Victoria backflips on key renewable energy promise
Victoria’s state Labor government insisted revelations an auction delay was possible were wrong. It has now confirmed the critical process will not begin until at least 2026.
Victoria has delayed its first offshore wind auction until at least 2026, backtracking on repeated assurances it would proceed this year, and injecting uncertainty into an industry billed as central to the state’s ambition of retiring coal-fired power.
The state Labor government had promised to launch a contract-for-difference auction in September, designed to underpin billions of dollars of investment in projects off the Gippsland coast.
But Energy Minister Lily D’Ambrosio confirmed on Tuesday the process would be pushed back, with a revised timetable not due until the end of the year.
“While our aspiration was to have those preconditions in place by the end of September, and great effort had gone into attempting to achieve this, it has not been possible,” Ms D’Ambrosio told a wind industry conference.
The minister blamed delays in processing federal feasibility licences and bottlenecks in transmission and port infrastructure.
The government last year dismissed as “inaccurate” reports by The Australian that a delay was inevitable.
“We are absolutely on track to deliver the nation’s first offshore wind energy industry. And on time,” Ms D’Ambrosio said at the time.
The delay is a blow for developers, who argue the auction is critical to creating investment certainty in a fledgling industry already grappling with rising costs, supply chain constraints and fading momentum.
Star of the South chief executive Charles Rattray, who oversees what is regarded as Australia’s most advanced offshore wind proposal, acknowledged the setback but argued the strategic case for offshore wind remained intact.
“While this is disappointing, it does not change the reality that offshore wind is essential to Australia’s energy future,” Mr Rattray said. “With 90 per cent of coal-fired capacity forecast to retire by 2035, offshore wind energy is needed to ensure energy security, price stability and a pathway to net zero.”
Victoria set ambitious goals in 2022, targeting two gigawatts of offshore wind capacity by 2032 and 9GW by 2040. The plan sparked a rush of global developers into the state, with the Albanese government granting 12 feasibility licences a year ago to consortia backed by companies such as Macquarie, one of Japan’s largest conglomerates, and Spanish giant Iberdrola.
But enthusiasm has cooled. Spanish developer BlueFloat Energy withdrew from the Gippsland zone in July. Origin Energy has slowed work on its project, while industry sources say other developers are weighing whether to surrender their licences rather than continue spending millions on surveys and studies without a clear investment signal.
Developers must pay the commonwealth about $1m annually to hold a licence, in addition to financing costly seabed mapping and environmental work.
Federal Energy Minister Chris Bowen on Tuesday confirmed The Australian’s report that the government would slash annual fees in a bid to prevent further exits, but executives said the concessions would not fully offset the capital burden.
The delay will add to concerns about Victoria’s ability to deliver on its transition agenda. The state remains Australia’s most fossil fuel-dependent, with brown coal still supplying around 60 per cent of electricity generation. Offshore wind is meant to be the cornerstone of its plan to retire coal plants while avoiding supply shortages and price shocks.
Industry figures said the government could try to rebuild confidence by merging the first two auctions – originally planned as a 2GW tender followed by a 4GW tender – into a single 4GW round, for scale and momentum.
But executives privately warned that investors were growing weary of shifting timelines, unclear policy settings and cost inflation.
While the Victorian government remains adamant it is “absolutely committed” to offshore wind, Tuesday’s announcement will heighten scrutiny of its capability and its willingness to shoulder the costs of enabling infrastructure.
For developers, the delay is another reminder that offshore wind in Australia remains an aspiration rather than a bankable industry.
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