What are the essential ingredients Australia needs to establish a viable and sustainable offshore wind industry?
This was a key talking point in the afternoon sessions at the Australia Wind Energy conference on Wednesday, with top executives from one global wind giant after another setting out their wish-lists: built-for-purpose ports; a federal target; government support… the list goes on.
But perhaps the most informative answer to this question came just before the afternoon tea break, from the keynote address by Claus Madsen – country managing director for Hitachi Energy in Denmark.
Madsen, whose spoke of Hitachi’s role in the global offshore wind industry – including the supply of 38 gigawatts of offshore substations, to date – also spoke from the perspective of a Dane, and an engineer, who witnessed an industry being made from scratch.
As the story goes, the global wind energy industry has its roots in the global oil crisis of 1973, when countries dependent on imports of the fossil fuel – Denmark chief among them – had their supplies suddenly cut off.
“This was a… crisis for the two countries in the world that had the weakest energy supply and that was Denmark and Japan,” Madsen told the conference in Melbourne.
“So [Denmark] had to close down any transportation on weekends and take our bicycles, since we were not allowed to take the car.
“Out of that came tremendous ingenuity on how to save energy and how to become more energy efficient … but also, how can we become less dependent and that’s basically how the wind industry started.”
But the true key to Denmark’s success in turning to wind power, says Madsen, has been its unity of purpose.
“All along, there’s been an alignment … between three key stakeholders; government, industry, and the citizens.
“Citizens at every single election, every four years, kept saying this is the road we want to take. The politicians have all answered, that’s also how we make the law of the land when it comes to energy.
“So about 80% [of the population] has all along been supporting the long term trajectory for Denmark.
“What did that mean? That means you could start educating people in universities, you could start having start-up companies, you could start investing in factories, etc. Because you knew this was long term.
“So we actually built an industry from scratch and it has been scaling ever since.”
Australia, of course, is not Denmark in the 1970s – and Madsen himself stressed this point.
And while in 2024 we have the rapidly worsening global climate crisis driving the shift to renewables, the urgency of weaning Australia off cheap coal has proven a much harder sell than convincing weekend bicycle-restricted Danes that they can do better than rely on foreign oil.
The technical, logistical, financial, regulatory, environmental and industrial challenges currently facing Australia in developing an offshore wind industry from scratch are unique and numerous, but they are also surmountable.
The message from Denmark, however, is that if Australia can’t lock in political alignment on its plans for offshore wind, then all of the above challenges will be much, much harder than they need to be and perhaps – in the end – insurmountable.
That is also the strong message from the world’s leading renewable energy developers, who have watched from the sidelines as the same party that paved the way for offshore wind in Australia (the Liberal National Party) as one of its last acts in federal government, has, from opposition, vowed to hobble it and focus on nuclear instead.
“You know, the threat of an election and a party has announced the policy that it’s in complete reserve of an existing policy, that kind of thing doesn’t help,” said EDF Renewables Australia chief, Dave Johnson, in a panel session at the conference.
“We do need, and I know it’s easy to say bipartisan support, but we do need that.
“None of this is going to happen without foreign investment and in order to encourage and achieve foreign investment you need [policy stability].
“Because the companies – EDF, Iberdrola, many others – they have opportunities to invest in many geographies.
“They want to invest in the places where they’ve got certainly, and they don’t have a view that in three or five years’ time the change of government could be made that could completely turn things in a different direction.”
“Long-term government support is absolutely critical,” added Kristy Simpson, the Perth project lead for Scotland-based developer Flotation Energy.
“There’s two critical reasons why … we must have these policies in place and that is, firstly, to ensure that banks are adequately capitalised.
“This provides more concessional finance – i.e. premiums come down, and that lowers the project risks and attracts that private capital that they actually need to get up and running.
“And secondly, to enable the private investment by establishing a really clearly defined energy vision.
“It’s so easy to say that can be done, but it’s not. It’s actually really, really complicated. But without it, if we don’t have the policies in place, we really won’t be able to provide those strong signals to investors that we actually need to be successful,” Simpson says.
“It’s the national strategy, in terms of targets and timing, that is going to … drive the investments in manufacturing that need to happen – it’s a national target, which is going to be a bigger number than Victoria’s 9GW,” said Anil Chanana the country manager in Australia for the Japanese-owned Parkwind.
“I think currently the 9GW target for Victoria is a very decent target, but it is not attracting the kind of interest required for those investments to happen in the supply chain.
“[Also needed is] government support, revenue support, in the forms of …[contracts for difference and power purchase agreements].
“Not just at the Victorian level, which is leading in this space, but it is required at the national level as well. We are beginning to hear about [Capacity Investment Scheme] 2.0 but more needs to be done there to provide that confidence,” says Chanana.
“I think will change and transformation is hard and I think that’s the reality,” Chad Hymas, the CEO of Macquarie’s renewables outfit Aula Energy, told the summit on Wednesday.
“I think from my perspective, I come back to being better coordinated, having a partnering mindset so that you recognise the diversity and bring those skills together to make this happen.
“And probably a little bit cheeky, but [we need] a vision for Australia around renewables that gets out of election cycles and has a transition plan over the next 30, 40, 50 years.”
