The Victorian government and relevant bodies have been working on the design of Renewable Energy Zones (REZ) over the last few years. The impending Victorian REZ Access Regime is a unique approach by VicGrid to promote the build out of renewables in the REZs, aiming to limit network curtailment and boost investor confidence, as also outlined in their 2025 Victorian Transmission Plan.

While the primary focus is on steering as much renewable buildout as possible into the REZs, VicGrid has left the door open to non-REZ projects. The caveat is that these candidates must prove that they are “unlikely to result in excessive network curtailment of existing and planned REZ scheme generators in Victoria”. Coming up with definitive metrics for this is quite challenging for a number of reasons that we will discuss, but VicGrid’s latest update on the Victorian Access Regime has provided some further clarity on this initial idea.

To assess the “no/low harm” from new/outside REZ projects, VicGrid has proposed a Grid Impact Assessment (GIA) approach. Under the draft GIA (Sept 2025 guidelines), two possible approaches were considered for evaluating the network curtailment impact:

• Test 1: undertaken by GIA applicant, a steady‑state test using PSS/E that requires the applicant to carry out power system load flow studies under worst case(s) boundary conditions.
• Test 2: undertaken by VicGrid, a market‑based test using PLEXOS market modelling, to quantify the impact on forecast REZ scheme generators and determine whether the impact is within the threshold for excessive network curtailment.

Following feedback from stakeholders, the revised methodology that VicGrid is now (likely) considering involves a single PSS/E test that includes a set of representative scenarios or conditions from their market model, such as strong wind/solar conditions. So now the questions become:

• how can GIA applicants build a safe level of capacity without adversely impacting REZ network congestion, and
• how can they clearly communicate that to VicGrid in their GIA submissions?

What can be done?

The proposed PSS/E studies across a range of operating conditions (for example, high demand or high wind) are relatively straightforward. However, an important question remains: if a PSS/E study under a selected high-demand or high-renewable condition shows that a project causes additional congestion, does that necessarily mean the project should not proceed? Not necessarily.

We recognise that there are ongoing discussions around the REZ access regime. However, assuming VicGrid finalises the framework following consultation and adopts a PSS/E-based GIA approach, we propose an alternative methodology that could provide a more robust assessment and greater confidence for both VicGrid and developers.

Headroom Assessment-Based GIA Alternative

We propose extending the conventional PSS/E assessment by integrating market dispatch modelling with AC load flow analysis at half-hourly resolution. We refer to this as a Headroom Assessment-Based GIA.

Under this approach, half-hourly power flows are assessed across relevant transmission lines and transformers under both N and N-1 conditions. Market modelling is first undertaken to simulate the dispatch of existing, committed, anticipated and relevant policy-driven projects, including projects assumed within the initial REZ allocation.

The resulting half-hourly dispatch is then fed into an AC load flow model, producing a comprehensive view of network flows and constraints across Victoria under both intact and contingency conditions.

This provides two key advantages. First, the market dispatch modelling captures realistic operating conditions throughout the year—or across multiple future years—reflecting changing demand, renewable availability, generator dispatch and network conditions. Second, applying AC load flow analysis to every half-hour avoids relying on a small number of selected snapshots, such as high demand/high wind or low demand/high wind conditions, which may not capture the conditions that actually drive congestion.

This approach would allow VicGrid to assess the incremental congestion impact of a new project across thousands of realistic operating conditions, rather than a limited number of predefined snapshots. It provides visibility not only of whether a project creates or worsens congestion, but also where, when and how frequently those impacts occur, including under N-1 conditions. For developers, the same analysis provides greater transparency around potential congestion and curtailment exposure and can help identify alternative project configurations, operating strategies or other measures that may mitigate those impacts.

Case Study

The following case study demonstrates how a Headroom Assessment-Based GIA could work in practice, using a Victorian REZ in a late-2020s forecast year.

First, we conduct the assessment with the REZ projects included, but without the new project, to establish the baseline network conditions. Figure 1 shows half-hourly flows for a sample transmission line (referred to as Line X1) under N-0 and N-1 conditions, with the most critical contingency referred to as X2. The forecast flows are overlaid with the relevant line ratings. Even from the raw half-hourly results, several insights are immediately apparent, including the material increase in Line X1 flows under the X2 contingency and the tendency for higher flows during winter.

Figure 1: Half-hourly line flows on Line X1, with and without a critical contingency.

Figure 1 shows that the half-hourly N-1 flows exceed the line limit during some periods. To make the extent of this congestion easier to interpret, Figure 2 presents the corresponding flow duration curve, showing that the line reaches or exceeds its limit for around 1% of intervals.

Figure 2: Duration curve of half-hourly line flows, with and without a critical contingency.

This establishes an important baseline: even before the new project is introduced, Line X1 is expected to be congested during a small proportion of intervals.

We then conduct the GIA for a new BESS in the area by introducing the project and assessing its incremental impact. Figure 3 again presents the flow duration curve to show the severity and frequency of congestion. The orange curve represents ordered half-hourly Line X1 flows under the critical contingency with the BESS injecting at a nearby substation, while the blue curve represents the corresponding N-0 flows.

Figure 3: Duration curve of half-hourly line flows, with and without contingency and injection of BESS generation.

With the new BESS included, Line X1 exceeds its limit in roughly 3% of intervals. If the representative PSS/E case selected for the GIA happens to fall within these intervals, the project could appear to have a material adverse impact on network congestion.

The first component of the GIA is therefore captured through PSS/E load flow analysis, which identifies how the project can change network flows and potentially increase congestion. The next step is to understand the operating conditions driving those impacts. Given VicGrid has indicated that it may test a range of representative scenarios derived from its market model, it is valuable to identify which conditions are most likely to present congestion risk for GIA applicants.

We can then examine the most congested periods in more detail. Figure 4 shows a high-wind day on which the BESS discharge contributes to relatively high loading on Line X1. The BESS dispatch and line flows are shown alongside aggregate wind generation within the REZ, highlighting the strong relationship between high wind output and Line X1 overload.

Figure 4: Half-hourly line flow on X1 on a day where there is line overload.

Since high wind generation is clearly a key risk factor for this BESS project, the next step is to examine the line flow duration curve specifically during periods of high wind output. Figure 5 shows line flows for the top 10% of intervals with the highest wind generation. The results show that approximately 30% of these high-wind intervals result in the line reaching or exceeding its limit. Put another way, around 3% of all intervals across the year experience both high wind generation and line overload. This indicates that almost all periods of line overload coincide with strong wind generation.

The next question is whether the BESS could adopt an operating strategy that mitigates this congestion risk. In particular, could the BESS avoid discharging during periods of high wind generation? In many cases, this may occur naturally through market dispatch, as periods of abundant, low-cost wind generation often coincide with lower regional prices and therefore provide less incentive for the BESS to discharge.

This highlights an important limitation of conducting the GIA using only a high-wind snapshot. Under such a condition, the BESS may appear to materially worsen the constraint and potentially fail the assessment. However, this does not necessarily represent its likely operation in the market. A half-hourly, market-informed assessment can instead capture when the BESS is actually likely to charge or discharge and assess its congestion impact under those more realistic operating conditions.

Figure 5: Duration curve of line flows during periods with high wind generation

 

Limitations

Many of the limitations associated with the GIA have been acknowledged in VicGrid’s own documentation. However, several issues remain important for applicants seeking to demonstrate that their projects can connect without creating unacceptable impacts on existing and planned REZ generation.

How much curtailment is too much?

VicGrid has indicated that GIA applicants will be assessed against a defined threshold, but the technical basis for determining an acceptable level of curtailment is not yet clear. Greater transparency around how the threshold is derived, how stakeholder feedback informs it, and how effectively it protects REZ projects from material congestion risk would provide greater certainty for applicants.

Measuring congestion for dispatchable assets

Standalone batteries are generally less likely to discharge voluntarily during the very high-wind or high-solar conditions that often drive congestion risk, and their flexible operation may allow them to dispatch around constraints. VicGrid has recognised this distinction: standalone storage is not subject to the standard network curtailment criterion and must instead demonstrate operational strategies that limit its congestion impact. The practical question is how such strategies would be demonstrated and enforced. Battery economics can depend heavily on capturing periods of volatility and price spikes that occur during a relatively small number of trading intervals each year. Any operational restriction that prevents discharge during these periods could therefore have a material commercial impact. As the methodology develops, further clarity on how these operating commitments would be assessed and applied will be important.

Who gets to go first?

The original draft methodology proposed a first-in-first-served approach. VicGrid’s subsequent update indicates that this may change to a process intended to assess applications more efficiently. This raises further questions: will different combinations of applicant projects be considered to identify an efficient outcome, and will projects that are more advanced in development receive any priority? These details will need to be clarified as the access regime is finalised.

 

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