Community group Strezlecki Community Alliance had challenged the approval of the Delburn Wind Farm, alleging permits breached a local planning requirement not to build wind farm infrastructure within five kilometres of the urban areas of Moe, Morwell and Traralgon.
Supreme Court Justice Melinda Richards found no part of the wind farm was within 5km of the three towns.
"The permits granted by the Minister on 27 March 2022 are not contrary to the five kilometre prohibition in cl 52.32 of the Latrobe Planning Scheme," Justice Richards wrote in her decision.
"The proceeding must therefore be dismissed."
Lawyers for the community group had argued nearby towns of Newborough, Boolarra, Yinnar, Thorpedale, Delburn and Mirboo North were part of a greater Latrobe City and should be included in the buffer zone.
While the planning scheme recognised Moe-Newborough as a single urban settlement, there was no mention of Newborough or the other towns in the planning scheme clause regarding wind farm proximity requirements, the decision read.
OSMI Australia, which will build the wind farm, welcomed the decision.
"This provides certainty for the Delburn Wind Farm to proceed, and we are actively working to bring the project into construction in early 2024," OSMI executive director development Peter Marriott said in a statement.
"We are excited to be able to invest in the region and create local jobs."
The wind farm is expected to provide more than 186 full time jobs during construction and 24 ongoing jobs during its 30-year operational life.
Mr Marriott said the wind farm would work with the community to ensure it delivered long-term benefits to surrounding communities.
"We invite community members to join our community consultative committee to help shape the generous neighbourhood profit-sharing scheme and community development fund," he said.
"We also want to hear from any residents who are concerned or opposed to the wind farm development - it's not too late to discuss your concerns."
Friends of the Earth community organiser Wendy Farmer said she looked forward to the first wind farm in the Latrobe Valley, the heart of Victorian coal energy production for almost a century.
"Our energy system is changing, the Latrobe Valley has a proud history of energy production and it is great to see that the valley will continue to play a part in Victoria's energy production," Ms Farmer said in a statement.
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