Planning the energy grid

A new approach to planning our grid

As the state’s ageing coal-fired power stations retire in the coming decades, they are being replaced with renewables. Our electricity system must also change to carry energy from where it is generated to where it is needed.

Shifting to renewable energy will deliver affordable, reliable and secure electricity. It will also help us deal with climate change by reducing our emissions.

To achieve these goals, the Victorian Government, through VicGrid, is putting in place a new approach to planning renewable energy zones and transmission infrastructure through delivery of the Victorian Transmission Investment Framework.

This new approach features a long-term strategic plan called the Victorian Transmission Plan. It supports early and meaningful engagement with landholders and local communities, partnerships with Traditional Owners, First Peoples, fairer community benefit arrangements and certainty for investors.

Read more about the Victorian Transmission Plan and renewable energy zones.

Core elements of the Victorian Transmission Investment Framework

• A long-term strategic plan for Victorian transmission and renewable energy zone development called the Victorian Transmission Plan
• A commitment to early and meaningful engagement with landholders and local communities and partnerships with First Peoples.
• A new approach to sharing the benefits of the energy transition more fairly featuring new community energy funds, landholder payments, neighbour payments and benefits for Traditional Owners.
• A new approach to managing how renewable generation projects access the shared network that improves coordination, reduces impacts and gives investors certainty.
• A new approach to specifying and procuring projects to meet Victoria’s transmission needs, ensuring timely delivery and value for money.
• A Victorian transmission planning objective that incorporates environmental objectives and the state’s needs in response to the transition to renewable energy.

The new framework has been developed following public consultation in 2022, which demonstrated broad support for change.

Why do we need these reforms?

As Victoria’s energy system changes, the way we plan and develop energy infrastructure needs to change too.

The current process used to plan transmission – the Regulatory Investment Test for Transmission – is not designed to anticipate the significant changes to the energy system and network that we are now seeing.

This process does not involve Traditional Owners, First Peoples, communities, landholders and regional stakeholders early enough in the process.Under the new framework, land use, social, cultural and environmental factors will all be taken into account from the very start of the process.

The reforms will also support timely coordination of investment in transmission, generation and storage, to ensure we build the right amount of infrastructure in the right places at the right time.

Legislation to implement the framework

On 2 May 2024, the Victorian Parliament passed amendments to the National Electricity (Victoria) Act 2005 to implement the first stage of the Victorian Transmission Investment Framework reforms.

The amendments require VicGrid to deliver the first Victorian Transmission Plan by 31 July 2025, which will set the long-term strategic vision for the development of the state’s renewable energy zones.

The next stage of Victorian Transmission Investment Framework reforms will introduce community benefits for regions hosting renewable energy and transmission infrastructure. VicGrid strongly values public consultation and is committed to engaging with stakeholders as part of this work.

On 2 May 2024, the Victorian Parliament passed amendments to the National Electricity (Victoria) Act 2005 to implement the first stage of the Victorian Transmission Investment Framework reforms.

How will the new framework apply to transmission projects currently underway?

Where possible, the Victorian Government will seek to apply the Victorian Transmission Investment Framework reforms to existing projects. For example, the community benefits arrangements.

Page last updated: 17/03/25