Victoria’s Net Zero Transmission Plan Blows Out to $7.9 Billion

The government is pushing to finalise 6 renewable energy zones for Australia’s second most populous state,

Solar panels are seen on the rooftop at AGL's Docklands office in Melbourne, Australia on Aug. 20, 2015. Scott Barbour/Getty Images

Victorian taxpayers face a $7.9 billion (US$5.1 billion) bill to cover transmission infrastructure for the state’s push towards net zero.

The figure outstrips an earlier estimate in June for the project to cost $4.3 billion.

The 2025 Victorian Transmission plan (pdf) unveiled on Aug. 17, proposes six renewable energy zones for Australia’s second most populous state, including the Central Highlands, Central North, Gippsland, the North West, the South West and Western.

An extra Gippsland shoreline renewable energy zone has also been proposed to support offshore wind turbine development.

“In total, the proposed renewable energy zones cover 7.9 percent of Victoria’s land area,” government agency VicGrid said.

Renewable energy zones are dedicated clusters for wind, solar and battery storage projects.

“The total, unescalated economic cost of the optimal development pathway is $7.9 billion,” the VicGrid report says.

A view of Wonthaggi Wind Farm to the south-east of Melbourne in Victoria, Australia, on July 7, 2015. Quinn Rooney/Getty Images

The VicGrid report also notes that the $7.9 billion price tag excludes multiple factors including land acquisition.

“The transmission costs reflect capital expenditure of the projects and do not include operating and maintenance expenditure, although allowances for operations and maintenance costs are included in the cost-benefit analysis,” the report states.

“The costs also exclude allowances for land acquisition, VicGrid and development/delivery partners, financing, and risk and escalation costs.”

During a 2025-26 budget estimates hearing on June 6, the Victorian Labor government confirmed a $4.3 billion estimate (pdf) for the plan.

The report noted that the transmission infrastructure market was dynamic and had experienced “sharp increases in costs in recent times.”

“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,” the report notes.

Engaging with “Traditional Owners and First Peoples” will also be a priority.

“We are prioritising early engagement and involvement of Traditional Owners and First Peoples in planning for renewable energy and transmission infrastructure,” it states.

Victoria’s Energy Minister Lily D’Ambrosio described the plan as a major milestone in the state’s energy transition.

“As coal-fired power stations close and we move further toward a future powered by renewables, we need to support this transformational change with a plan that balances the long-term interests of all Victorians,” she said.

Victorian Minister for Energy and Resources Lily D'Ambrosio speaks to media at the Parliament of Victoria in Melbourne, Australia on Oct. 16, 2024. AAP Image/Joel Carrett

D’Ambrosio said without the plan, the government would not be able to connect new renewables to the grid.

“We have already taken significant strides in the transition to renewable energy and with this plan now in place, we can ensure we build the right infrastructure in the right place at the right time to provide all Victorians with reliable and affordable power,” she added.

Shadow Minister Says ‘Little Support’ From Community

Liberal Shadow Minister for Energy David Davis said the renewable energy zones would not constrain surging electricity and gas prices.

He also noted they appeared to have “little support across vast areas of regional Victoria.”

“The changes to so-called renewable energy zones come amid controversy on Labor’s heavy-handed approach to its roll out using authoritarian laws and bullying tactics to overwhelm regional communities,” he said in a statement.

“What has happened to basic democracy in Victoria?”

“And the roll out of Labor’s big transmission wires will force the electricity bills of every Victorian family upwards.”

On Aug. 17, the Allan Labor government said 42 percent of the state’s electricity was generated via “cheap” renewables. The government is aiming for 65 percent of its grid to be powered by renewables by 2030, and 95 percent by 2035.