Lily D’Ambrosio declares federal cash ‘critical’ to Victoria’s offshore wind plans

Victorian Energy Minister Lily D’Ambrosio has declared federal spending ‘critical’ to her state’s plans for an offshore wind industry.

Victorian Energy Minister Lily D’Ambrosio. Picture: NCA NewsWire / David Crosling

Victorian Energy Minister Lily D’Ambrosio has declared federal spending “critical” to her state’s plans for an offshore wind industry, despite experts warning that large-scale investment in the technology is unlikely to be the most efficient use of taxpayer funds.

Ms D’Ambrosio’s comments come just days after she insisted Victoria is on track to hold its first offshore wind auction next year, after wind industry sources told The Australian of widespread concerns about whether an auction would attract any bids.

Such auctions set the minimum and maximum return a developer would receive once generating electricity.

In Britain, which unlike Australia has a mature offshore wind market, no company was prepared to bid at a price equivalent to about $84/MWh last year, forcing the government to increase the price to $139/MWh for this year’s round of bids.

These compare with current Victorian forward prices for largely brown coal-fired baseload power in 2026 of $58.64/MWh.

Victoria is aiming to produce 2GW of electricity via offshore wind by 2032, 4GW by 2035 and 9GW by 2040, as part of its renewable energy target of 95 per cent by 2035.

Speaking with renewable energy industry podcast Renew Economy, Ms D’Ambrosio lamented that there was “still no commitment from the commonwealth, to work with the state … for the financing part of getting these projects actually built”.

“No other country that has built offshore wind energy has relied solely on a subnational government to get these projects built, so the commonwealth government … needs a plan that includes financing,” she said.

Podcast co-host and energy market expert David Leitch was sceptical about whether federal spending on large-scale offshore wind would be the best approach, indicating he believed Victoria would need to become a net importer of renewable energy generated in other states.

“Victoria is not the world’s best place to have renewable energy. It’s not even Australia’s best place, really, at least onshore, I don’t think. But historically Victoria has been … an over-producer and supplier to other states because brown coal had, before considering the incredible carbon cost … a very low fuel cost, so it made a great baseload supply,” Mr Leitch said.

“Offshore wind is just going to have a much higher cost. It’s going to be expensive to replace the brown coal with offshore wind, and I don’t … think … looking at it from the national point of view, as opposed to Victoria’s point of view, that a lot of offshore wind is the right answer.”

Ms D’Ambrosio did not directly address whether she was effectively saying a Victorian offshore wind industry would be unsustainable without support from federal taxpayers, or what she made of Mr Leitch’s views.

“We’ve done the groundwork to set up the country’s first offshore wind industry here in Victoria, with global renewable energy companies lining up to invest in our state,” she said.

A spokeswoman for federal Energy Minister Chris Bowen avoided directly responding to a question about whether the Albanese government intended to provide funding to help establish Victoria’s offshore wind industry.

“Australia’s offshore wind industry took a huge step forward last week with the granting of the first feasibility licences for Australia’s first offshore wind zone in Gippsland,” she said. “These licences represent capacity greater than Victoria’s entire current electricity generation.”