On 17 August 2025, VicGrid released the final 2025 Victorian Transmission Plan (VTP). This builds on the 2024 Victorian Transmission Plan Guidelines (Guidelines) released late last year. The VTP provides a framework for a consistent and coordinated approach to Victoria's clean energy transition. Both the Guidelines and the VTP form part of the Victorian Transmission Investment Framework (VTIF) – a framework which contains a suite of reforms to support the State’s energy transition.

This article is part of our 'Amping up' series following the development of the Victorian Transmission Plan.

The Victorian Transmission Plan is an important piece of VicGrid's new and integrated approach to facilitating energy generation and transmission infrastructure to support Victoria's needs over the next 15 years. It aims to support the state’s ambitious targets of 65% renewable electricity by 2030 and 95% by 2035.

The VTP forms the strategic plan under the VTIF, and aims to provide policy certainty, attract private investment and embed community engagement at the core of Victoria’s energy future. The VTP aims to unlock the network capacity needed to deliver renewable and reliable energy to Victorians through to 2040 and beyond.

The VTP proposes the following additional renewable generation capacity by 2040:

• 5.7 – 9.6 GW of new onshore wind;
• 9 GW of new offshore wind;
• 2.3 – 8.9 GW of new utility-scale solar;
• 4.8 – 7.7 GW of storage capacity; and
• 4 new transmission projects across 3 programs (in addition to 3 existing projects).

The VTP outlines its plan to develop the following:

• Renewable Energy Zones (REZs): six areas across Victoria have been identified as the most suitable for new onshore renewable energy generation, such as wind and solar. The REZs are relatively compact, collectively covering less than 7.9% of the State’s land area.
• Transmission projects: seven transmission projects proposed over the 2025-2040 period, designed to support the development of REZs and offshore wind farms; and
• Gippsland Shoreline REZ: the Gippsland Shoreline REZ will host onshore connection infrastructure to support offshore wind generation.

Key elements of the Victorian Transmission Plan

1. Renewable Energy Zones (REZs)

Following the consultation period earlier this year, the VTP has been updated in response to feedback from community members, Traditional Owners and industry stakeholders. Notably, the Wimmera Southern Mallee and Grampians Wimmera REZ proposed under the draft VTP have been merged into a single Western REZ, now comprising two distinct parts. This reduces the total number of onshore REZs to six. Additionally, VicGrid has clarified that the generation figures modelled for each REZ are indicative only, serving as planning tools to guide transmission infrastructure needs rather than acting as limits on actual generation capacity.

The VTP proposes six REZs across Victoria, identified as the most suitable for new onshore renewable energy generation and storage. The proposed REZ locations are:

1. Central Highlands REZ;
2. South West REZ;
3. Western REZ;
4. North West REZ;
5. Central North REZ; and
6. Gippsland REZ.

These are shown in Figure 1 of the VTP:

REZs will need to be formally declared by the Victorian Minister for Energy and Resources (Minister) pursuant to a statutory process. The process will require the Minister to make a declaration in a formal order, which will outline:

• the boundaries of the proposed REZ;
• the preferred transmission corridor within and outside of the REZ boundary;
• the intended hosting capacity of the REZ; and
• the engagement requirements and expectations of project proponents during project development.

A draft of the Order showing the proposed REZ is expected to be placed on public notice for a minimum of 6 weeks. The Minister must consider any submissions when determining whether the REZ should be declared under an Order.

The proposed REZs under the VTP include substantial changes to the REZ Study Area under the Guidelines. For example, the Ovens Murray REZ has been removed, and the Central North REZ no longer includes the Benalla and Glenrowan regions. The REZs are much smaller in size when contrasted with the areas that VicGrid previously identified in its Guidelines to be most suitable (tier 1) and suitable for investigation (tier 2), based on the combination of high opportunities and low constraints for wind and solar. The final location of the REZs will be further refined as part of the REZ declaration process.

2. Offshore wind connections

The VTP also includes comprehensive planning for offshore wind generation, particularly focusing on Victoria's ambitious offshore wind targets of at least 2 GW by 2032, 4 GW by 2035, and 9 GW by 2040. To support the first 2 GW of offshore wind in Gippsland, VicGrid has developed transmission infrastructure to connect offshore wind projects to the grid. This includes a transmission line from the Latrobe Valley to Giffard, avoiding multiple private lines and minimising impacts and costs. The Gippsland Shoreline REZ is designated for offshore wind developers to site their onshore connection infrastructure, minimising impacts on coastal communities and the environment. The Gippsland Shoreline REZ is different to the 6 REZs identified above which are designated for onshore wind and solar generation.

Only offshore wind projects will be eligible to participate in the Gippsland Shoreline REZ. Onshore generation projects within the Gippsland Shoreline REZ will be subject to the Grid Impact Assessment process.

VicGrid will soon consult on a proposed access scheme for the Gippsland Shoreline REZ. The scheme will set out the intended 2 GW hosting capacity for offshore wind within the Gippsland Shoreline REZ and the process for allocating access to this capacity, along with other requirements.

3. Firming and other technologies

The VTP affirms Victoria's emphasis on renewable generation going forward. However, the VTP recognises the need for other technologies to complement renewables and ensure a reliable and secure energy mix. To manage periods of low renewable generation, the VTP contemplates a significant contribution by batteries and long-duration storage (such as pumped hydro). In addition, gas will play a role as firming infrastructure (to support periods of peak demand and low renewable generation), and interconnectors will continue to give access to diverse renewables and firm capacity from other jurisdictions.

4. Transmission network planning

The VTP identities seven priority programs for transmission infrastructure investments by 2040 to enable the development of REZs and offshore wind. These transmission projects are intended to leverage the projects that are already under development or construction, including: Western Renewables Link, Victoria to New South Wales Interconnector West, Marinus Link Stage 1 and the transmission infrastructure required for the first 2 GW of offshore wind in Gippsland.

These new projects are:

1. Western Victoria reinforcement program: network upgrades to support the connection of onshore wind and solar generation in the proposed Western, Central Highlands and South West REZs, and reinforce the network supply to metropolitan Melbourne. Proposed by year end 2030.
2. Eastern Victoria reinforcement program: network augmentations and upgrades, and an additional line between Hazelwood and Yallourn, to meet increased demand in eastern metropolitan Melbourne and support the proposed Gippsland and Central North REZs (and the Gippsland offshore wind area). Proposed by year end 2030.
3. North West strengthening program: replacement of sections of the existing single circuit transmission with a new high-capacity double circuit line, to support additional generation in the proposed West and North West REZs. Proposed by year end 2035.
4. South West expansion program: a new double circuit 500 kV line to meet demand for high-quality wind generation in Victoria's west including additional generation from the South West and Central Highlands REZs. Proposed by year end 2033.
5. Gippsland offshore wind transmission stage 2 program: a new transmission loop to connect additional offshore wind generation in the Gippsland offshore wind area to meet Victoria’s 2035 and 2040 offshore wind targets. Proposed by year end 2033-2038.
6. Latrobe Valley strengthening program: new power flow controllers and dynamic load rating devices, to facilitate the integration of wind and solar, manage power flows, and address network congestion (including to support the proposed Gippsland REZ and Gippsland offshore wind area). Proposed by year end 2034-2035.
7. Offshore wind upgrade: uprating of existing lines from Heywood to Portland, to connect offshore generation from the Southern Ocean offshore wind area to Portland. Proposed by year end 2038.

These 7 priority transmission programs are identified in Figure 3 of the VTP:

VicGrid will now commence planning for and procuring these transmission programs, including deciding whether each project will follow a contestable or non-contestable procurement process. A competitive procurement will not always be possible, such as where the project cannot be separated from existing assets, or where there is an urgent need for the market to respond. VicGrid's proposed procurement contestability framework is set to come into effect following the anticipated passage of the National Electricity (Victoria) Amendment (VicGrid – Stage 2 Reform) Bill. Stay tuned for the next instalment of our 'Amping Up' series, where we will explore the implications of the VicGrid Stage 2 Reform Bill in more detail.

5. Community engagement

In 2024, VicGrid released the draft Renewable Energy Zone Community Benefits Plan (Community Benefits Plan) which is another key document for industry to engage with in the lead up to the release of the declaration of REZs, as each REZ will have dedicated community benefit arrangements.

An important feature of the VTP is the emphasis on meaningful engagement with various stakeholders, including communities, industry, and First Peoples, to ensure broad-based participation and input in the planning process. The approach is designed to minimise impacts and maximise benefits, fostering partnerships that support regional development and the energy transition. We welcome the emphasis on long-term social licence as part of Victoria's renewable future.

The VTP, which adopts the commitments under the Community Benefit Plan, introduces benefits for:

• Landholders: Landholders hosting new electricity transmission infrastructure will receive payments of $8,000 per kilometre of typical easement area per year for 25 years, in addition to existing compensation arrangements.
• Traditional owners: The Victorian Government will partner with First Peoples to co-design benefits for Traditional Owners of REZs and related transmission corridors.
• Regional communities: REZ Community Energy Funds will support projects that improve energy outcomes or deliver benefits from the energy transition for communities in regions hosting REZs and new transmission infrastructure by pooling resources.
• Significantly impacted neighbours: Transmission companies will provide benefits to Victorians whose land is near, and significantly affected by new transmission infrastructure.

Legislation to give effect to the REZ Community Energy Funds and Traditional Owner benefits is expected to be introduced into Victorian Parliament. These benefits will be funded by access fees for the REZ, paid for by mandatory contributions from transmission, generation and storage companies.

While the stated intention to engage with the community is welcomed, a one-sized-fits-all approach is not always appropriate. Instead, an approach must be flexible to ensure engagement strategies and benefit sharing mechanisms can be tailored to reflect the unique needs of each community and to develop direct and meaningful connections between developers and communities. We consider benefit sharing and its importance for project developers in light of current trends both internationally and within Australia in our earlier Insight piece here.

Key considerations

We outline below key considerations that industry should be proactively considering following the release of the VTP.

Planning and environment approvals

The VTP represents a significant shift towards more centralised and coordinated planning of Victoria's energy transition, recognising both the scale of the challenge ahead and the lessons learnt from previous approaches. However, there are opportunities to further streamline the planning approvals pathway for renewable energy projects within REZs.

The VTP refers to the existing Victorian planning approval and environment assessment processes under Planning and Environment Act 1987 (Vic) and the Environment Effects Act 1987 (Vic) respectively. It observes that the Development Facilitation Program provides an accelerated planning assessment pathway for eligible projects, being Renewable Energy Facilities with an installed capacity of 1 megawatt or greater and utility installations for the transmission, distribution or storage (where the installed capacity is 1 megawatt or greater), under clause 53.32 (Significant Economic Development) of the Victoria Planning Provisions. The VTP also recognises the Victorian Government's commitment made in the 2024 Economic Growth Statement to speeding up the Environment Effects Statement (EES) assessment review times of no longer than 18-months. The VTP states that it is a high-level plan, intended to support approval processes. However, the VTP does not provide insight on how the 2024 Economic Growth Statement’s commitment to faster planning approvals for projects within REZs will be implemented through the Victorian Planning Policy Framework. This could be achieved through opportunities to refine EES referral criteria or scoping requirements, but remains to be seen.

The approach to integrating the VTP and REZs into the Victorian Planning Provisions also remains an open question. VicGrid and the Department of Planning have indicated they are working to embed the VTP in the Planning Policy Framework, however the exact nature of the reforms remains to be seen. Given the strategic planning underpinning the REZs and the VTP, we would welcome the introduction of complementary reforms to the environmental and planning approvals pathway, such as the introduction of new REZ overlays.

Furthermore, whilst issues such as cumulative impacts become much more relevant in planning decision-making due to the concentration of new development within specified areas, we query whether a suite of controls similar to those which are being adopted for Strategic Extractive Resource Areas may be an appropriate way to streamline the assessment of projects within REZs while recognising the strategic land use planning which has underpinned their development. This could be coupled with the implementation of an approvals coordinator function for projects within REZs, adopting a model that has been successful in helping to drive investment and remove uncertainty in other contexts.

Managing inconsistent land uses

The proposed REZ boundaries under the VTP seek to reduce the likelihood of overlap with critical minerals deposits identified by Victoria’s geoscience knowledge and data. However, there are known deposits of critical and strategic minerals and metals in the proposed Western, Central Highlands, North West and Central North REZs, along with potentially undiscovered deposits. The VTP states that where a proposed or future REZ overlaps with critical mineral deposits, exploration and extraction will not be excluded within REZs. The type and nature of mineral deposits, and implications for limiting or preventing access will be considered during the approval of above-ground land uses. As part of the Critical Minerals Roadmap, a land use coexistence framework will be developed to balance energy, agriculture, and resource priorities and to support coordinated and transparent decision making. We look forward to the release of further details in respect of this policy and further guidance in respect of land use co-existence with REZs.

Treatment of projects located outside of a REZ

The VTP provides a welcome indication of the Victorian Government’s strategic direction for renewable energy development, including the role of REZs. However, further detail would assist to clarify how proposed generation and storage projects located outside declared REZs will be managed. The VTP notes that these projects will be subject to a Grid Impact Assessment (GIA) and will need to demonstrate that their project will not result in generators located within REZs being 'excessively curtailed'. The GIA will be the primary document for applicants seeking to connect new generation outside a REZ or generators wishing to expand the nameplate capacity of a facility connected outside a REZ. As part of this assessment, projects must demonstrate that their connection will not have a negative impact on projects inside of the REZs by limiting their generation or taking up grid capacity (Criterion 1) and meet both government expectations for community and Traditional Owner engagement and benefits (Criterion 2).

The Guidelines expressly outlined that REZs will not 'lock in' development in any region or prevent individual projects. The Guidelines clarified that all proposed projects (both within and outside REZ areas) will continue to be assessed on a case-by-case basis and will be subject to relevant planning and environmental approvals processes. However, these statements are not identified as clearly in the VTP. Instead, the approach taken by the VTP is that any new generation projects outside of REZs will not be prohibited but will be subject to a GIA to reduce the risk of curtailment for REZ generators.

If REZs are to be considered as part of planning assessment processes, then it could become more difficult to obtain planning approval for projects outside of REZs.

Overall, while the VTP sets out a clear trajectory, further guidance would assist stakeholders in understanding the role that REZ location will play in planning and environmental decision-making.

REZ Access Schemes

A key feature of the proposed Victorian Access Regime will be REZ Access Schemes that are tailored to the requirements of each REZ. Once a REZ is declared, VicGrid will publish a draft REZ access scheme for consultation with industry. It will set out access limits (i.e. caps on the maximum capacity of different types of renewable generation that can be connected within the REZ), scheme fees (annual fees to be paid by operators of approved generation and storage projects, access conditions (e.g. requirements relating to a proponent’s community engagement performance, operational dates or other technical performance requirements) and the access allocation process.

Addressing underinvestment risks

A key measure of the VTP’s success will be how effectively REZ hosting capacity, transmission infrastructure, and storage developments align with future energy demands. Concerns have been raised about the potential risk of substantial underinvestment in transmission infrastructure.

However, as part of the VTP, VicGrid has developed three hypothetical scenarios to forecast renewable energy supply and demand, aligned with the Australian Energy Market Operator's (AEMO) 2024 Integrated System Plan (ISP) and tailored to Victoria’s context under the Victorian Transmission Investment Framework. This approach helps manage the risks of under or over investment and ensures the proposed project mix remains adaptable to future uncertainties.

In response to concerns raised during the consultation process, VicGrid has increased the overall REZ footprint. However, this increase equates to approximately 1% of Victoria's total land area. The REZs outlined in the VTP are still relatively modest in both geographic scope and hosting capacity, with a strong concentration in north-west Victoria. Compared to the broader zones defined in AEMO’s ISP, Victoria’s REZs under the VTP are significantly more constrained, covering just 7.9% of the state’s land area, in contrast to the 37% designated under the ISP.

This means that many areas across Victoria that are well-suited for renewable energy development fall outside these designated REZs. As a result, there is a risk that overall energy generation could be insufficient due to the exclusion of regions with appropriate and viable conditions.

What’s next for the Victorian Transmission Plan?

The VTP outlines a 15-year strategy for meeting Victoria's transmission and renewable energy generation needs. VicGrid will now begin detailed planning for the optimal development pathway of the REZs and transmission infrastructure projects, and work towards the formal declaration of REZs identified under the VTP.

The next iteration of the VTP in 2027 will adopt a longer-term 25-year outlook, with revised VTP plans to follow every four years.

The release of the VTP marks a pivotal step in shaping Victoria’s clean energy future. VicGrid has responded to community feedback to deliver a plan that aligns with current and emerging renewable energy developments and recognises the importance of cultural heritage and environmental considerations within the renewable energy sector. For industry, the VTP provides greater clarity and confidence when investing in renewable energy and transmission infrastructure that supports Victoria's decarbonisation and energy targets.

If you are a renewable energy project proponent and are interested in understanding how best to navigate these developments in transmission infrastructure planning, please contact one of our specialists.

Stay tuned for the Next article in our 'Amping up' series on the National Electricity (Victoria) Amendment (VicGrid Stage 2 Reform) Bill.