At least $12 billion worth of Victorian renewable projects are at risk following the state opposition’s pledge to scrap the $7.6 billion VNI West transmission project. The promise puts a major question mark over the future of numerous wind, solar and battery developments planned for northern and north-west Victoria. The political uncertainty clashes with strategic policy, as former energy minister Lily D’Ambrosio reiterated that offshore wind is essential for the state’s energy mix. She argued against over-reliance on onshore developments, a portfolio that VNI West is designed to unlock.
The debate over future generation capacity comes as existing renewables suppress market prices. NEM spot prices fell 24.8 per cent week-on-week to average $45.25/MWh, with renewables supplying over 55 per cent of demand. Mild conditions and strong solar output drove the decline across the mainland. In Tasmania, supply was tightened after WattClarity analysis confirmed a fire has indefinitely taken the Tungatinah Hydro Power Station offline, removing a key asset from the state’s system.
Despite the high-level political friction in Victoria, project development continues on the ground. The state government’s 119MW Horsham Solar Farm commenced grid connection, a milestone for what will become Victoria’s first publicly owned utility-scale solar and battery hybrid project. In the private sector, corporate demand for storage is solidifying. Anza Power announced Amazon signed its first Asia Pacific standalone battery tolling deal for the 50MW/200MWh Bairnsdale BESS in East Gippsland, securing a significant offtake partner for the project.
Meanwhile, the operational realities of large-scale storage are attracting intense regulatory scrutiny in Western Australia. The state's Economic Regulation Authority fined state-owned Synergy $1.2 million over a software malfunction at the Kwinana Big Battery. The regulator found the glitch caused the battery to submit bids that inflated wholesale electricity prices across the South West Interconnected System. Synergy attributed the market distortions to a technical error rather than intentional manipulation, but the penalty signals a low tolerance for system failures that impact market outcomes.
As Australia builds out its storage fleet, international markets are creating new revenue streams for these assets. German grid operators are finalising a bankable, long-term payment mechanism for synthetic inertia services. Analysis suggests Germany's new inertia market could boost battery storage IRR by 1-2 percentage points, providing a crucial revenue layer for project developers. The move offers a potential model for the NEM as it seeks to procure essential system services. Globally, the scale of the transition was highlighted as China’s cumulative solar capacity hit 1.28 TW, overtaking coal as its largest power source for the first time.
The contrast between Victoria's project momentum and its political headwinds underscores the non-technical risks facing the transition pipeline. While commercial deals are being signed and projects are connecting, major transmission infrastructure remains vulnerable to shifting political priorities. Stakeholders will now watch for further policy signals ahead of the next state election. Meanwhile, AEMO is progressing several consultations, with submissions on its gas participant fee structure due next week.