Here's everything you need to know about Victoria's plan to cut electricity bills and prevent blackouts

Coal-fired power stations in Australia have an average lifespan of 29 years, the youngest in Victoria is now 34-years-old - as these power plants have aged and become less reliable the need to supply power from other locations and sources is already here.

On August 17 state government body VicGrid released its 2025 Victorian Transmission Plan (VTP) - a 15-year strategic plan outlining the state’s Renewable Energy Zones (REZ) and transmission line projects required to achieve 65 percent clean energy generation by 2030 and 95 percent by 2035.

The VicGrid report sets out six onshore REZs and the Gippsland offshore wind zone. These projects will expand renewable power generation and infrastructure across the state.

Climate Change and Energy Senior Fellow at the Grattan Institute, Tony Wood told the Gippsland Monitor: “If we don’t do this, we won't address climate change and the cost of building new coal-fired power stations would probably cost just as much, if not more than renewables anyway.”

Modelling from the Clean Energy Council found “relying on coal power and significant amounts of expensive gas generation for longer would increase the average household bill by $449 a year in 2030 and $877 for a small business”. 

The report points to the need to invest in the grid as coal-fired power stations reach the end of their lives to maintain reliable and affordable energy.

“I think the choice we have as a society and as a community isn't whether we do this or not,” said Wood. “The question is whether we do it well or whether we do it badly.”

Wood said the VicGrid report is an important step for Victoria, “not just because coal-fired power stations produce emissions that drive climate change but they’re also becoming less reliable”.

How unreliable are aging coal-fired power stations?

The Australian Energy Market Operator (AEMO) had expected 17 planned outages between October 2024 and March 2025 – instead, there were 145 outages.

Wood said this unreliability “increases the chances of having some sort of prolonged outage. We know if one of the large coal-fired power stations was offline today, the risks of under supply of electricity and blackouts would start to increase”.

Loy Yang and Yallourn were among the most unreliable power stations in the state.

How much is it going to cost?

The VicGrid VTP claims grid modernisation will cost $7.9 billion over the next 15 years, up from a $4.3 billion initial estimate made by the state government earlier this year.

However, the cost of continuing to rely on an unstable fossil fuel grid could be much higher, with the report stating that not shifting to renewables would cost the state’s economy $9.6 billion over the next 30 years.

Wood said the increasing cost of transmission is “not unique to Victoria, and it's probably not unique to the world”.

“Everything's costing a whole lot more and taking longer to build. This isn’t unique to electricity transmission. It's also common across other infrastructure projects, where a lot of the materials and labour are the same,” Wood said.

AEMO said in May that rising transmission costs are “due to supply chain constraints, competition, project complexity, contracting and social licence considerations”. 

Research from the CSIRO has consistently found the shift to a renewable energy mix will bring household electricity bills down, but Wood says politicians should be careful about promising consumer savings immediately.