Plans for Australia’s first offshore wind farm gather pace

Plans to build Australia’s first offshore wind farm off the coast of Victoria have taken a big step forward, after one of the world’s leading offshore wind developers was brought in on the 2GW project.

Melbourne-based renewables outfit, Offshore Energy, who are leading the project, said on Friday that they had entered into a partnership with Danish outfit Copenhagen Infrastructure Partners, to progress development of the 2,000MW wind farm, proposed for the south coast of Gippsland.

Offshore Energy unveiled their ambitious plans for the $8 billion, 250 turbine project – dubbed Star of the South – in June, at a state government New Energy Technology Roundtable.

The Melbourne-based company was founded just five years ago, under the leadership of CEO Andy Evans, formerly of Acciona, and former chief of geothermal hopeful Petratherm, Terry Kallis, who chairs the company.

The new partnership with CIP will kick off by undertaking further development of the proposed site for the offshore wind farm, which is located between 10-25 km off the Victorian coast in the Bass Strait.

“Offshore Energy is delighted to partner with Copenhagen Infrastructure Partners, one of the leading offshore wind developers in the world, to develop Australia’s first offshore wind farm,” said Evans in a statement on Friday.

“The partnership brings together local knowledge and proven international experience that we believe will deliver many benefits for Australia, Victoria and local communities.”

CIP, meanwhile, sees the project as a “unique opportunity” in what is a new market for offshore wind.

“We are very satisfied with this partnership, and look forward to contributing our competence and experience in cooperation with Offshore Energy, all levels of Government and key stakeholders in the development of the first offshore wind project in Australia”, said CIP senior partner, Torsten Lodberg Smed.

Of course, the question remains whether the project can compete on cost, in Australian waters, particularly in comparison to onshore wind and large-scale solar, which continue their journey down the cost curve at a remarkable rate.

Like its fellow large-scale renewable technologies, the levelised cost of generation from offshore wind has been on a downward slide – just not quite as steep or quick a slide as its onshore rivals.

Results of a recent UK auction saw two offshore wind projects win contracts at record-lows of £57.50 per megawatt hour ($A102.87/MWh) – putting them among the cheapest new sources of electricity generation in the UK; cheaper than new gas, according to government projections.

As Carbon Brief reported in September, those offshore wind schemes are also close to being subsidy-free: the Department for Business, Energy and Industrial Strategy (BEIS) expects wholesale power prices to average £53/MWh in the period from 2023 to 2035, covering the bulk of their 15-year contract period.

This compares to 2014, when the UK government awarded 15-year contracts for difference to five offshore windfarms at £140-150/MWh – projects that are coming online this year and in 2018.

What this means for the Australian market unclear, but Evans is confident Offshore Energy can get finance for the Star of the South project.

In June, the company said it was in advanced discussions with local and international investors, including with the federal government’s Clean Energy Finance Corporation, and had commenced a comprehensive and “sincere” stakeholder engagement process.

In terms of the resource, preliminary analysis of the proposed site off the coast of Gippsland showed Star of the South could potentially generate around 8,000GWh of electricity per year, or enough to power 1.2 million homes.

The proposed site is also strategically located alongside existing transmission infrastructure in the Latrobe Valley, the home of the recently shuttered Hazelwood coal-fired power station. Under-sea cabling would, however, need to be installed to connect the wind farm to Victoria’s grid.

Evans – who in his former role at Acciona to helped build the Waubra wind farm – said that offshore wind’s natural high capacity factor and more constant generation made it a potentially important ingredient in Australia’s transition away from fossil fuels.

“When placed in the right wind conditions like those off the coast of Gippsland, offshore wind delivers a high, consistent flow of electricity.”