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What is a renewable energy zone?
Renewable energy zones will be areas of the state that not only have abundant renewable energy resources, such as wind and sun, but are also appropriate for development from a land use and environmental perspective.
Renewable energy zones may contain renewable energy infrastructure including solar and wind projects, and batteries for storage, and will be connected to the transmission network in an orderly and efficient way.
Coordinating development of large-scale renewable energy projects in renewable energy zones will help meet climate targets and keep the lights on for Victorians as coal-fired power stations retire. Renewable energy zones will help match renewable energy with transmission infrastructure and demand, to ensure our electricity system is reliable, secure and developed at the lowest cost possible.
Why do we need renewable energy zones?
Victoria is rich in renewable resources such as wind and solar, but some of our sunniest and windiest places aren’t well connected to the existing power grid.
Our grid was built last century to deliver power from coal-fired power plants in the Latrobe Valley to homes and businesses.
We need to modernise the grid to connect new renewable energy sources located across the state. This means we need to set up renewable-rich areas with the right infrastructure and transmission capacity to carry energy to Victorian homes, businesses, hospitals, schools and other vital services.
Coordinating development in renewable energy zones aims to streamline grid connections and optimise the planning and construction of transmission lines. It will also help minimise environmental and community impacts and disruption, and leverage economies of scale to deliver more affordable energy to all Victorians.
How will we identify renewable energy zones?
VicGrid is using a new planning approach to identify Victorian renewable energy zones.
This is a big change to how energy infrastructure has been planned in the past.
Land use, social, cultural and environmental factors are being taken into account from the very start of the process. In the past, the only considerations were technical and economic.
We’ve used a strategic land use assessment to identify a broad renewable energy zone study area. The assessment took into account feedback from the community alongside 60 statewide datasets covering agriculture, land use, biodiversity, cultural and social factors.
Community and industry feedback about the study area, and regional and local data, is helping us narrow it to draft proposed renewable energy zones. This process considers economic costs, land use, community preferences, regional development opportunities, generator interest, existing levels of development and resource potential.
The land eventually proposed for renewable energy zones needs to protect significant areas and sites, minimise impacts on land, agriculture, communities, water and biodiversity, and control costs to avoid unnecessary bill increases.
What are the benefits of renewable energy zones?
Renewable energy zones will create regional development opportunities, jobs and deliver benefits to local communities.
The Victorian Government is introducing a new Renewable Energy Zone Community Benefits Plan which will establish:
- Renewable Energy Zone Community Energy Funds to benefit regional communities
- payments for landholders who host transmission infrastructure
- guidance for payments for significantly impacted neighbours
- a commitment to co-design a new approach to benefits for Traditional Owners.
New network access arrangements will apply when renewable energy zones are created, giving renewable energy zone generators greater certainty they can get their energy to market.
These arrangements are set out in the Victorian Access Regime. The regime will set caps on new generation capacity in Victorian renewable energy zones and introduce a Grid Impact Assessment for projects seeking to connect to the transmission network outside renewable energy zones. This is designed to reduce the risk that renewable energy zone generators will face excessive network congestion.
The new access arrangements will also set expectations for how project developers must engage with communities and deliver meaningful benefits.
Where will renewable energy zones be located, and how much development will happen in each?
VicGrid is in the process of narrowing the study area to draft proposed renewable energy zones. Maps showing their locations will be released in the draft 2025 Victorian Transmission Plan, due to be published for public consultation soon.
VicGrid will set a cap on the amount of generation that can be developed within each renewable energy zone. The cap amount will be unique for each renewable energy zone.
Energy market modelling will determine how much generation and storage will be required in each renewable energy zone. This process will also take into account existing and planned projects in each region, to consider the cumulative impacts of development.
Next steps
Draft proposed renewable energy zones will be open for public consultation as part of the draft 2025 Victorian Transmission Plan, expected to be released soon.
Community and stakeholder feedback will help shape decisions as the draft proposed renewable energy zones are refined to proposed renewable energy zones, to be published in the final 2025 Victorian Transmission Plan in mid-2025.
Following the final 2025 Victorian Transmission Plan, the Minister can start the renewable energy zone declaration process. A renewable energy zone declaration will set out a renewable energy zone’s boundaries and how much new generation will be accommodated in the zone.
There will be the opportunity for further engagement with communities and industry prior to a renewable energy zone being declared.
Read more about the Victorian Transmission Plan.
Page last updated: 18/03/25