Federal Labor considers fee relief for offshore wind-power developers as project fears rise
The federal government may slash million-dollar fees charged to offshore wind projects as Victoria's ambitious clean-energy transition hangs in the balance.
The federal government is considering easing the annual fees charged to offshore wind-powered electricity generation developers.
The decision could be crucial as industry leaders say a string of projects could collapse, jeopardising particularly Victoria’s plan to replace coal-fired generation with clean energy.
Developers awarded feasibility licences in the Gippsland offshore wind zone are required to pay about $1m a year to maintain exclusive rights to explore sites, with the payments designed to deter “land banking” of prime seabed.
The fees cover administrative costs, but have become a growing burden for proponents already grappling with soaring global construction costs, supply chain bottlenecks and uncertainty over transmission connections.
Officials from the federal Department of Climate Change, Energy, the Environment and Water have begun discussions with industry on potential changes, including lowering the annual fee. Any adjustment would not take effect until the next instalments are due about April 2026.
The rethink comes after Spanish developer BlueFloat Energy walked away earlier this year, while Origin Energy has slowed progress on its Gippsland project, though it was far less enthusiastic on the immediate prospects of the industry than others.
Industry figures fear more of the 11 projects could be abandoned unless conditions improve.
One licence seen as vulnerable belongs to Macquarie Group’s Corio Generation, which is developing the proposed 2.5GW Great Eastern Offshore Wind project about 22km off Gippsland.
While insiders insist Corio remains committed, the project has become a touchpoint for speculation about the sector’s future.
Victoria can ill afford for would-be developers to fall away given it has cast offshore wind-powered generation as the cornerstone of its energy transition, setting targets of at least 2GW of capacity by 2032, rising to 9GW by 2040.
The state’s reliance on coal and gas for power and heating makes it one of the most fossil fuel-dependent jurisdictions.
Federal Labor has also embraced offshore wind as a pillar of its 2050 net-zero strategy.
The Albanese government last year issued 12 feasibility licences in Gippsland, trumpeting the move as the foundation for a multibillion-dollar industry capable of supporting thousands of jobs.
Offshore wind will also be important for the broader energy transition.
The energy source typically generates the most power during periods when solar and onshore wind are depressed, providing much-needed variety to a grid that is increasingly on course to be powered by intermittent sources.
Yet momentum has faltered. Globally, developers are scrapping or renegotiating projects as turbine, steel and financing costs rise. In Australia, proponents face the added challenge of building supply chains, port facilities and transmission infrastructure from scratch.
Victoria has pledged to run an auction for its first 2GW of capacity, with the process flagged to start this month.
But with two weeks left in September, no firm timetable has been set.
Of the 11 projects left, industry sources said three bidders at most are likely to participate.
Star of the South, owned by Copenhagen Infrastructure Partners and superannuation giant Cbus – widely considered Australia most advanced; Orsted and Parkwind are considered most ready to bid on the contract-for-difference auction.
Infrastructure planning is also unsettled. Last year, Canberra rejected Victoria’s proposal to use the Port of Hastings as a key offshore wind hub, citing environmental concerns over nearby wetlands.
For major developers, the level of uncertainty remains too high to justify billions of dollars in expenditure.
“We would not be able to commit money to a project with so much uncertainty and risk – it would not be responsible,” an executive, who was unable to speak on the record, said. “But clearly others have a lower risk threshold.”
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Originally published as Federal Labor considers fee relief for offshore wind-power developers as project fears rise
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