“Giant leap:” Australia’s first offshore wind auction goes live as state seeks first 2 GW of projects

Australia’s first ever auction for offshore wind generation capacity is finally underway, after the Victorian Labor government officially opened the Request for Proposal process for the state’s first two gigawatts (GW) of projects.

The launch of the long awaited auction process was announced with little fanfare late on Tuesday night, with just six days left to meet the August deadline set by a premier and energy minister both since departed – and just three months ahead of what promises to be a very tough state election for Labor.

New energy minister Jaclyn Symes says offshore wind projects can now bid for contracts and will be assessed on value for money, deliverability and benefits for local workers, businesses and communities.

Symes says contracts are “expected” to be integrated into the national Electricity Services Entry Mechanism (ESEM) – the successor to the Capacity Investment Scheme, the details of which are still being fleshed out by AusEnergy Services Limited (ASL) and a working group of developers and government agencies.

The already delayed auction is designed to provide financial support to up to 2 gigawatts (GW) of offshore wind capacity – an amount likely to be supplied by just one project – which the state government wants to be in place by 2032.

There are currently nine active project licences remaining in Victoria’s Gippsland offshore wind zone, with a combined proposed generation capacity of more than 20 GW. 

Symes says auction process will run for a year, closing in August 2027, with contracts expected to be awarded in 2028. The successful project or projects will then move towards investment, construction and operation.

The auction’s launch – despite recent political turmoil that has resulted in a new leader of the Labor government and the departure of its hugely successful and well respected energy minister, Lily D’Ambrosio – marks a critical milestone for a fledgling industry that now desperately needs investment signals.

“This auction is a giant leap towards getting Australia’s first offshore wind projects built – attracting billions in investment, creating thousands of jobs and delivering the reliable power we need as coal retires,” Symes said in a statement.

“Victoria has some of the best offshore wind resources in the world. This auction is about harnessing that advantage and building the next generation of energy right here in Victoria.

“Jess Wilson’s One Nation-Liberal Coalition want to rip up energy projects without a real plan to keep the lights on, while we’re getting on with building the energy Victoria needs for the future.”

As for the finer details of how Labor’s offshore wind auction will work, these appear to be a work in progress. There is little new information on the government website, which currently says only that “the auction design is commonly used in Australia and around the world to develop renewable energy.”

The biggest question mark is over the price, with the cost of offshore wind already significantly higher than solar or onshore wind, and likely to have an added premium in Australia due to the lack of an established industry.

But there have been some positive signs from some of the latest global auctions for offshore wind. A recent Danish tender, offering two-sided contracts for difference (CfD), led to two oversubscribed rounds and the winning projects made bids of €67.42/MWh ($A109.9/MWh) and €72.50/MWh ($A118.22/MWh) for 20 years.

More to come…