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February 22, 2024
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Australian offshore wind ‘supercharged’ in Victoria as billions pledged to fast-track projects

In addition, Victoria’s state government announced that it will increase its goal for renewable electricity to 95% by 2035 and published the first offshore wind implementation statement.

Re-wiring the country

The first act of the Commonwealth’s new A$20 billion “Rewiring the Nation” programme will see $1.5 billion of concessional finance made available to them as part of an agreement with Victoria to jointly fund offshore wind projects and renewable energy zones (REZs) in the state.

According to a joint statement made by Anthony Albanese, the Australian Prime Minister, this is supported by a “promise to coordinate Victorian and Commonwealth regulatory processes to promote the rapid development of the Victorian offshore wind industry.”

Grid financing

The undersea Victoria-New South Wales Interconnector (VNI West) KerangLink will get a $750 million concessional loan from Rewiring the Nation through the Clean Energy Finance Corporation in order to be finished by 2028.

Additionally, agreements were reached by the Commonwealth, Victoria, and Tasmania to each contribute equally, up to a maximum of 20% of the project equity, to the construction of the Marinus Link interconnector across the Bass Strait.

The VNI-West KerangLink would unlock 4000MW of new power generation, supporting more than 2000 direct employment during construction, and creating $1.8 billion in nett market benefits, including for energy users, the release said. “This news will boost regional jobs,” it added. Additionally, “Marinus Link is expected to bring in $1.5 billion in investment to the Gippsland region and generate 1400 new employment in Victoria.”

“This contribution is the largest investment in energy that we have seen by a Commonwealth Government in any single announcement since the Chifley government announced the Snowy Mountains Scheme,” said Albanese, who was elected to office earlier this year on the strength of commitments to enact climate change legislation.

Victoria advances.

In a separate development, Victoria published its first offshore wind implementation strategy statement, raising its goal for renewable electricity to 65% by 2030 from 50% and to 95% by 2035.

The state also promised to invest an additional “initial” $1 billion through an equity fund to generate 4.5 GW of new renewable energy over the following ten years, helping to reduce emissions by 75-80% by 2035 and reach net-zero status by 2045 rather than 2050.

Offshore Wind Energy Victoria (OWEV), a new entity within the Department of Environment, Land, Water, and Planning, will lead the development of transmission infrastructure to coordinate offshore wind connections, according to the offshore wind implementation statement. OWEV will streamline and coordinate development to reach 2GW by 2032, 4GW by 2035, and 9GW by 2040.

An offshore “one-stop-shop”

State environment minister Lily D’Ambrosio declared that OWEV will serve as a “one-stop shop for the offshore wind energy industry…to assist the long-term development of this burgeoning sector and to support industry and stakeholders.”

A coordinated, government-led transmission solution is the best way to achieve offshore wind ambitions, safeguarding Victoria’s energy future while minimising impacts on communities and costs for customers, according to a statement from VicGrid.

It will initially collaborate with the Australian Energy Market Operator (AEMO) to enable the connection of up to 2-2.5GW in both Portland and Gippsland Coast.

Local material

In the interim, the Port of Hastings has been designated as the prefered port to enable offshore wind construction, subject to the required engagement with the community and industry and permissions for the project’s impact on the environment and planning.

The statement stated, “The Port of Hastings has the potential to be multipurpose and permit construction, manufacturing, and research enterprises to co-locate on property allocated for these uses which minimises impacts on public amenity.

According to the announcement, the state’s Local Jobs First policy would also be used, “so that local content will scale up as the supply chain evolves.”

For Victoria’s offshore wind industry, a new workforce and skills strategy is also being developed. Finally, the Victorian government says it will introduce a “enabling reforms package to remove critical barriers and give offshore wind proponents the certainty required to proceed to final investment decision” in addition to working with the Commonwealth to deliver simplified regulation and legislation.

Premier of Victoria Daniel Andrews stated that his administration intends to reinstate the State Electricity Commission (SEC) in order to implement the 4.5 GW of new renewable energy projects that have been proposed and to pass legislation establishing new emission reduction targets.

A survey released last month indicated Andrews is “in a strong position” and on pace to secure a third term in the state, but this will only happen if his Labour government is re-elected in the state election in November.

The coal-fired Loy Yang A power station is scheduled to close in 2035; according to Andrews, the SEC projects would replace it and result in a third of Victoria’s energy being held by the government.

The new renewable energy projects will be majority-owned by the government (51%), with the remaining capital coming from “like-minded institutions” such industrial super funds.

The market embraces this “gamechanger”

The combined commonwealth/state agreements, according to Australia’s Renewable Energy Council (CEC), are a “game-changer” that have “just got turbocharged” the nation’s transition to clean energy.

“A smart, contemporary, and powerful transmission system is a critical piece of the jigsaw puzzle to deliver a lower cost, more dependable, and clean energy power system and transition Australia to become a clean energy superpower,” said Kane Thornton, the council’s chief executive.

It is also “a wise investment in the energy infrastructure required for the 21st Century” to support REZs and offshore wind projects, according to Thornton.

“The Victorian Government has realised the value of co-investment and the important role of the private sector when it comes to infrastructure projects of this nature,” said Thornton, referring to the additional investment and targets pledged by Victoria.

Victoria now has a strong path for implementing the energy transformation that is essential to both addressing climate change and the state’s economic development, he said, thanks to the significant investment made to speed up transmission networks.

Being “on the same page”

The developments were also hailed by Charles Rattray, CEO of Star of the South, a 2.2GW offshore wind farm in Bass Strait off the coast of Gippsland, Victoria. The ability to make timely judgments and take effective action to start offshore wind farms up and running depends on all levels of government being on the same page, he said.

He continued by stating that the Offshore Wind Implementation Statement is “a positive step towards the clear and predictable path needed to attract the investment, supply chain, and labour needed for a thriving offshore wind business.”


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