The Victoria to New South Wales Interconnector (VNI West) is a proposed double-circuit 500 kV overhead transmission line that will connect the Western Renewables Link in Victoria to EnergyConnect in New South Wales. It will maintain the grid connection between Victoria and NSW, maintaining the reliability and security of the grid in both states. VNI West is one of five actionable projects in the 2022 Integrated System Plan (ISP), confirmed in the latest 2024 ISP, and critical to maintaining reliable electricity supply for all Victorians as coal-fired generation is switched off.

Coal generation is rapidly retiring, putting the reliability of our electricity supply at risk as energy demand continues to grow. Renewable generation, supported by storage (batteries and hydro) and gas, will fill the supply gap. New transmission is needed to connect renewable generation to homes, schools, and workplaces. Renewables projects will be developed in the sunniest and windiest parts of the state – which are not the same places where coal generators are located. As the location of electricity generation changes, new transmission lines will be required. While we will continue to use the existing network wherever possible, new transmission lines must be built to connect new sources of generation with the homes, schools and businesses that use the power.

VNI West will put downward pressure on electricity prices over time, by unlocking access to cheaper renewable energy, maintaining the efficiency of the electricity grid as coal-fired power stations retire.

VNI West will enable more renewable energy to flow between states, reduce reliance on expensive, ageing coal-fired generation and enhance competition in the electricity market, which can help put downward pressure on prices.

AEMO’s 2022 Integrated System Plan (ISP) first identified VNI West as a project to be progressed urgently but did not identify any other major transmission developments in the region under the 'most likely' scenario. Australia’s power system is undergoing a once-in-a-generation transformation, and it is not expected that transmission investment at the current scale and pace will need to continue once the power system has transformed to a low-emission system. While there will always be growth in renewable generation and demand that will require network upgrades, these are expected to be minor in the absence of a major technology disruptor.

During the development phase, VicGrid will lead VNI West’s development with Iberdrola supporting activities such as project design, procurement, planning approvals, the Environment Effects Statement (EES) process, and engagement. If Iberdrola meet VicGrid’s expectations through the development phase, they will then be appointed to build, own and operate the project with strict oversight from VicGrid. As the project progresses, Iberdrola’s presence on the ground will increase.

The estimated cost of the VNI West transmission project is approximately $7.6 billion, for both the Victorian and New South Wales sections, updated in AEMO’s 2025 Electricity Network Options Report (ENOR). This figure reflects updated planning, design, and construction assumptions and replaces the early-stage estimate of $3.6 billion, which was published in the 2024 Integrated System Plan (ISP).

The increase is consistent with broader industry trends, where transmission delivery costs have risen due to inflation, supply chain pressures, and competition for skilled labour. VNI West is not immune to these challenges, but remains a critical investment in Victoria’s energy future.

Importantly, the cost also includes stronger environmental, social, and community benefit measures—such as VNI West's Social Value program, which delivers support to landholders, impacted neighbours, and local communities.

Iberdrola Australia has been appointed as VicGrid’s development partner for the Victorian section of VNI West. The company will support VicGrid to progress design, procurement and delivery planning for this critical transmission project.

If Iberdrola meet VicGrid’s expectations through the development phase, they will then be appointed to finance, build, own and operate the project with strict oversight from VicGrid.