Macquarie’s renewables developer Corio seeking partners for offshore wind-powered generation project

Macquarie’s renewable energy developer, Corio, wants a partner for its offshore wind-powered generation project in Gippsland.

Macquarie’s renewable energy developer Corio is seeking partners for its offshore wind project in Gippsland, sources have told The Australian, as it moves to accelerate development of a project seen as critical if Victoria is to transition away from coal.

Corio was earlier this year selected for a so-called feasibility licence to develop an offshore wind project in Gippsland, gaining exclusive rights to its region to undertake preliminary works before a final investment decision is made.

Offshore wind projects are expected to cost billions of dollars and will require consortiums of investors.

Corio is understood to have approached would-be investors, sources involved in those talks confirmed to The Australian.

A spokeswoman for Corio declined to comment.

New investment in the project will improve its viability, but it will also test market appetite to invest in offshore wind.

Australia’s largest electricity and gas retailers, AGL Energy and Origin Energy, have both said they see renewable energy generation projects like wind and solar as having insufficient returns to justify funding directly, increasing the onus on global players and Australian superannuation funds.

Superannuation funds are looking for exposure to Australia’s energy transition, and could be satisfied with guaranteed returns on investment of less than 10 per cent.

Several global funds are also looking at Australia as a potential avenue to invest funds raised to tackle climate change.

But offshore wind is expected to be a longer dated investment. Nearly all of the projects selected for development licences are unlikely to be operational until well into the next decade.

Projects are likely to need capital to fund feasibility studies and there are no guarantees that these projects will materialise.

Victoria, however, has pegged much of its transition hopes on offshore wind.

The Victorian government in 2022 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 current renewable generation in Victoria.

Victoria has pledged to hold its first contract-for-difference auction for offshore wind next year, though industry sources continue to suggest that the state government could delay the process to 2026 in the hope of attracting more interest.

Holding it in 2025 is likely to solicit interest only from Star of the South – Australia’s most advanced offshore wind project.

Victoria is likely to secure commitments from the Copenhagen Infrastructure Partners and Cbus-backed project – but having more competition will tighten bids and reduce taxpayer liability.

Victoria’s coastline is ideal for offshore wind. Winds are very strong and consistent by international standards, while 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 cheaper technology than the floating turbines that have to be used in deeper waters.