The Final Report Is Always Different From The Draft
Victoria has finalised its 2025 Transmission Plan (1), a roadmap that will shape the state’s renewable energy future to 2040. For investors, the plan provides long-awaited clarity, but it also reveals rising costs, shifted footprints and political sensitivities that cannot be ignored.
What the Report is About
The final Victorian Transmission Plan (VTP), prepared by VicGrid, sets out the transmission and renewable energy zone (REZ) strategy needed to achieve the state’s renewable energy targets — 65 per cent by 2030 and 95 per cent by 2035.
Six REZs are now defined across the South West, Central Highlands, Central North, Gippsland, North West and the West. In addition, a shoreline REZ in Gippsland has been created solely for connecting offshore wind farms through underground cables and terminal stations. (2)
The plan maps out up to 9.6 GW of new onshore wind, 9 GW of offshore wind, nearly 9 GW of solar and as much as 7.7 GW of new storage capacity by 2040. Seven priority projects, including new transmission lines between Sydenham and Tarrone, Truganina and Deer Park, and Hazelwood and Yallourn, form the backbone of this expansion.
What Changed in the Final Plan
The final plan is not a simple confirmation of the draft released in May; it is a broader and costlier document that incorporates industry and community feedback.
One of the most notable changes is the expansion of REZ land. The footprint has grown by 200,000 hectares to 1.88 million hectares — almost 8 per cent of Victoria’s total land area. (3) The government argues this was necessary after developers indicated that larger areas were critical to making projects technically and commercially viable.
The structure of the zones has also shifted. The draft proposed seven zones, but the final plan consolidates some and adds others. The Wimmera Southern Mallee and Grampians have been merged into a single Western REZ, while new land has been added in the South West around Coleraine. These changes reflect efforts to respond to community feedback and reduce duplication.
The Gippsland Shoreline zone has been refined in a significant way. While earlier drafts included onshore elements, the final version restricts the zone to offshore wind connections only. According to a report from the ABC, this means its role will be limited to hosting underground cables and terminal facilities that link offshore projects to the grid. This adjustment was made in part to address concerns from farmers and regional communities about land use. (4)
Boundaries have also been shifted in response to Traditional Owner and community input. The final report acknowledges the need to better protect biodiversity, water systems and farmland, and to account for natural hazards such as bushfires and flooding.
Finally, and most dramatically, the cost projections have changed. All reports state that the government’s earlier estimate of $4.3 billion has almost doubled to $7.9 billion. Updated Australian Energy Market Operator (AEMO) projections and rising construction costs are cited as reasons. However as quoted in the ABC article, some energy experts argue that even this figure is understated, with one estimate suggesting the real cost could reach $28 billion over the next decade.
Real-World Investor Lessons
For investors, several lessons can be drawn from the final plan.
Certainty is valuable. Despite the controversies, the plan provides developers and capital providers with the clarity they need about where projects can be built and how they will connect to the grid. This reduces risk for long-term investment decisions, particularly in wind and solar.
Costs are volatile. The leap from $4.3 billion to $7.9 billion in just a few months highlights the inflationary pressures facing energy infrastructure. Higher input costs and expanded scope are realities investors must now account for in their models.
Community consent is a live risk. Farmers warn of disrupted agricultural operations, describing transmission lines as “enemy territory” and vowing to resist access. Coastal communities in Gippsland fear industrialisation of their seascape and the potential impact on tourism. These tensions could delay projects and increase costs.
Energy bills remain politically sensitive. The government insists households may save up to $20 per year and small businesses $50. Critics argue that households could instead see bills rise by 50 per cent and large industries face increases of up to three-and-a-half times. This debate matters because affordability will remain a political flashpoint, potentially leading to subsidies or regulatory changes.
Transmission itself is an investable theme. Beyond generation, the expansion of transmission lines, substations and storage integration offers direct opportunities for infrastructure investment. For investors willing to partner with government or developers on these capital-intensive upgrades, the opportunities are substantial.
The Bottom Line
The finalisation of Victoria’s Transmission Plan is both a milestone and a reminder to Investors of the complexities of the energy transition. The scope of REZs has expanded, costs have risen, and community tensions are evident if reports are to be believed. Yet the plan also provides the clarity that investors need to move forward. For capital providers, the opportunities are large, but so are the risks. The reality is that success will depend not just on financial analysis but on navigating policy, politics and community sentiment.
References
Victorian Government. 2025 Victorian Transmission Plan. August 2025. https://www.energy.vic.gov.au/renewable-energy/vicgrid/the-victorian-transmission-plan
Petrova V, Renewables Now. Victoria adopts final plan for new renewable zones, transmission links. 18 August 2025. https://renewablesnow.com/news/victoria-adopts-final-plan-for-new-renewable-zones-transmission-links-1280282/
Lock S, AAP. Renewable transmission plan expands, cost to double. 17 August 2025. https://aapnews.aap.com.au/glance/news/renewable-transmission-plan-expands-cost-to-double?section=top-stories
ABC News. Renewable energy expert accuses Victorian government of concealing true cost of transition plan. 17 August 2025. https://www.abc.net.au/news/2025-08-17/vic-victorian-renewable-energy-final-proposal/105663924
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