Victoria counts on $30 billion of offshore wind, not much solar, to replace coal

The Victoria state government is counting on some $30 billion of investment in offshore wind to replace the bulk of the coal fired generators that will close over the next decade as part of its ambitious new plan to reach 95 per cent renewables by 2035.

Analysis done by PwC, based on modelling prepared by the department of energy for the state Labor government, shows that the bulk of new renewable and storage investment will be made in offshore wind, from around 2028 on, and mostly in the years between 2030 and 2035.

That aligns with the previously announced state targets of 2GW of offshore wind by 2032, 4GW by 2035 and 9GW by 2040.

But the significance of it is that the $30 billion expected in capital spending on offshore wind is more than the total that will be spent on all other renewable and storage technologies, including onshore wind, rooftop and utility scale solar and storage, and pumped hydro.

As this graph above shows, large scale solar is expected to attract just $1.5 billion of new capital investment over the next two decades and big batteries just $2.2 billion, with onshore wind accounting for another $9 billion.

Consumers are expected to contribute more than $9.3 billion – roughly equally distributed between rooftop PV and household battery storage.

Of course this is just modelling, and not predictions, but it is interesting to see how the government and its advisers see the renewable energy mix bering played out.

How all this pans out in the timing of the new projects is revealed in the following graph.

Like Queensland, a significant part of the Victoria renewable plan is back-ended – largely reflecting short term logistic issues, and grid congestion, and because much of the new capacity cannot be connected until new transmission is built.

That back-ending reflects both the ramping up of offshore wind – which will take at least six years to get going since the technology is at its very early stages in Australia – and an anticipated re-boot in the onshore wind sector in the 2030s.

Consumers are expected to continue significant investment in household batteries into the late 2030s, while hydrogen starts to make an appearance, although the state modelling indicates only $614 million to be spent out to 2040.

That could be because most hydrogen projects will be focused on industrial uses, rather than as a contributor to the electricity grid.

The focus on offshore wind is reflected in the joint announcement earlier this week by the federal and state Labor governments of the first instalments of the $20 billion Rewiring the Nation commitments.

Much of the $1.5 billion allocated to renewable energy zones in Victoria is expected to go towards those offshore wind projects, which will need as much assistance as they can with connection issues given their significantly higher capital costs.

There will be no shortage of wind proponents, with the total number of projects crowding out the Gippsland offshore wind zone already exceeding more than 10GW in five different proposals.

The latest to confirm their interest is Vena Energy, which on Thursday formally unveiled a 2GW proposal dubbed Blue Marlin. More are expected to follow although how they separate their competing and sometimes overlapping claims is going to be fascinating to see.

On Friday, the Victoria government further emphasised its commitment to offshore wind with news that it will spend $76 million to plot a course to meet its offshore wind targets and to establish a new government body – Offshore Wind Energy Victoria – to provide streamlined support to accelerate this emerging sector.