Victoria vows to hold offshore wind auction next year

Victoria has vowed to press ahead with the first offshore wind auction next year, despite sources saying interest could be muted.

Victoria has vowed to hold its first offshore wind auction next year. Picture: AFP

Victoria has vowed to hold its first offshore wind auction next year, a pledge that cements a timetable that industry sources say is likely to spur little action.

Offshore wind is at the heart of the state’s plan to move away from fossil fuels. The Australian on Wednesday reported that there was internal consideration of a delay to the first auction, but Victorian Energy Minister Lily D’Ambrosio said the state would proceed with the first auction next year.

“We are absolutely on track to deliver the nation’s first offshore wind energy industry. And on time,” Ms D’Ambrosio told reporters.

The pledge binds Victoria to the auction, despite sources continuing to stress that government figures have raised the prospect of a delay. The state Labor government appears determined to push through its roadmap, given the politician sensitivity of the plan.

Victoria is Australia’s most fossil fuel-dependent state, relying on three major coal power stations for baseload electricity and gas to meet increased demand throughout winter.

Ms D’Ambrosio said there were 12 developers ‘‘champing at the bit” to get going, though only six had so far obtained a feasibility licence, allowing them to begin work.

Nearly all projects will now have to begin extensive surveying work on the ocean floor and assess environmental impacts before they will be able to consider participating in the contract for difference auction.

Such auctions set the minimum and maximum return a developer would receive once generating electricity. Projects typically are only viable once they have secured an agreement.

Victoria is under mounting pressure to deliver its ambitious roadmap for offshore wind.

The state government in 2022 set a target of generating 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’s two largest coal power station are likely to have retired by 2032 – increasing the importance of offshore wind.

But only one project – Star of the South, backed by Copenhagen Infrastructure Partners and Cbus – has completed significant preliminary works and could be ready in time.

Should Victoria move to hold the first auction in 2025, industry executives said interest could be muted due to extensive work remaining outstanding, potentially embarrassing a government that has put such importance on offshore wind.

Delaying the auction would be politically risky, though it would likely garner more interest and subsequently tighten the bids offered by the 12 developers should all secure licences and decide to continue development.

Victoria’s coastline is ideal for offshore wind. Winds are strong and consistent by international standards, while a large area of shallow ocean less than 50m-60m deep is suitable for wind turbine platforms.