and onshore zones are too small, says investor lobby

Victoria has been accused to relying too heavily on offshore wind projects, as yet another major clean energy investor lobby says the state’s proposed land-based renewable energy zones are too small.

The Clean Energy Investor Group, which represents many Australian and international renewable energy and storage investors, says it is worried that the narrow goals of Victoria’s newly updated transmission plan is not ambitious enough.

The CEIG believes the state is leaning too heavily on the still nascent offshore wind opportunity by making the renewable energy zones (REZs) too small, a view echoing that of the Clean Energy Council last week.

“[The small REZs] risks limiting long-term investment potential and flexibility. VicGrid should draw lessons from the Central-West Orana and South-West REZs in NSW, where initial under-sizing created challenges for later-stage investment and network upgrades,” the submission from CEIG head of policy Marilyne Crestias says.

It says the solution is to make the REZs bigger, with a view to the future possibilities associated with the energy needs for green industries, and have a plan for making them bigger in future to give communities and investors clarity.

The other key worry is that Victoria’s plan relies too heavily on meeting its offshore wind targets without providing a plan for if that sector doesn’t meet the expectations placed on it.  

While the state has legislated targets for a mix of renewable energy in its grid, it has specifically said it wants at least 2 GW of offshore generation capacity by 2032, rising to 4 GW by 2035 and 9 GW by 2040.

“The Commonwealth Government has yet to announce whether it will support [offshore wind] auctions. This comes in a global context where the technology continues to face headwinds: projects underway have been cancelled due to supply chain, equipment availability, and other issues,” the CEIG submission says.

“These challenges are leading developers to seek more certain routes to projects that will make it to market. Other jurisdictions now take a base case of little or no offshore wind.”

The submission also notes that specific details about the auctions “remain scarce”, despite Offshore Wind Energy Victoria (OWEV) executive director Anh Mai saying in June it’s being fine-tuned before launching in September.

With Victoria’s proposed REZs being smaller than many industry groups wish, questions are being asked about what happens to projects that are currently outside these areas. 

The draft plan wants projects to do grid impact assessments to make sure those within REZs aren’t curtailed, but it’s a process that could become infamous for delays and complexity for those outside, the CEIG worries. 

The solution is to create a “clear and replicable criteria” that developers can use to assess the grid impact of a project, and for developments that are already under way outside the REZ areas there must be “transitional arrangements”.

“CEIG urges VicGrid to… develop a common, agreed-upon definition of, or standard for, ‘excessive curtailment’,” it said. 

“It would also be useful to understand how the VTP will treat BESS facilities and how their grid benefits will be assessed. 

“There is also concern that the requirement for utility scale storage projects outside a REZ to complete a Grid Impact Assessment could lead to costly and concerning consequences … Victoria risks losing both projects already in development and critical renewable energy projects in its pipeline.”

The CEIG submission reflected fears that Queensland’s war on renewables is shaking faith in other states’ efforts to supercharge their own transitions, particularly if there is a change of government in Victoria, which must hold a new state election in November, 2026.

Victoria has a legislated target of reaching 95 per cent renewables by 2035, but fears that a future Coalition government could change the targets or remove them altogether.

The new Queensland LNP government has already delayed and cancelled some advanced renewable energy projects, along with funding for the major CQ-H2 green hydrogen project, and in late June locked in rules that could make big clean energy developments impossible to ferry through newly complex rules. 

It is also looking at repealing the state’s legislated renewables targets.

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