31 August 2022

Offshore wind on horizon in Australia

Offshore wind projects imminent due to more renewable-focused outlook, cost competitiveness & fluctuations in fossil fuel markets.
Australia Energy and Natural Resources
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The realisation of offshore wind projects in Australia is shifting closer, thanks to a more renewables-focused Commonwealth Government, increased cost competitiveness of renewable projects, and fluctuations in the fossil fuel markets.

Australia moves to declare its first offshore renewable energy zone

Most recently, the Minister for Climate Change and Energy, Chris Bowen MP, announced his proposal to declare Australia's first offshore renewable energy area in the Bass Strait, off the coast of Gippsland in Victoria (Proposed Area). The Minister has powers under the Offshore Electricity Infrastructure Act 2021 (Cth) (the Act) to declare designated areas that are appropriate for offshore renewable energy development. In these areas, proponents may seek licences to commercialise offshore wind resources, construct turbines and transmit electricity to shore via undersea cables.

The Proposed Area is set to be home to Australia's first offshore wind farm (the 2,200 MW Star of the South project) which is presently seeking Victorian and Commonwealth Government planning approval.

Prior to the Proposed Area being officially declared, a 60-day public consultation process has commenced which seeks input from communities in the Gippsland area, environmental groups and other marine users. Closing on Friday, 7 October 2022, this public consultation process provides both industry and the public with an opportunity to share their view on what the offshore renewable energy industry may look like in Australia. Click here for more information.

Where to next?

Acknowledging the opportunity of offshore wind to help decarbonise Australia's energy market, the Commonwealth Government has earmarked several other regions which could also be designated for offshore renewable energy development in the future. In particular, it has flagged five other areas as potential future offshore renewable energy zones:

  1. the Pacific Ocean off the Hunter and Illawarra regions in New South Wales;
  2. the Southern Ocean off Portland in Victoria;
  3. the Bass Strait off northern Tasmania; and
  4. the Indian Ocean off Perth and Bunbury in Western Australia.

We think that both the Hunter and Illawarra regions are particularly well-placed to receive significant investment in offshore wind projects, given the established heavy industries, proximity to deep-water port facilities and favourable connectivity to the electricity grid.

Looking to develop offshore wind in Australia?

Proponents of offshore wind in Australia are required to obtain several permits under the Act, and must provide financial security to the Commonwealth Government to safeguard against the cost of decommissioning a project at the end of its lifecycle. The environmental impacts of a proposed project will also be rigorously assessed by the Commonwealth Government and the relevant State Government, and community support needs to be sought and maintained. Consultation with the relevant local Council will also be necessary. We cover these key considerations and more in our Renewable Energy Projects Development Guide.

Informed by our extensive track record advising on some of Australia's largest and most complex energy projects, McCullough Robertson's whole-of-project team can help you to navigate Australia's regulatory and approvals regime, as well as to support the construction, operation and maintenance programs for renewable energy projects.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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