Australia cuts red tape and fees for offshore wind projects in bid to slow exodus

The Australian federal government has confirmed it will slash fees, levies and red tape for companies exploring offshore wind projects in Australia, in what appears to be a move to slow down or even stop the recent exodus of would-be developers.

Federal energy and climate minister Chris Bowen says application fees for research and demonstration licences will be slashed from $300,000 to just $20,000, while application fees for transmission and infrastructure licences will be halved from $300,000 to $150,000.

In addition, red tape will also be reduced with simpler financial and reporting requirements, and lower capital requirements.

Bowen says the measures are important to attract international investors, particularly given the global challenges facing the offshore wind industry. These include an outright assault on the technology by the Trump administration and the cancelling of key projects, and cost pressures in other parts of the world.

“These cuts to fees, capital requirements and red tape make Australia a better prospect for investment and regional job creation,” Bowen said in a statement. 

“We want to make it easier for developers to build an Australian offshore wind industry, create thousands of great long-term jobs and generate cleaner, cheaper power for millions of homes. 

“We recognise that the industry currently faces economic pressures and we are acting accordingly with temporary relief.” 

The federal and some state governments have invested a lot of political capital in the development of offshore wind, despite concern in some energy circles that the technology is not competitive on price with onshore wind or solar.

Victoria, however, has deemed it essential to its ability to close the last of its coal fired power stations and reach 95 per cent renewables by 2035 and maintain that in the long term.

It has legislated offshore wind targets, with the first 2 GW required to be built by 2032 and 9 GW by 2040. Its Gippsland zone will be the first to host offshore wind and includes some of the country’s most credible projects.

But some of the offshore wind players that have quite Australia were, in effect, prospectors. They include companies that had never installed a single offshore wind turbine anywhere in the world, and appear to have packed up and left without significant investment.

Also, floating wind considered for states such as NSW appears to be too early stage and too expensive to get early commitment in the short term.

There is no doubt, however, that global cost pressures are rising – as they are for onshore wind technologies – and while leading companies such as Southerly Ten argue that it is the “value” of the output that counts more than the cost, many players – such as RES and Origin Energy – are deciding on a “wait and see” approach.

Others, including some of the big offshore wind developers such as Orsted and Equinor are facing bigger issues elsewhere that are impacting their share prices and capital resources. The test of interest will likely come when Victoria announcing the parameters of its first auction that is scheduled to be launched by the end of the year.

The fee relief announced by Bowen will also apply to annual levies on feasibility and research and demonstration licences, which will be waived, and annual levies applied to transmission and infrastructure licences, which will be halved.

The fee reductions are to be in place for a period of two years and apply for all six declared offshore wind zone, with some 24 GW of project said to be in various stages of early development.

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