Major energy project VNI West is likely to cost $7.6 billion — more than double early estimates.
The cost of building a controversial transmission line project designed to integrate renewable energy into the Victorian grid has doubled — a blowout set to put even more pressure on household bills.
Victoria
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Victorians consumers are set for more power bill pain after it was revealed a critical Victorian energy project has had cost blowouts of $3.7 billion.
The massive jump in construction costs for the Victoria to NSW interconnector West — a series of high voltage powerlines that will allow more renewables to plug into the grid — is revealed in a new report released by the Australian Energy Market Operator.
The report shows the project, which is already hugely controversial in Victoria’s west due to the impact on land and farming, has blown out from $3.9bn to $7.6bn.
But uncertainty over the estimates mean it could soar to as much as $11.4bn, with the Victorian Farmers Federation calling for the project to be scrapped.
The report revealed delays in construction, which recently caused the VNI West project to be pushed back two years to 2030, as well as increasing costs were among the factors contributing to the blow out.
In 2024, the VNI West project, which will see thousands of kilometres of high-voltage transmission lines built across Victorian farmland to connect renewable energy projects, was forecast to cost $3.9 billion, according to the Australian Energy Regulator (AER).
This was an increase from the previous estimate of $3.3bn.
The Victorian Farmers Federation said the potential for the project to cost $11.4bn “only adds to calls for the government to scrap it entirely”.
“The Victorian Government is risking smooth and reliable energy transmission by continuing to force the VNI West project through,” VFF president Brett Hosking said.
“Farmers know we need deep, economy wide cuts to emissions. We know the world is changing and we’re part of that change, but we won’t cop being steamrolled in the process.”
St Vincent de Paul Society national policy manager Gavin Dufty said the government must step in to shield consumers from huge cost increases.
“The government needs to underwrite these costs rather than them being paid for by increased electricity bills,” he said.
In June, Victorian Energy Minister Lily D’Ambrosio declined to comment on cost blowouts of transmission projects but said they were critical to energy security.
“If we do not build these transmission projects the lights will go out and the cost of power will go through the roof,” she said.
Ms D’Ambrosio was being grilled by National MP Jade Benham who said there were serious concerns about the impact on farmers, but also the cost to Victorians “who pay their energy bills now”.
Opposition Energy spokesman David Davis said the cost projections were alarming.
“AEMO reports on the transmission capital costs and distribution costs released over night should send a shudder through Victorian families,” he said.
“In short what they mean is the state government has lost control of the massive costs of these enormous new infrastructure projects with some costs doubling, and more consumers … will feel the pain as the cost of this infrastructure is sheeted home in massively increasing electricity bills.”
The latest report warned that transmission projects across the country were blowing out due to ongoing global supply chain constraints and workforce shortages, in many cases transmission projects have increased significantly by 100 per cent compared to 2024 projections.
“We recognise that higher costs for network development would ultimately affect consumer bills,” AEMO’s system design executive general manager Merryn York said.
“These revised cost inputs are material, and we will consider them carefully as we model an optimal development path that delivers the most efficient outcomes for consumers, while meeting government energy and emissions targets.”
The major transmission project in the state’s west, called VNI West or KerangLink, is now projected to open in 2030 rather than 2028 – the year the Yallourn power station is due to close.
The project has also been delayed by community backlash, with farmers folding multiple protests at parliament in recent months fighting back against new laws which would allow transmission companies to force their way on to private land.
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Originally published as Major energy project VNI West is likely to cost $7.6 billion — more than double early estimates.