Australia doubles down on offshore wind for $8b

The 2.2GW offshore wind farm in Victoria opens up prospects for similar projects, according to analysts.

Australia will invest $8b into its first ever offshore wind project off the coast of Gippsland in Victoria, which has a proposed capacity of 2.2GW.

According to the Institute for Energy Economics & Financial Analysis (IEEFA), whilst the investment size of the project is huge, it still marks a step in the right direction as offshore wind projects typically have been slow to get off the ground.

“Australia has the highest uptake of solar globally, and onshore wind power generates nearly a quarter of all the renewable electricity in Australia’s National Energy Market,” said co-author of the note Tim Buckley, director of energy finance studies at IEEFA.

“The “Star of the South” opens up the promise of local and skilled jobs, the development of a replacement industry for the Latrobe Valley, and other economic opportunities in adjacent sectors.”

IEEFA said that the initial capital cost estimates of “Star of the South” require caution, this being the country’s first entry into the offshore wind sector. “The investment requirements of port upgrades and logistics to support the construction of the project adds to the project establishment costs,” said research analyst Kashish Shah, co-author of the note.

“However, offshore wind, although being a variable source of power, operates at a utilisation rate of 50-55% so this will offer greater reliability as well as supply diversity on the grid than is currently being experienced.”

IEEFA cited The Australia Institute, which found that two Victorian brown coal-fired power plants, Loy Yang A and Yallourn accounted for 55 plant breakdowns between December 2017 and June 2019.

This analysis supported the Australian Energy Market Operator’s assessment of Victoria’s ageing thermal power system as being the least reliable, also experiencing 32% of gas and coal-fired blackouts during the same period.

Timely commissioning of the Star of the South will allow early decommissioning of some of the old, polluting, and unreliable units of the two brown-coal fired stations in Victoria, according to IEEFA. “The penetration of low cost but variable renewable generation in Australia’s national electricity market has been rapidly growing,” said Buckley.

Photo by Lars Plougmann from Flickr