Australian government announces first offshore wind energy zones

Out-Law News | 01 Sep 2022 | 1:29 pm | 3 min. read

The Australian government has announced its intention to declare the Gippsland Coast in the south east as the first area suitable for offshore wind development.

This is the first major announcement under the 2021 Offshore Electricity Infrastructure Act, which came into force on 2 June and provides for the development of an offshore wind industry in Australia.

Five other potential areas have also been identified for the development of future offshore renewable energy projects. These are the Pacific Ocean regions off the coast of Hunter and Illawarra in New South Wales, the Southern Ocean region off Portland in Victoria, the Bass Strait region off northern Tasmania, and the Indian Ocean region off Perth and Bunbury in Western Australia.

The federal government’s announcement reaffirms the Victorian government’s support for establishing an offshore wind industry, a space in which Australia is significantly lagging behind other parts of the world – such as Europe. Chris Bowen, minister for energy and climate change, said that Australia “has some of the best wind resources in the world” with the six chosen sites having “good to excellent” wind resources, along with close proximity to existing connections to the grid.

Morgan-Payler James_October 2019

James Morgan-Payler

Partner, Head of Asia Pacific

Europe has seen a significant decrease in the costs of energy produced by offshore wind projects as a result of technology development, economies of scale and competitive tendering mechanisms, and it is likely that these benefits will occur in Australia as the industry develops

Energy projects expert James Morgan-Payler of Pinsent Masons said: “The push to establish an offshore wind industry is set to be a key component in reaching the Government’s net zero emissions target by 2050 and ensuring that 82% of Australia’s electricity is generated by renewable sources by 2030. It also offers enormous opportunity for large-scale investment in Australia for renewable energy developers and other stakeholders”.

The government has begun a consultation exercise on the proposal to declare the Gippsland coast as suitable for the development of offshore renewable energy projects, and is inviting feedback from all interested parties. Developers in particular are invited to send proposals on potential offshore wind projects demonstrating to National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA), the Offshore Infrastructure Regulator, how their project will share the area with existing users. The consultation period runs until 7 October 2022.

Once the consultation period has concluded, the government will consider the submissions and the potential impacts offshore renewable energy projects may have on alternate uses of the area. These submissions will form the basis for the Department for Climate Change and Energy’s decision as to the suitability of the area for the development of offshore renewable energy projects and whether the declaration will be made. Once a declaration is made, the minister will grant feasibility licences to developers.

Feasibility licences will give the chosen developers a period of up to seven years to investigate and plan their project. As part of this process, they will need to consider a range of factors including the environment, native title interests and the potential impact on commercial and recreational fishing in the area, among other matters. Considerable collaboration from all levels of government, local communities, indigenous groups and other relevant stakeholders with vested interests will also be needed if future projects are to be successful.

Morgan-Payler said: “The need for such extensive collaboration represents a significant hurdle for the industry, along with the high costs of development and lack of an established supply chain. However, Australia has the benefit of the involvement of experienced European consultants and contractors enabling them to develop skills faster through technology and people transfer. Europe has seen a significant decrease in the costs of energy produced by offshore wind projects as a result of technology development, economies of scale and competitive tendering mechanisms, and it is likely that these benefits will occur in Australia as the industry develops”.

“Australia also represents a technological challenge, with Australia’s best offshore wind resources occurring in deeper water meaning we will need to use floating turbines which sit on surface platforms tethered by cable to the seafloor. This technology remains in the early development phase. As this technology matures and becomes cheaper, it will open up more areas for development of offshore projects in Australia,” he said.

He added: “Despite the above, with greater clarity to the legislative framework and licensing, and increasing commitment by the state, territory and federal governments, the offshore wind industry looks primed for growth in the coming months and it is essential for interested developers to begin putting together their proposals”.