Energy infrastructure in Melbourne | Victoria

Photograph showing multiple high-voltage power transmission towers silhouetted against a vibrant sunset sky with orange and yellow hues. The towers are connected by numerous power lines, emphasizing infrastructure for electrical energy distribution.

Reliable, interconnected and transitioning to 95% renewable electricity by 2035

Victoria’s energy infrastructure is being transformed to deliver reliable, scaleable and future ready energy to support industrial growth, electrification and the transition to net zero.

Legislated targets – including 95% renewable electricity by 2035 – and the planned closure of the state’s final coal-fired power stations are creating opportunities for large-scale investment across generation, transmission and storage. This transition is expected to unlock around $35 billion in private investment, supported by coordinated planning and a strong project pipeline.

Victoria operates one of the most complex and interconnected energy systems in the southern hemisphere. Its central position in the National Electricity Market (NEM), combined with advanced grid infrastructure and near-universal smart meter coverage, provides a strong foundation for innovation, efficiency and cross-border energy flows.

Victoria’s role in Australia’s electricity market

Victoria is a central hub of the National Electricity Market, acting as both a major generation source and a key transit point for electricity between states.
  • Strong interconnection enables energy flows between New South Wales, South Australia and Tasmania.
  • Major projects such as VNI West and Marinus Link will strengthen Victoria’s role as both an exporter of renewable energy and importer of firmed supply.
  • Dedicated transmission planning through VicGrid supports a coordinated, state-specific development pathway.

Key energy infrastructure advantages

  • One of the most interconnected grids in Australia with around 6,500 km of high-voltage transmission and over 200,000 km of distribution network – providing scale and flexibility for large energy users.
  • Direct access to multiple state markets through 5 major interconnectors within the NEM, enabling cross-border trading and price optimisation.
  • The most digitally advanced grid in Australia, with near-universal smart meter coverage across approximately 3 million metres – supporting real-time data, demand management and integration of distributed energy.
  • Coordinated Renewable Energy Zones (REZs), led by VicGrid, reducing connection delays and improving certainty for new projects.
  • Major transmission upgrades underway to unlock renewable energy at scale and connect it efficiently to industrial and metropolitan demand centres.
  • Victoria recorded average wholesale electricity prices of $37/MWh in Q4 2025 – lower than New South Wales $103/MWh and the NEM average $50/MWh.
  • One of the fastest-growing storage pipelines in the NEM, supporting grid stability and enabling consistent, high-quality power for 24/7 operations.
  • Clear, legislated targets and long-term planning frameworks providing greater policy certainty and visibility compared to other Australian jurisdictions.

Victorias advanced grid infrastructure

Generation

  • Victoria’s system combines established generation with a rapidly growing renewable energy portfolio.
  • Approximately 12,000–14,000 MW of generation capacity is transitioning from large-scale fossil fuel assets to distributed renewable sources.
  • In FY2024/25, renewable energy in Victoria accounted for 42.4% of generation, led by wind (21.8%) and solar (14.9%)
  • The state reached a record 82.5% instantaneous renewable generation in October 2025.
  • Over 650,000 Victorian homes (nearly one in 3) have rooftop solar, contributing over 4,000 MW of invisible capacity to the grid, equivalent to 2 large coal-fired power stations.
  • Businesses can secure long-term energy supply through power purchase agreements (PPAs), supporting cost certainty and decarbonisation.
  • Generation assets participate in the NEM, enabling access to a broader market.

Transmission network

  • Victoria’s grid is deeply integrated within the NEM, allowing electricity to flow across state borders and improving system resilience.
  • Victoria’s high-voltage transmission network enables electricity to move efficiently from generation sources to demand centres.
  • Major projects including VNI West, Western Renewables Link and Marinus Link are expanding capacity and improving reliability.
  • A $480 million grid strengthening program is modernising infrastructure across 12 priority projects.
  • Transmission planning and smart grid technologies help integrate variable renewable energy while maintaining system stability.

Distribution

  • Advanced software and control systems enable real-time monitoring and balancing of supply and demand, reducing the risk of outages and improving efficiency.
  • Near universal smart meter coverage (over 99%) – the highest in Australia.
  • Advanced grid enables integration of distributed energy, accommodating large volumes of rooftop solar, batteries and electric vehicles – turning traditionally passive users into active participants in the energy system.
  • Supports innovation in virtual power plants (VPPs), smart electric vehicle charging and dynamic pricing.

Energy storage and firming capacity

Energy storage firms up variable renewables by storing excess energy during the day and discharging it during peak evening demand.

  • The Victorian Government has legislated energy storage targets to ensure grid reliability:
    • At least 2.6 GW of storage capacity by 2030
    • At least 6.3 GW of storage capacity by 2035.
  • 730 MW of storage operating, with 2.9 GW under construction or commissioning.
  • Victoria has the highest concentration of utility-scale battery storage in the NEM.  Key projects include: 
  • SEC will deliver 1 GW of new storage capacity by 2028 and is assessing an additional 1 GW of long-duration storage opportunities.
  • Distributed storage programs, including the 100 Neighbourhood Batteries Program and Solar Homes Program support local grid stability.

Gas and alternate fuels

  • Victoria is transitioning away from fossil gas through a multi-year Gas Substitution Roadmap aligned with its net zero by 2045 target.
  • In 2026, gas contributes approximately 15-17% of Victoria's net greenhouse gas emissions.
  • Electrification is being prioritised across residential and commercial sectors, with regulatory changes supporting the shift.
  • The Victorian Government is supporting hydrogen production and refuelling infrastructure, as well as biogas capture for renewable electricity generation for high-heat industrial applications.
  • Industrial Renewable Gas Guarantee (planned for 2027) – a market-based certificate scheme to stimulate investment in biomethane and green hydrogen, targeting 4.5 PJ of annual supply by 2035.

The Victorian Government green-lighted the following projects:

Renewable Energy Zones (REZs)

  • The 2025 Victorian Transmission Plan identifies 6 proposed renewable energy zones.
  • Coordinated development areas are led by VicGrid to streamline connections and reduced project risk.
  • Infrastructure is being concentrated in REZs to facilitate the production and distribution of energy from onshore wind, solar, hydro and offshore wind.
  • The Gippsland Shoreline REZ is a strategic area for underground cables needed to connect future offshore wind farms to the grid.

Victorian Government investment in energy infrastructure

The Victorian Government is actively investing in and coordinating energy infrastructure to support long-term growth and desired transition.

  • Established VicGrid as its transmission planning operator to fast-track infrastructure.
  • Established 6 Renewable Energy Zones (REZs)  ($540 million) to coordinate new wind and solar connections.
  • $1 billion committed through State Electricity Commission (SEC) to accelerate 4.5 GW of renewable power and storage. It has invested in:

Victorian Government energy policy

Victorian Government energy programs

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