Japan’s largest energy utility, the Tokyo Electric Power Company, has become the latest global heavyweight to dive into Australia’s vast but as-yet untapped offshore wind energy market, following a deal to buy Flotation Energy.
Tepco joins the likes of Ørsted, Equinor, Iberdrola, Shell, Corio and others to stake a claim in the country’s offshore wind prospects, just as the federal government adds further detail to the regulatory rules that will govern in the industry.
In Australia, the UK-based Flotation Energy is behind the 1.5GW Seadragon Offshore Wind Project off Gippsland and the 1.5GW Perth Array Offshore Wind Project, projects it has been developing since 2019.
The companies say the deal will see Flotation Energy continue to operate as its own entity, with the same name, but with the added clout of Tepco’s 9.9GW of generating capacity behind it.
For Tepco, the deal marks the Japanese giant’s first foray into overseas offshore wind power, and Flotation Energy says its Australian projects have provided a key draw card.
“Australia has signaled to the industry that it is ready to unlock the vast renewable resources of offshore wind,” said Flotation Energy CIO and managing director of Australia, Tim Sawyer.
“The alignment of the federal and Victorian state governments to fast track the delivery of offshore wind and critical grid infrastructure in Australia will unlock significant investment in this nascent industry,” Sawyer said.
“Joining forces with Tepco has placed Flotation Energy in an even stronger position to think big, be bold and deliver.
“We have the experience, ambition and capital required to deliver our projects and unlock vast economic benefits across the whole value chain of offshore wind.”
Tepco Renewable Power president, Masashi Nagasawa, says the company is also pursuing its own pipeline of projects.
“Following the visit of Japan’s Prime Minister to Australia, and the welcome news of both Victorian and Federal Government commitment to developing offshore wind and transmission in Australia, we are also actively considering the development of our renewable pipeline in Australia,” he said.
Giants of the industry flock Down Under
The arrival of Tepco on Australia’s offshore wind energy scene follows that of almost every other big name in the industry, including Danish giant Ørsted, which last month confirmed major investment plans, with an eye on the waters off Victoria’s Gippsland coast.
Other international energy players jockeying for position include Iberdrola, Shell, Equinor, Macquarie Group’s Corio, Copenhagen Infrastructure Partners, and Vena Energy, plus a host of smaller players like OceanEx, Bluefloat, and more.
BlueFloat, along with Energy Estate, also announced a 900MW offshore wind project in New Zealand on Wednesday, the first of a 5GW portfolio the two companies and their local partner hope to roll out.
The rush of newcomers and new project proposals is part of what Energy Estate principal and co-founder Simon Currie describes as “astonishing momentum” that has built up over a relatively short period of time.
It was just over one year ago – in September of 2021 – that the former federal Coalition government introduced the Offshore Electricity Infrastructure bill to Parliament, after a long wait and a lot of lobbying.
One year and one election later, the Labor Albanese government is making its way through the complex process of setting the rules to underpin the sector – and just this week announced some updates to draft licensing regulations.
For those companies like Star of the South that have been planning for years and are champing at the bit to get started on their projects, progress seems slow.
“We’ve got every a-grade investor already in the country, so the industry is well placed to get moving,” said Oceanex CEO and co-founder Andy Evans on Wednesday.
“The top 12 parties are all here, but for BP, who will come,” Evans added.
“We need real action and that starts with the declaration of Gippsland, the start of the declaration process for the next [offshore wind] zones, and the finalisation of regulations.”
‘This is a resource play’
Currie agrees that those are the key next steps, but says the progress being made by the Albanese and state governments should not be downplayed.
“The momentum is astonishing,” says Currie, whose company Energy Estate has a portfolio of offshore wind projects in development in Australia in partnership with BlueFloat Energy.
“From what was an immature industry [just over a year ago], what we’ve now got, essentially, is a bipartisan industrial compact behind us.
“There is now this monumental momentum,” he told RenewEconomy. “The question now is, ‘Where the bloody hell are you? If you’re an offshore wind developer, then why aren’t you in Australia?’
“This is a resource play. And the Bass Strait is a clean energy basin.”
Rules of engagement
Still, there’s a bit of work to be done. The federal government on Wednesday published updates to a first round of draft regulations, after consultation with industry, state and local governments, NGOs and community groups.
A statement from the department of climate, energy, the environment and water says it received 36 submissions in response to the draft regulations, which aim to provide certainty around licensing of offshore wind projects and outline cost recovery arrangements.
“In response to the feedback provided during the consultation on the draft regulations (from 22 March to 22 April 2022), the draft regulations and the CRIS were updated to support their operation and the increased industry readiness in applying for licences,” the statement says.
“The outcome from the Guidelines for Offshore Electricity Infrastructure Licencing Scheme consultation will be placed on our webpage in coming weeks.”
Among the updates details is a confirmation of 700km2 as the available acreage per Feasibility Licence, which Evans says provides a certainty that is key to industry to do more detailed design work on projects.
See also: BlueFloat consortium unveils first 900MW offshore wind farm in New Zealand
See also: Offshore Wind Farm Map of Australia
