The cost of China-made offshore wind turbines has dropped by 50 per cent over the past four years, Rystad Energy says, offering the potential for desperately needed capital cost savings for the Australian sector as it builds its first projects.
In Australia, the upfront cost of building offshore wind, while trending down since the global energy crisis heights of 2022, remains at nearly twice the amount of onshore wind, according to the latest CSIRO GenCost report: around $4600/kW for a fixed-bottom project.
Developers have warned that if costs don’t come down, projects will struggle to get built in Australian waters – particularly with the added costs from local content rules that are expected to be imposed through offshore wind auction schemes.
But the head of Australia and global renewables assets at Rystad Energy, Gero Farruggio, says the falling cost of offshore wind turbines being manufactured in China presents an opportunity for significant savings for projects in the Asia Pacific region.
“One opportunity here is the cost of the Chinese offshore wind turbine,” Farruggio told the Australian Clean Energy Summit (ACES) in Sydney on Wednesday.
“This has dropped by 50 per cent in the last four years. It presents really significantly lower costs compared to Western OEMS and a real opportunity for these regional developers here to scale more efficiently and more economically.”
Victoria will launch Australia’s first ever offshore wind energy auction in September this year, with contracts expected to be awarded before October, 2026, in a bid to meet state targets of 2GW of capacity by 2032, 4GW by 2035 and 9GW by 2040.
The federal Labor government has awarded 12 feasibility licences to offshore wind projects proposed for Victoria’s Gippsland declared zone and one feasibility licence for the Southern Ocean zone.
One project has since dropped out of the running, with Spain’s BlueFloat Energy earlier this month dumping its 2.5 gigawatt Gippsland Dawn project after being unable to make the economics work.
“Following a strategic review of current and anticipated global offshore wind market conditions, BlueFloat Energy’s ultimate shareholder Quantum Capital Group has determined that continuing to fund offshore wind developments is no longer commercially viable in the short and medium term.
“[Quantum Capital Group] has taken the difficult decision to cease BlueFloat Energy’s global operations, including Australian based developments and the Gippsland Dawn project in particular,” the company said in a statement at the time.
