Renewable Energy Zones

Renewable Energy Zones (REZs) are areas designated by the Australian government for large-scale deployment of renewable energy infrastructure. The goal of REZs is to co-locate renewable energy infrastructure and investment within Australia's National Electricity Market (NEM), reducing the overall costs of electricity generation and transmission. The New South Wales government describes REZs as "the equivalent of modern-day power stations", combining generators, storage, and high-voltage transmission. As of 2025, there are five announced renewable energy zones in New South Wales, six in Victoria, one in Tasmania, and twelve planned in Queensland. The Australian Energy Market Operator shortlisted a total of 43 potential REZs in its 2024 Integrated System Plan. Most renewable energy zones have been designed to host one or more types of renewable energy infrastructure, such as solar farms, wind farms, battery storage, or pumped hydropower. One of the primary goals of REZs is to coordinate the development of transmission infrastructure, taking advantage of the existing infrastructure associated with fossil fuel plants scheduled for decommission. The Australian Electricity Market Operator projects that Australia will need an additional 10,000km of transmission lines in order to support the transition to renewable energy. Renewable energy zones have been controversial in many areas of regional Australia, with concerns ranging from a loss of agricultural land to fears of overdevelopment and damage to natural landscapes. Some Indigenous communities have opposed the use of their traditional lands for renewable energy infrastructure development. Developers and governments have attempted to assuage these concerns by offering payments to land owners and communities impacted by renewable energy projects.

History Following a restructuring of the Australian electricity market in the 1990s, transmission utilities began to play a responsive role to the introduction of new generation capacity. Australia's NEM adopted an 'open access' model that allowed electricity generators to negotiate access to any part of the network at any time. However, an influx of variable renewable energy starting in the 2010s placed pressure on Australia's electricity grid. Over 16,000 megawatts of renewable energy entered the NEM between 2016 and 2021, stretching network hosting capacity and degrading system strength. This led to generation curtailment and connection lags. Renewable energy zones have long been discussed as a potential solution to the problem of network congestion. Locational coordination has been identified as a way to address the stress placed on network hosting capacity by an uncoordinated influx of renewable energy. The first major renewable energy zone was established in the Electric Reliability Council of Texas in the early 2000s. Additional efforts at coordinating renewable energy development in zones have taken shape in places that include North America, India, South Africa and the Philippines. The term 'renewable energy zone' was first used in the Australian context in Queensland in 2016 to describe a set of policies to build up transmission and generation infrastructure in Far North Queensland. An integrated plan for renewable energy zones was recommended in the 2017 Independent Review into the Future Security of the National Electricity Market. In its 2018 Integrated System Plan, the Australian Energy Market Operator responded to this recommendation by assessing 34 candidate REZs and argued that REZs would "provide an effective, least-cost way to integrate new generation, storage, and transmission development". Renewable energy zones were also recommended in the 2019 Australian Infrastructure Audit, which argued that coordinating investment in REZs would lead to lower wholesale and network costs for users over time. The Australian Energy Market Commission released an initial discussion paper on the regulatory framework for renewable energy zones in October 2019. In its most recent 2024 Integrated System Plan, the AEMO shortlisted 43 potential REZs. As of January 2025, New South Wales has announced five renewable energy zones, Victoria has announced six, Queensland has announced twelve, and Tasmania has announced one. While REZs are managed at the state level, several REZs are adjacent to one of the federal government's six announced offshore wind zones.

Locations

New South Wales As of 2025, New South Wales has announced five renewable energy zones: the Illawarra, Hunter-Central Coast, South-West, Central-West Orana and New England REZs. In June 2024 the Central-West Orana REZ, located in the region surrounding Dubbo, became the first REZ to win planning approval. The New South Wales Energy Infrastructure Roadmap, published in 2020, aims to add 12 gigawatts of renewable energy generation and 2 gigawatts of long-duration storage to the state's energy grid by 2030. The plan is expected to cost $32 billion by 2030. In New South Wales, landowners in REZs are paid for hosting infrastructure, such as wind turbines and transmission lines, on their land. Landowners are expected to receive a total of $1.5 billion in lease payments by 2042. NSW offers land owners $200,000 over 20 years for each kilometre of transmission line they host, and more than $40,000 per wind turbine and $1500 per hectare of solar farm. In 2023, the New South Wales government announced an 'access fee' scheme that would charge renewable energy developers a minimum of $1700 per megawatt per year to be invested in community funds designated for health, housing, infrastructure, education and other projects in REZs.

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