The Victorian Government has given the green light to one of the biggest wind farms in the state's history.

The $650 million project near Dundonnell, in south-west Victoria, is expected to generate enough energy to power 140,000 homes.

The permit approval for developer Trustpower follows a thorough Environment Effects Statement process and ends a seven-year standstill since the project's inception in 2009.

Premier Daniel Andrews said the wind farm would save an estimated 700,000 tonnes of greenhouse gas emissions each year, with construction due to begin in 2017.

"We made commitments at the election to ensure Victoria played its natural role, a leadership role, in taking real action against undeniable and dangerous climate change," Mr Andrews said.

"At 96 turbines, the size and scale of it... this is why it's such a proud day.

"This is going to play a massive part in our obligations for children and grandchildren to leave them a better standard of living than that we have enjoyed."

Up to 300 direct and indirect jobs are expected to be created during construction, and up to 16 full-time positions when operational.

Planning Minister Richard Wynne said the project would help ensure Victoria met a 25 per cent renewable energy target by 2020 set by the State Government.

"That will rise to 40 per cent by 2025, [so] these are ambitious targets, and this project really sets the benchmark," he said.

"It speaks, I think, to the appetite that there is for investment in renewable energy in this state."

Victoria prepared to 'go it alone' on climate change

A Federal Government decision to merge the Environment and Energy portfolios has sparked hopes among advocates that renewable energy will play a greater role in energy policy.

The Australian Wind Alliance's Andrew Bray said the incoming minister Josh Frydenberg had been "positively disposed" to renewables.

Victorian premier Daniel Andrews (right) tours the Dundonnell windfarm with stakeholders ( Supplied )

"There was a marked change when he took over the energy portfolio from Ian Macfarlane," Mr Bray said.

"He was much more positive towards renewable energy, so we are hopeful."

Mr Andrews said he would not be waiting on the Federal Government to lead the "battle" against climate change.

"I would have liked the Australian Senate and all sides of Parliament to allow us to do the hard work they weren't prepared to do," he said.

"The national renewable energy target ought to have been as was promised.

"We've chosen another way, and the ACT-style auction system, we'll have more to say on that towards the end of the year, together with our contribution to our pledge for real action of climate change."

The Victorian Government has not ruled out buying more renewable energy certificates from wind farms.

Local manufacturers not guaranteed work

Despite the size and scale of the project, the Victorian Government could not confirm local manufacturers would secure a tender bid.

Keppel Prince Engineering, based in nearby Portland, is one of Australia's largest wind tower manufacturers, and sacked over 80 staff in 2014 due to uncertainty over the Renewable Energy Target.

Trustpower general manager Deion Campbell said the procurement process would be a "long and complex" exercise.

"By and large, someone who manufactures locally should be able to outcompete the imported stuff," Mr Campbell said.

Editor's note: A previous version of this story said the Dundonnell Wind Farm would be the biggest in Victoria, however the ABC understands that the wind farm at Macarthur, in south-west Victoria, has more turbines. The Victorian State Government stands by their claim that the Dundonnell Wind Farm will be the biggest, as it will produce more power than any other wind farm in the state.