VNI West: the interconnector stuck in a paddock dispute

Kerang’s saleyards aren’t far from where AusNet wants to run a 500kV double-circuit line across some of the best irrigated cropping and dairy country in northern Victoria. I drove through there back in autumn, and the orange “No Transmission” signs were still up on fence lines from Lalbert through to Wedderburn, two years after the first route options went to consultation. That’s the picture with VNI West right now: a project the Integrated System Plan treats as close to non-negotiable, stuck behind a landholder revolt that shows no sign of softening.

Let’s be careful with that number, because “VNI West” gets used loosely. The project AEMO and Transgrid and AusNet are jointly delivering is a new high-capacity transmission link between Victoria’s grid near Kerang/Bulgana and the NSW grid near Wagga Wagga, adding roughly 1,500MW of transfer capability between the two states on top of the existing Victoria-NSW interconnector. That’s power, not energy. It’s a measure of how much the link can move at any instant, not how much it will move over a year, and the distinction matters when people start talking about what it’s “worth” to consumers.

What the Integrated System Plan actually asks for #

AEMO’s most recent Integrated System Plan keeps VNI West in the “actionable” category, which in ISP language means it’s judged necessary under every credible scenario, not just the aggressive ones. The logic is straightforward enough: Victoria’s REZs out west and the growing wind and solar fleet across the state need somewhere to send surplus power, and NSW’s own REZ build, including the Central-West Orana zone I’ve covered before, needs more import capacity when its own generation is becalmed. Without a bigger link, both states end up constraining generation they’ve already paid to build. My colleagues have written about how the AEMO Integrated System Plan actually reads on the detail, and VNI West turns up in nearly every future scenario as a load-bearing assumption, not an optional extra.

The original target was energisation by 2028, feeding into the broader timeline for NSW’s coal closures. Eraring, Bayswater, Vales Point: the ageing fleet I’ve reported on elsewhere isn’t getting younger, and the REZ build that’s meant to replace it is already running behind the coal exit schedule, a mismatch I wrote about in NSW’s coal exit outrunning its REZ build. VNI West sits in the middle of that timing problem. Push it out and you don’t just delay one transmission asset, you widen a gap that’s already uncomfortably tight.

Where the route dispute actually sits #

The contested section is mostly on the Victorian side, through the Murray Plains and the broader Kerang-Loddon corridor. AusNet’s preferred route crosses irrigated farmland, some of it under long-term water entitlements that landholders argue can’t simply be worked around with a transmission easement. The objections aren’t really about opposing the transition in principle: most of the farmers I’ve spoken with over the past year accept renewables are coming. The argument is about whether 500kV towers through productive cropping land, rather than along existing road and rail corridors or underground in places, represents fair treatment of the people who actually hold the land.

Victoria’s planning process for transmission, run through the Environment Effects Statement framework under the Environment Effects Act 1978, has been slower than AusNet or AEMO would like, partly because the number of submissions objecting to specific route segments has been unusually high for a linear infrastructure project. The Australian Energy Regulator’s own guidance on transmission cost recovery assumes a reasonably linear path from route approval to construction; this project has not had one.

The KerangLink alternative and why it matters #

This is where it gets genuinely interesting rather than just contentious. A community-aligned group, backed by some agricultural interests and at least one engineering consultancy, has been pushing an alternative corridor commonly referred to as KerangLink, which would shift the route further west and rely more heavily on existing easements and lower-value land. Proponents argue it reduces the agricultural land take materially and shortens the contested-submission list. AusNet’s position, stated in its regulatory filings and public consultation material, is that the alternative routes considered to date either cost materially more, take longer to construct, or don’t achieve the same network benefit, though it has conceded some route refinement is still underway in response to landholder feedback.

I don’t think KerangLink is a magic fix, and I’ll say that plainly because the easy thing for a reporter to do is present it as the obvious answer nobody listened to. Shifting a 500kV corridor isn’t like moving a distribution feeder; it changes tower spacing, conductor sag calculations, substation tie-in points, the lot. But the fact that an alternative route with apparent community buy-in has been sitting on the table for well over a year without a transparent published comparison of cost and megawatt-kilometre efficiency between the two options is, in my view, the part of this project that’s been handled worst. Transparency isn’t a nice-to-have on an asset this size. It’s the thing that actually buys social licence.

What it costs and who pays #

The project’s regulated cost estimates have moved since the original contingent project applications, as they tend to do once detailed route engineering and land acquisition premiums get factored in. AusNet and Transgrid’s combined cost estimate for the Victorian and NSW sections sits in the billions of dollars, recovered through the regulated transmission charges that ultimately flow into network tariffs on power bills across both states. That’s the mechanism I went through in more detail in who really pays for the transmission build-out, and VNI West is as good an example as any of why that question generates heat. Landholders along the route aren’t the ones who benefit most directly from the extra transfer capacity, yet they carry the visible cost: towers across the paddock, easement restrictions on land use, changed sightlines. Consumers in Melbourne and Sydney get cheaper, more reliable power flows and barely notice the asset exists.

Why delay here bites harder than on most projects #

A transmission project running a year or two late is not unusual in this market: the New England REZ transmission works and the Central-West Orana lines have both had their own slippage, which I’ve covered in the New England REZ status piece. What makes VNI West different is that it’s a chokepoint, not a spur. Delay it and you don’t just delay one REZ’s export capacity, you constrain the whole interstate trading relationship that the ISP leans on to keep prices down when either state has a bad wind day. Think of it the way you’d think about a single congested bridge between two cities that both depend on freight moving across it – local roadworks on one side back up traffic that has nothing to do with that side at all.

There’s also a reliability angle that doesn’t get enough airtime. The existing Victoria-NSW interconnector is already running close to its limits on windy days with high renewable output in western Victoria. Waratah Super Battery and other grid-stability assets, which I wrote about in the context of the Waratah Super Battery’s status, help manage short-duration system strength issues, but they don’t substitute for raw transfer capacity between regions. If VNI West slips materially past 2028, AEMO’s own reliability forecasts, published through its Electricity Statement of Opportunities process, are likely to show tighter reserve margins in both states than currently modelled, particularly in NSW during the mid-2020s coal retirement window.

The quiet chess move nobody’s talking about #

If I can indulge a small aside: watching this dispute unfold reminds me of a drawn-out chess endgame where one side keeps declining to simplify the position because every trade looks slightly worse than the one before it. AusNet and the regulators keep offering incremental concessions on route and compensation, landholders keep declining to settle because each concession implies more might be available, and the clock keeps running regardless of who’s “right” on the merits. Somebody has to force a decision point, and in transmission planning that’s usually a ministerial call or a hard regulatory deadline, not a negotiated consensus.

Victoria’s energy minister has signalled support for the project proceeding, and AEMO’s position hasn’t wavered. But “the state government supports it” and “the towers are in the ground” remain two very different sentences, and the gap between them is measured in years, not months, once you’re dealing with Environment Effects Statement timelines, native vegetation offsets, and the inevitable VCAT or court challenges that come with compulsory acquisition on agricultural land.

Where this leaves the timeline #

My honest expectation is that VNI West energises somewhere between late 2029 and 2031, not 2028, unless Victoria’s government intervenes directly to compress the approvals process or AusNet makes a public commitment to a modified route that substantially addresses the KerangLink concerns. Neither looks imminent as things stand. The project remains “actionable” in AEMO’s planning sense, and nobody serious is proposing to cancel it. But actionable and on-schedule are not the same thing, and the farmers along the Kerang corridor know that better than most of the people drafting the ISP scenarios in Melbourne offices.

Next time I’m up that way I’ll stop in at Kerang itself rather than just driving the back roads, and see whether the mood on the main street has shifted now that a second construction season has come and gone without a sod being turned. My guess is it hasn’t.

– Anjali Rao, Grid & Storage Correspondent

Photo by Jaël Vallée on Unsplash