VNI West’s $4 billion cost blowout revealed

Forecast to cost $3.6 billion last year, new estimates now expect the VNI West to cost more than $7.5 billion to build. See the details.

Victorian farmers have had enough, demanding construction of the VNI West transmission line to be scrapped as its cost doubles.

Victorian farmers have called for the VNI West transmission line to be scrapped after the Australian Energy Market Operator this week revealed the cost had blown out from last year’s estimate of $3.6bn to $7.6bn.

AEMO’s 2025 Electricity Network Options Report, found the cost of building VNI West and many of the transmission lines outlined in its original 2024 integrated system plan had blown out by “100 per cent higher in some cases”.

“Transmission projects in the NEM are currently experiencing very strong competition for workforce and resources both within Australia and globally, as well as prioritising local engagement and adjustments to project scope and transmission line routes to accommodate community engagement and feedback,” the report stated.

Victorian Farmers Federation president Brett Hosking said: “We know this (VNI West) is a failed project and this report only adds to calls for the government to scrap it entirely.”

“There’s huge opposition to this project throughout rural communities, and rightly so. This won’t change until the government and AEMO revisit their approach and treats farmers and our rural communities with the respect they deserve,” Mr Hosking said.

“To date the energy transition has been a failure and the Victorian Government is risking smooth and reliable energy transmission by continuing to force the VNI West project through.”

AEMO’s revised costing covers both the NSW and Victorian sections of the VNI West route and excludes the Western Renewables Link.

Victorian Energy Policy Centre director Bruce Mountain has repeatedly warned AEMO was grossly underestimating the cost of building new transmission lines and “now it has come to light”.

“It has gone beyond outrage,” Professor Mountain said. “Someone really needs to be held accountable in AEMO and the Energy Minister who takes their advice.”

“It is remarkable that our governments... have not long ago announced a hold on AEMO’s actionable ISP, while they reach out for credible, honest and independent advice.”

Ultimately the cost of building VNI West and other transmission lines will be recovered as extra charges on all Australians’ power bills.

AEMO will feed the latest costings into its 2026 integrated system plan, the draft of which will be published in December, providing the state and federal governments with the latest estimates on both the total costs and benefits of transmission projects.

The big question for Victorian Energy Minister Lily D’Ambrosio and her transmission planning division VicGrid, is whether they will still pursue VNI West, given the massive costs, which AEMO says could still blow out by another 50 per cent to $11.4bn.

AEMO’s report found costs had blown out due to:

SUSTAINED supply chain pressures on materials, equipment and workforce;

MARKET competition driven by a high number of concurrent projects under development in the national electricity market;

PROJECT complexity, including an increased number of projects planned for remote areas;

SOCIAL licence and additional community and landholder engagement along proposed transmission line routes;

SCOPE revision as more detailed project assessments are completed; and

ADDITIONAL contracting costs to account for risk allocation in engineering, procurement and construction contracts in response to pressures in the current market.