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VicGrid's role in the changing energy landscape

As our ageing and increasingly unreliable coal-fired power stations retire and are replaced by renewables, our energy grid needs to change to carry power from new renewable energy sources across the state to Victorian homes and businesses.

VicGrid is working to make sure this change delivers the safe, reliable and affordable power that Victoria needs for the future and that host communities have a say and can share in the benefits of the energy transition.

Building a resilient energy grid for Victoria

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VicGrid's responsibilities

VicGrid is:

  • Coordinating the planning and development of Renewable Energy Zones (REZs)
  • Investing $480 million in projects to strengthen and modernise Victoria’s energy grid
  • Changing the way we plan and develop electricity transmission infrastructure in Victoria to ensure it benefits all Victorians through the Victorian Transmission Investment Framework
  • Coordinating the delivery of the transmission required to connect new offshore wind resources to the grid
  • Working with the Australian Energy Market Operator to deliver major infrastructure upgrades
  • Providing information to communities.

Transfer of responsibilities for planning Victoria's shared network

  • The Australian Energy Market Operator (AEMO) leads the design of Australia’s future energy system and is currently responsible for the planning of the Victorian transmission network through AEMO Victorian Planning (AVP).
  • The Victoria Government is progressing reforms to change the way transmission is planned and developed in Victoria, through the Victorian Transmission Investment Framework (VTIF).
  • The VTIF reforms propose that the responsibility for planning Victoria’s declared shared network, and all of AEMO’s associated declared network functions, will be transferred to VicGrid from the Australian Energy Market Operator (AEMO). This will end AEMO’s Victorian transmission network service provider role.
  • This transfer is subject to legislation passing Parliament next year. Any transfer would be enacted in a staged and carefully considered approach in close consultation with AEMO to enable an orderly transfer of responsibilities.
  • Legislation to enable this transfer is expected to be introduced to the Victorian Parliament next year and to come into effect in mid-2025.

Funding the planning of renewable energy zones

  • As VicGrid takes up its new role planning renewable energy zones, we are also putting in place new arrangements to fund this work.
  • Currently, AEMO in its role as Victorian Transmission Planner, recovers the costs for planning the shared transmission network through charges to energy users, known as transmission use of service (TUOS) charges.
  • Consistent with this practice, VicGrid will recover the costs of renewable energy zone planning in a similar way.
  • Costs will be recovered from large directly connected customers and also from the electricity distributors who operate the poles and wires that deliver power to Victorian homes and businesses.
  • When transmission charges are passed through to distributors, they are ‘repackaged’ into network charges, which are then passed onto retailers, who pass them onto end users of electricity in Victoria.
  • AEMO’s revenue methodology for Victorian planning for 2024-25 has incorporated reference to VicGrid’s fees and charges for planning renewable energy zones. VicGrid has determined costs of $26.54 million can be attributed to renewable energy zone planning functions for 2024-25. This is equivalent to about an additional $3.20 on an annual household bill.

Full details of these charges are set out in the TUOS notice available below.

Our journey so far

In February 2021, we released the Renewable Energy Zones Development Plan Directions paper.

We then consulted industry and community stakeholders, with the volume and diversity of responses highlighting the importance of this initiative for the Victorian community and the energy industry. A summary of stakeholder views was published in the Engagement summary report.

The feedback we received has informed our subsequent policy work and consultation processes on reforms to transmission planning and development in Victoria and the prioritisation of projects to strengthen the grid. Further details on each of these workstreams is provided throughout this site.

VicGrid was established by the Victorian Government in 2021 as a division within the Department of Energy, Environment and Climate Action.

Page last updated: 19/03/25