If you cast your eye briefly across the offshore wind industry around the world, you might wonder why anyone would bother with the technology.
In the US, Donald Trump has been ripping up contracts, and vowing to stop any further developments, ostensibly to stop whales banging in to them, but mostly to protect the fossil fuel industry.
In the UK, a government-backed major project has been pulled because its owner says it is no longer viable. And, in the North Sea, offshore wind operators are mired in an unseemly neighbourhood spats, accusing nearby projects of “stealing their wind.”
Enter the Australian state of Victoria, with a bold plan to build an offshore wind industry in its waters from scratch, have the first generation fed into its grid by the end of the decade, and 9 GW of capacity by the late 2030s.
If you thought it wasn’t serious, then check out its newly released grid transmission plan: Victoria really is counting on offshore wind to fill the gaps when the last of its remaining coal fired generators exit the grid over the next 10 years.
To build such an industry from scratch is an extraordinary process – think of the infrastructure (ports, substations, converter stations, and transmission lines), the supply chains and the social licence issues to be overcome. Capital, ironically, seems to be the least of its problems, although the key question is: At what price.
Australia is blessed with extraordinary wind and solar resources, and a lot of land. And in any comparison with solar PV and onshore wind, offshore wind loses out, and by some considerable margin if the Australian Renewable Energy Agency’s goal goal of delivering $20/MWh solar by 2030 is realised.
The best guess for the levelised cost of energy (LCOE) for offshore wind in Australia is somewhere close to $200/MWh, which would seem to rule it out as a non-starter if that was the only consideration. So why bother?
The key, says Charles Rattray, the head of Southerly Ten – the company developing what is regarded as Australia’s most advanced offshore wind project, the 2.2 gigawatt Star of the South in Victoria’s Gippsland – is the shape and value of that output.
And when Rattray talks about shape, he is not necessarily referring to daily output patterns, which normally has wind sending the bulk of its output to the grid in the evenings and overnight, and not so much in the middle of the day when rooftop and utility scale solar is dominant.
Rattray says modelling at Star of the South shows that its output will be strongest at two key times when electricity demand in Victoria will be the highest – in winter evenings and in the midst of summer heatwaves.
“What often gets lost in things like capacity factors, and averaged out profiles, is you miss things like seasonality,” Rattray says in the latest episode of Renew Economy’s Energy Insiders podcast.
“And so Star of the South will produce energy when onshore wind is producing less, and when solar is producing less.
“When we’ve got those very high heating days in winter, that’s when Star of the South is flying, and the amount of energy, the capacity factors, then you’re talking about more like 70 per cent and then the other really interesting one is when you have the very hot still heat waves in in Victoria and in southern Australia.
“That’s another time when Star of the South has a very, very high capacity factor, again, in the 70s. And that’s the other really significant value.
“This is why we talk about a portfolio of assets. Rather than Star of the South or offshore wind being a substitute product, they are different products. They produce at different times. They produce at different costs. And you would have to build an extraordinary amount of storage for onshore wind to match the option.”
The offshore wind sector is arguing it is needed because, while onshore wind and solar have lower LCOE’s, and a massive pipeline of potential projects, it’s unlikely to be built out at the scale in the timeline needed because of the transmission and social licence issues.
Projects struggle for planning approval, they struggle for connection agreements, and they struggle for somewhere to plug in to the grid. Rattray says onshore wind and solar cannot be built at the scale and speed to replace the 21 terrawatt hours of supply that he says is needed to fill the gap from coal.
And it seems to be implicit in the latest transmission planning document released by Victoria, which counts on offshore wind to help fill in the gap created by the anticipated closures of Yallourn, Loy Yang A, and Loy Yang B.
It is also interesting to note that the Australian Energy Market Operator also concedes the rising cost of transmission, and social licence issues, and is putting more focus on distributed networks and consumer energy resources for the next iteration of its multi decade planning blueprint.
Star of the South is one of 12 projects with feasibility licences in Australia’s first offshore wind zone in Gippsland, and which will be competing in the country’s first offshore wind tender scheduled for later this year.
It is clearly the most advanced.
“We have had a competitive advantage in terms of the amount of time we have spent in the community,” Rattray says.
“We’ve collected a lot of data that other proponents haven’t had the opportunity to collect, and the feasibility license that we now have gives us the rights to complete various activities, but we’ve actually done most of those things, and so certainly, from a data collection perspective, we’re a long way ahead of other proponents.
“They are starting to invest more significantly, and they are collecting data. But in terms of understanding the geotechnical layout of a project that we deliver, the bird life, the various underwater forms of life, all of those things where we’re very, very well advanced.”
Rattray says Southerly Ten is still confident that Victoria’s timelines can be met – 2GW of capacity by 2032, 4GW by 2035 and 9GW by 2040 – with the first production by the end of this decade.
“If we can get our environmental approval, and there’s still a way to go to do that, and if we can have that auction run successfully, and have the right projects awarded our capacity, then then we’re confident. Even with that, though, there is a lot that still needs to go right.”
One of those is attracting suppliers and infrastructure, particularly in ports. Rattray says there is no point have a one off project, the industry needs scale to make it worthwhile.
“I want to be really clear, just delivering start the south wouldn’t be the greatest outcome for the industry here. We want to see multiple projects being being built, and we want to see Victoria hit that nine gigawatt target., and one of those is attracting suppliers.”
You can listed to the full interview with Charles Rattray in the latest episode of Renew Economy’s Energy Insiders podcast here.
