Offshore wind developers mull plan B in Victoria as Gippsland decisions loom

Developers at risk of failing to secure a licence to build offshore wind projects in Victoria are mulling plans to acquire stakes in projects that do win favour with regulators.

Offshore wind developers at risk of failing to secure a licence to ­develop in Victoria are mulling plans to acquire stakes in projects that do win favour with regulators, as intense competition to ­secure a converted permit forces global heavyweights to consider alternative plans.

More than two dozen developers have lodged applications with the National Offshore Petroleum Titles Administrator to develop offshore wind projects in Gippsland, positioning themselves to capitalise on Victoria’s strategy to place the renewable energy source at the heart of its plans to wean the state off coal.

Global heavyweights including the likes of Orsted (the world’s largest offshore wind developer), Shell and Norwegian giant Equinor are battling it out with local giants such as Origin Energy, Macquarie and AGL Energy for licences.

The first licences are expected to be issued in September at the earliest, sources told The Australian. But with only five or six ­applications expected to be ­approved, major players are going to miss out.

To mitigate the threat of missing out on an industry that is likely to be lucrative, several developers are quietly considering alter­native plans to gain exposure – buying stakes in developments that do win a licence.

BlackRock, the world’s largest asset manager, last week told The Australian it was seeking a stake in offshore wind developments.

Buying minority stakes would be a consolation prize for developers that miss out, but it would be welcomed by successful projects, with each development likely to cost in excess of $12bn.

Buying stakes in international projects is not uncommon. RWE, Germany’s largest power company and one of the world’s largest renewable energy developers, in 2021 moved into the Taiwanese market by acquiring stakes in a local development company.

RWE has lodged an application to develop in Gippsland, but may struggle to secure a converted licence in Australia despite satisfying much of the guidance offered by NOPTA to developers earlier this year.

Notable requirements include evidence of experience in developing offshore wind projects and large capital reserves, but with some of the world’s largest renewable energy developers all proposing projects, splitting ­applications is expected to be ­difficult. Taiwan is one of the fastest-growing markets for offshore wind outside Europe, and aims to have 15.5 gigawatts of installed capacity by 2035.

But Australia is moving quickly to catch up and is luring a plethora of the world’s biggest renewable energy companies after the federal and state governments signalled overwhelming support to grow the industry.

The Victorian government last year set a target of generating the equivalent of about 20 per cent of its energy needs from offshore wind within a decade.

The target then doubles to 4GW by 2035 and 9GW by 2040. In all, Victoria sees potential for 13GW of offshore wind capacity by 2050, five times the state’s current renewable generation.

Victoria’s coastline is ideal for offshore wind. Winds are strong and consistent by international standards and a large area of shallow ocean less than 50m- 60m deep is suitable for wind turbine platforms to be fixed to the seabed, a much more mature and lower-cost technology than floating turbines that have to be used in deeper waters.

Other states are also desperate to lure developers, and within days the Hunter region of NSW will be declared Australia’s second offshore wind region.

The Hunter is attractive as it is close to major demand centres and retiring coal power stations mean offshore wind could repurpose existing transmission infrastructure to supply electricity to homes and businesses.

But the proposed region in the Hunter is smaller and the ocean floor is deeper, requiring floating turbines.

While the region is probably only going to support two developments, major developers such as Equinor, French giant EDF and Spain’s Bluefloat are all moving ahead with plans to develop in NSW.

Federal Energy Minister Chris Bowen last week unveiled the third potential offshore wind region off the coast of Victoria and South Australia.

Mr Bowen has also suggested the Illawarra of NSW, northern Tasmania and areas near Perth as other regions where offshore wind could be permitted.

The federal government hopes first generation from offshore wind will occur before 2030, a target that is likely to be dependent on South of the South – Australia’s most advanced offshore wind project – from meeting its development schedule.

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Originally published as Offshore wind developers mull plan B in Victoria as Gippsland decisions loom