Drive the Murray Valley Highway between Kerang and Swan Hill and you’ll pass more “No Transmission” signs than you will cattle. I counted eleven on a single stretch near Mystic Park last time I went through, nailed to fence posts and the odd hay shed, which tells you something a spreadsheet can’t: this fight has outlasted at least two rounds of route consultation and the paint is still fresh.
The VNI West interconnector is meant to be one of the load-bearing pieces of the AEMO Integrated System Plan’s optimal development path, the new 500kV double-circuit link tying the Victorian grid to southern NSW and, via that connection, helping shift surplus wind and solar between two of the NEM’s biggest renewable energy zones. On paper it is straightforward infrastructure. On the ground, in the paddocks between Bulgana and Dinawan, it has become the most contested transmission build in the country, and the contest shows no sign of resolving on the timeline AEMO originally pencilled in.
What the project is actually meant to do #
Strip away the politics and VNI West is a capacity problem. The existing Victoria-NSW Interconnector was built for a grid with a handful of large coal and gas stations feeding predictable flows in roughly predictable directions. The grid it now has to serve looks nothing like that: wind and solar output in western Victoria and southern NSW swings hard, sometimes within the same afternoon, and the interconnector capacity between the two states is often the binding constraint on how much of that generation can actually find a buyer.
AEMO’s modelling, most recently restated in the 2024 Integrated System Plan and its supporting documents, treats VNI West as close to essential for the NEM to reach its mid-2030s capacity targets without leaning harder on gas peaking than anyone would like. It’s also meant to connect through to the Victorian end of the New England REZ build in NSW and relieve pressure that’s already showing up in projects like the New England REZ, where the wind-solar-storage build is running well ahead of the transmission that’s supposed to carry its output. Without VNI West, a chunk of that generation effectively has nowhere decent to go on windy days.
The route dispute, in plain terms #
AEMO’s planner for the Victorian half, AusNet, proposed a corridor running broadly north-west from the Western Victoria Transmission Network project through the Loddon Mallee region to the NSW border near Kerang. Landowners along that corridor, organised partly through groups like the Western Victoria Transmission Company opposition networks and local farming associations, argued the route carves through some of the state’s most productive irrigated cropping and dairy country, much of it along the Loddon and Avoca river systems, and does it with towers up to 80 metres tall marching through land that’s been worked by the same families for generations.
The alternative that’s had the most political air time is KerangLink, a route realignment pushed by local councils and farming groups that shifts the corridor further west, closer to existing easements and the Murray Valley Highway itself, on the logic that co-locating new infrastructure with existing disturbed land is both cheaper and fairer than cutting a fresh scar through intact farmland. AusNet and AEMO have examined variations on this but haven’t adopted it wholesale, partly because a pure highway-corridor alignment runs into its own problems: proximity to towns, additional substations, and in some sections, worse wind and bushfire exposure for the structures themselves.
Let’s be careful with that framing though, because “the community wants KerangLink and AusNet won’t budge” is the simplified version you’ll hear at a public meeting, and it understates how much the route has already moved. AusNet’s revised corridor, released through its project update process, did shift sections west in response to submissions. It’s not nothing. It’s also not the full KerangLink alignment, and that gap is exactly where the dispute still lives.
Cost and the number that keeps moving #
The project’s cost estimate has drifted the way most transmission numbers have in the past few years, up and to the right. Early regulatory investment test figures put VNI West somewhere in the $2-3 billion range for the Victorian and NSW sections combined. By the time AusNet and Transgrid updated their contingent project applications through the AER’s regulatory process, that figure had climbed, reflecting the same steel, labour and easement cost pressures that pushed Marinus Link and other transmission projects well past their original estimates. I won’t quote a single all-in figure here because the Victorian and NSW scopes are assessed separately and the public numbers from AusNet’s and Transgrid’s respective filings don’t always line up on what’s included, land easements and connection assets especially. Anyone who gives you one tidy number for the whole interconnector is rounding more than the project allows.
What’s measurable, and worth sitting with, is the capacity on offer: VNI West is designed to lift the thermal transfer capability between Victoria and NSW substantially above what the existing interconnector allows, which matters less as a single figure and more as the difference between constrained and unconstrained dispatch on high-wind days in the west of the state. That’s a power transfer question, not an energy one, and the distinction matters when you’re reading AEMO’s constraint equations rather than its headline capacity tables.
Where the timeline actually sits #
AEMO’s original ISP path had elements of VNI West in service by the back half of this decade. That date has already slipped once, and most people close to the project now talk about the back end of the decade at the earliest for first energisation of any stage, with full capacity later again. Planning approvals in Victoria, which run through the state’s Environment Effects Statement process, haven’t concluded on the full corridor, and NSW’s side of the project, led by Transgrid, has its own approvals pipeline running in parallel rather than lockstep.
This is the pattern that’s become familiar across the transmission build generally, and I’ve written before about how the gap between coal closures and replacement transmission keeps widening rather than closing. VNI West isn’t unique in slipping. It’s just slipping on a project AEMO’s own reliability forecasts lean on fairly heavily, which raises the stakes on the delay in a way that, say, a standalone REZ augmentation wouldn’t.
Who actually pays, and why that keeps the argument alive #
Transmission in the NEM is funded through the regulated asset base, recovered from network charges on everyone’s bill over decades, which is the mechanism I’ve gone through in more detail when looking at who really pays for the transmission build-out more broadly. That funding model is part of why landowners along the corridor feel like they’re absorbing a cost, amenity and productive land, for a benefit that’s shared across two states’ worth of electricity consumers. It’s a legitimate grievance even if you accept, as I do, that the project needs to happen somewhere.
My own read, and this is the mildly unfashionable bit: I think AEMO and the transmission planners under-invested in early, genuine route negotiation before they published a preferred corridor, and they’re now paying for that in delay rather than in money saved. The KerangLink proponents aren’t wrong that co-location has real merit, and a planning process that started with that option properly costed, rather than brought in as a late concession, would likely have moved faster even if it ended up rejecting KerangLink in the end. Communities can live with “no” if they believe the alternative was seriously tested. They don’t accept “no” nearly as well when it looks like the answer was decided before the consultation started.
What’s riding on it #
If VNI West keeps slipping, the practical effect shows up first in constraint costs and curtailment for generators on both sides of the border, which eats into the economics of projects already under construction. It also pushes more weight onto firming solutions closer to load, batteries, and in the near term, gas, which is the trade-off I covered when looking at how gas peakers and big batteries are splitting the firming task between them. A slower VNI West doesn’t break the system. It makes the system lean harder on the pieces that are already working overtime, and it keeps a chunk of cheap renewable generation stranded behind a wire that isn’t there yet.
There’s also a reliability angle AEMO flags routinely in its planning documents and the AER tracks through the regulatory investment test process: a longer delay compounds with other interconnector and REZ transmission projects that are also running late, and the cumulative effect is larger than any single project’s slip would suggest on its own. That’s the actuarial-table problem with the whole ISP pipeline right now, lots of individually explicable delays that add up to something less forgivable in aggregate.
What to watch next #
The near-term markers are concrete enough: the outcome of Victoria’s planning approval on the revised AusNet corridor, whether Transgrid’s NSW section keeps pace or becomes the new bottleneck, and whether AEMO’s next ISP update, due through its regular biennial cycle, revises the in-service date again. None of those will resolve the underlying tension between what a 500kV line needs geometrically and what a wheat and dairy district along the Loddon is willing to host without a fight.
I’ll be back out that way before the next round of consultation closes. The signs on the fence posts are a decent proxy for where this stands; so far, nobody’s taken any down.
– Anjali Rao, Grid & Storage Correspondent
Photo by janilson furtado on Unsplash