Green giant Orsted to bridge coal exits with offshore wind boost
Danish renewables operator Orsted plans to develop giant offshore wind projects as part of plans to add Australia as a major investment destination to its global green network.
Danish renewables operator Orsted plans to develop giant offshore wind projects as part of plans to add Australia as a major investment destination to its global green network.
The world’s biggest offshore wind power developer will submit plans to the government ahead of an April 27 deadline detailing its plans to develop major projects in the Gippsland Basin, heralded as a new source of energy generation as coal exits the power grid.
Orsted may build up to 5 gigawatts of generation from offshore wind projects in Victoria alone and will also weigh up additional projects in NSW and South Australia.
“We are aiming to build multi-gigawatt scale offshore wind projects in Victoria,” Orsted’s Asia-Pacific president, Per Mejnert Kristensen, told The Australian.
The current capacity of Victoria’s coal plants spread across the twin Loy Yang plants and Yallourn is 4.8GW, although the variable nature of wind supply means much more generation will need to be committed to replace thermal coal capacity, which can run around the clock.
Mr Mejnert Kristensen concedes Australia faces a rocky transition from coal to renewables, but said Orsted could play a part in delivering much-needed new supplies.
“It is always a bit tricky and you need a lot of focus and dedication to make that transition,” he said.
“It’s of course difficult to predict how exactly it will transpire, but what we see and hear is something that makes us very positive towards the transition into renewables. Our overall vision is to create a world that runs entirely on green energy.”
Orsted said it had targeted Australia as a major destination for investment with Victoria’s Bass Strait earmarked as the nation’s first priority area for offshore wind power developments.
Victorian Premier Daniel Andrews has pledged that 20 per cent, or 2GW, of the state’s power would be supplied by offshore wind by 2032, 4GW by 2035 and 9GW by 2040.
“When we hopefully get the feasibility licence, we will have seven years to develop the site. So that will take you to around 2030,” Mr Mejnert Kristensen said, noting that 250 Australian businesses had expressed an interest in working with the company since it held an industry briefing.
“We are a little separate from many of the other developers in that we are there for the long haul. We have this model of from develop to build to operate the wind farm. So whether we divest a part of it, that can happen, but we are actually in there to run the wind farms for 25 or 30 years, or even longer.”
He said the company was still seeking to understand how any underwriting mechanism may work with the Victorian government, but said it expected to hold talks with utilities over potential offtake deals should it give the go-ahead to Victorian projects.
“We know that fortunately the Victorian government, and I’m sure the other state governments too, are very keen on getting the right framework implemented, because it is very important that, that you get that right,” he said.
“There are so many different models. And unfortunately, what we’ve seen in some countries is that the wrong models are implemented. And that actually meant that the offshore wind farms are not being built, or they are being built very, very late, because there’s simply not a viable business case around it.”
While wind turbines on land remain a dominant renewable source, offshore wind projects are expected to triple globally this decade with their cost of energy tumbling by two-thirds since 2012 with giant turbines now taller than the Eiffel Tower.
Its local Victorian rivals include the developers of the $10bn Star of the South wind farm off the Gippsland coast that plan to supply 20 per cent of the state’s electricity needs once the Yallourn coal plant closes, providing a major source of renewable energy as the grid moves away from coal.
Alinta Energy has also proposed a giant $4bn offshore wind farm that could supply Victoria’s Portland aluminium smelter and the broader east coast grid, one of the biggest bets yet on the renewable technology attracting support from big name investors.
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