Update on Developments with Victoria’s Renewable Energy Zones

Map of Vicvtoria showing the Renewable Energy Zones and the western Victoria Transmission Newtwork project currently under development

The Victorian Government has recently provided an update on the progress of Stage One of its Renewable Energy Zones Development Plan to strengthen and modernise Victoria’s electricity infrastructure for a clean energy future.

Victoria is undergoing a once-in a generation energy transition and Renewable Energy Zones (REZs) are set to play a key role, allowing for the orderly and strategic development of energy infrastructure.

The Renewable Energy Zones (REZs) Development Plan focuses on transmission network development within Victorian REZs. REZ development focuses on high-voltage transmission network investments to enable large-scale renewable generation and storage, rather than smaller-scale solutions and distribution network issues. The REZ Development program  is currently divided into two stages:

  • Stage One projects are focused on investments that the Victorian Government could immediately progress to deliver shorter-term grid remediation solutions in areas where network limitations are impeding renewable energy projects.
  • Stage Two projects are potential medium-term investments in REZ transmission infrastructure that due to their nature and complexity will involve further assessment and community and stakeholder consultation.

A program of proposed Stage One projects is currently being considered under three separate delivery streams:

1.Services to Strengthen the System

These projects aim to increase the ability of a transmission network to maintain a steady operating state when additional energy generators connect to the grid in the REZs.

A Call for Expressions of Interest in relation to three services to strengthen the system in the Murray River, Western Victoria and South West REZs is now closed. The Australian Energy Market Operator (AEMO) has commenced the next stage of the procurement process, including issuing an Invitation to Tender to shortlisted respondents.

2.Minor Network Upgrade Projects

These projects aim to relieve constraints and allow the transmission network to transport more electricity to consumers. A request for proposal process with the relevant incumbent network service providers for three sets of minor transmission network upgrades across the Murray River, South West and Central North REZs is currently underway.

3.Mortlake Turn-In Project

This project seeks to maximise renewable energy generation in Victoria by addressing network voltage constraints that are limiting how much electricity generators in the South West can feed into the grid. Currently, two 500 kV transmission lines run past the Mortlake Terminal Station but only one of them is connected to the station. The Mortlake Turn-In Project will connect the second 500 kV line to the station by upgrading existing equipment, which will reduce generation constraints and improve network stability.

Following assessments of the benefits and costs of the proposed project, the Victorian Government has directed AEMO to seek a proposal for the next phase of the investigation of the Mortlake Turn-In Project from the owner of the Mortlake Terminal Station, AusNet Services.

About the procurement processes

The program of proposed Stage One projects have been progressed by Ministerial Orders issued on 3 August 2021 and 11 January 2022 under the National Electricity (Victoria) Act 2005 s16Y. The procurement process for each delivery stream will determine the technical and commercial aspects, including scope of works and costs associated with each project. These processes will assist the Government in making final investment decisions, subject to projects demonstrating a clear benefit to Victorian households and businesses.

Implications if projects proceed

Collectively, proposed Stage One projects will potentially support up to 3,000 MW of new and existing renewable generation to flow through the grid in regions currently experiencing the most severe constraints.

The Victorian Government recognises that the nature of large-scale transmission and generation infrastructure means there is potential for such projects to impact on local communities.

If implementation of any one of these projects proceed, the Victorian Government will work closely with AEMO and project proponents to seek to maximise the benefits and opportunities, and minimise potential impacts associated with development for hosting communities. All proponents of projects proceeding to implementation will be required to ensure their projects adhere to appropriate planning and approval processes.

Next steps

Government decisions on whether to proceed with the projects are expected from Quarter 2, 2022. The timing of the commencement and completion of each project will depend on if, and when, the Government makes a decision to proceed with implementation, and the detailed scope of works outlined in response to each procurement process.

The Victorian Government continues to develop the framework for determining future transmission investment in REZs, VicGrid’s proposed role in that framework, and the Government’s broader approach to developing Victorian REZs. The Government will make further announcements regarding stakeholder consultation on the development of these frameworks.

Further Information

For more information, read the Renewable Energy Zones article on the Energy Smart Farming or visit the State government’s  Victoria’s Renewable Energy Zones.

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