LOCAL councils will decide on all wind farm applications under a Victorian Coalition election policy unveiled today.

Shadow Planning Minister Matthew Guy said under the policy, local government would be reinstated as the planning authority for all wind farm applications.

At the moment, local government only decides on wind farm applications of less than 30 megawatts, meaning Planning Minister Justin Madden decides most applications.

"It is time to give local communities the key role in deciding where wind farms will go and restore certainty to the planning process for wind farms,'' Mr Guy said.

Under the Coalition policy, turbines will also have to be at least 2km from the nearest dwelling.

The Coalition has also pledged to introduce a "shared payment system'' for landowners within 1km of the nearest turbine as a form of compensation.

If the Coalition won the November 27 election, it would also establish "no-go'' zones for wind farms at places such as Wilsons Promontory, the Mornington and Bellarine peninsulas, Surf Coast and Great Ocean Road regions, McHarg and Macedon Ranges, Dandenong and Yarra Ranges and sections of the Bass Coast.

Coalition leader Ted Baillieu said the policy was "about ending the division caused by Labor's years of inaction on proper wind energy guidelines''.

"(It) will give certainty to the wind energy industry and to communities where wind farms are located,'' Mr Baillieu said.

Victorian Energy and Resources Minister Peter Bachelor said the Coalition policy would "cost investment and jobs in Victoria and would lead to more CO2 emissions into the atmosphere''.

"The ... Opposition's wind farm policy would mean less windfarms - and less renewable energy - in Victoria," Mr Batchelor said.

"Renewable energy companies say that Mr Baillieu's announcement puts at risk millions of dollars of investment in wind farms and would cut in half the number of wind farm investments planned for Victoria.''