Victoria plots green energy revolution, transmission routes finalised
Victoria has expanded its renewable energy zones to cover 8 per cent of the state, promising lower bills despite warning of sharp increases in transmission costs.
Victoria has boosted the size of giant renewable energy zones to cover 8 per cent of the state’s land area and promised to modestly lower household bills despite conceding “sharp increases” in transmission costs as it pushes ahead with a green energy masterplan out to 2040.
The state government in May laid out a draft blueprint through to 2040 that targets six giant renewable energy zones and a string of new transmission lines, with several deemed “urgent”, to prepare for major coal-fired power stations closing later this decade.
It has finalised that plan with roughly 8 per cent of the state’s land to be used as green zones, from 7 per cent previously, guiding where wind and solar projects and batteries for storage should be developed.
VicGrid said the total, unescalated economic cost of its optimal development pathway was $7.9bn, cautioning that delivering the projects was expected to increase the transmission
component of energy bills by $14 per household and $34 per small business annually.
However, it said the transmission hit would be offset by a reduction in wholesale electricity costs as a result of the generation and storage unlocked by its favoured rollout plan.
“This plan will deliver cheaper and reliable power for homes and businesses, lowering annual Victorian energy bills by $20 for households and $50 for businesses compared to not
implementing the plan,” the report says.
The zones in Victoria are Central Highlands, Central North, Gippsland, North West, South West and a combined western area covering Grampians Wimmera and Wimmera Mallee.
“Industry stakeholders consistently told us the size of zones and the amount of energy generated from each zone needed to be at a level that enabled the development of technically and commercially viable renewable projects,” VicGrid chief executive Alistair Parker said.
Victorian authorities say only “a fraction of the land within project sites” will be needed for infrastructure. On a typical wind farm, the turbines along with access roads and other infrastructure occupy only 2 per cent of the project site.
The state body conceded cost increases also continued to pile pressure on major transmission projects needed to connect renewable energy to the power grid, along with concerns over whether the major infrastructure would be built in time.
“The transmission infrastructure market is dynamic and has experienced sharp increases in costs in recent times,” VicGrid said.
“Key drivers of change have been increasing global demand from energy transition and electrification, rising raw materials, labour and contracting costs, supply chain constraints and market capacity pressures.”
Energy experts, industry and farmers have sounded the alarm on the VNI-West interconnector after the Australian Energy Market Operator released a report indicating the proponents of the project believe it is likely to cost $7.6bn, with a range of 30 per cent lower or 50 per cent higher, meaning it could cost as much as $11.4bn.
VicGrid pointed to a raft of reasons for transmission inflation.
“Suppliers and construction companies are also facing substantial rises in overheads, including insurance for larger contracts, logistics of increasingly globalised operations and environmental offset costs,” the agency said in a report on Sunday.
“Transmission projects are also undertaking more extensive community and stakeholder engagement activities, which also contributes to increased delivery costs.”
Farmers have criticised the Allan government for forcing regions to carry the burden of its renewable targets and ignoring concerns its transition plan will compromise food security.
“Respondents stressed the need to protect farmland and raised concerns about impacts to farming activities, biosecurity risks and productivity,” the report notes.
“There was an underlying sentiment that farms are for food and fibre production, not for the production of energy. Efforts to avoid farmland in the design of the draft proposed REZs were also acknowledged.”
Victoria aims to reach a 40 per cent renewable electricity target this year and then turbocharge the rollout of solar, wind and batteries over the next decade to hit goals of 65 per cent by 2030 and 95 per cent by 2035 when AGL Energy’s Loy Yang A coal plant is due to shut.
To reach those goals by 2040, about 5.2 million solar panels will be deployed across large-scale facilities contributing 2.7 gigawatts of electricity.
Onshore wind will deliver 970 turbines, or 5.8GW of power, while 500 wind turbines will be located offshore for a 9GW boost.
The state’s ability to hit its goals will also play an important role in federal Labor’s aim for Australia to more than double renewable energy to 82 per cent of the power grid by 2030.
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