The ambitious Navigator North offshore wind farm project, valued at $8 billion and intended for the Gippsland coast in Victoria, has hit a significant roadblock. Developers, including major players Origin and RES, have announced that the project will not be ready in time for the first round of state auctions, raising concerns about its future viability.
This offshore wind farm, designed to feature 110 turbines and generate 1.5 gigawatts of power, is projected to supply electricity to over one million homes and create approximately 200 jobs. It was among 12 projects granted a feasibility license by the federal government in 2024, but its prospects now appear uncertain.
A spokesperson for Origin and RES confirmed that they would not participate in the upcoming Victorian government auction, which is intended to allocate state support to successful projects. The companies cited an inability to meet the necessary timelines as the reason for their withdrawal, although they emphasized their commitment to continue working on the project and to target future auctions.
This announcement comes on the heels of another setback in the offshore wind sector, as BlueFloat Energy recently withdrew from its offshore wind projects both in Australia and internationally. Energy experts are now sounding alarms, warning that unless state and federal governments expedite the rollout of the offshore wind industry, more investors and suppliers may follow suit.
Tony Wood says the offshore wind industry is being impacted by delays. (ABC News)
Tony Wood, a senior fellow for energy and climate at the Grattan Institute, expressed that the announcement was not unexpected. “The whole process is taking a lot longer and turning out to be more expensive than maybe it had been anticipated,” he noted, highlighting the challenges facing the industry.
Understanding the Offshore Wind Auction
The Victorian government is in the process of establishing a 2 GW offshore wind industry, which necessitates an auction process. Developers of the 11 proposed offshore wind farms will compete for government support packages to facilitate the construction of their projects.
In April, Victorian Energy Minister Lily D’Ambrosio unveiled an energy implementation strategy that indicated the auction process would commence in September. However, no official announcement has been made to date. Wood pointed out that a significant hurdle is the lack of clarity regarding the funding contributions from both state and federal governments.
“There’s still no clarity around how that’s going to work,” he said, emphasizing that this uncertainty leads to delays and increased costs for projects.
Bruce Mountain emphasizes the need for significant government investment in offshore wind. (ABC News: Peter Garnish)
Professor Bruce Mountain from Victoria University’s Energy Policy Centre warned that more developers might pause their projects if the situation does not improve. “I don’t think it will be the last,” he stated, noting that while the Victorian government has set ambitious targets for offshore wind capacity, it lacks the mechanisms to ensure these targets are met.
The Victorian government aims for a renewable energy target of 40% this year, increasing to 95% by 2035, which includes at least 2 GW from offshore wind by 2032. Nationally, Australia has set a goal of achieving 82% renewable energy by 2030. However, Mountain expressed skepticism about the feasibility of these targets without substantial federal investment.
“The current government simply lacks the resources to be able to fund that amount of new capacity coming in,”
he said.
Mountain emphasized that the success of these initiatives hinges on federal government support, which is currently competing with various other claims for energy transition funding.
The Path Forward for Offshore Wind
Despite the regulatory delays and uncertainties, some stakeholders remain optimistic about the future of offshore wind in Victoria. Charles Rattray, CEO of Southerly Ten, which is developing the Star of the South project, expressed that a clearer auction process would provide the industry with the certainty it desperately needs.
“What we would like to see is the momentum in the industry to be gained by the launching of this first auction,” Rattray stated. He emphasized the importance of multiple sequential auctions to instill confidence among investors, suppliers, and skilled workers.
In response to the ongoing challenges, a spokesperson for the Victorian government reiterated its commitment to collaborating with the federal government to establish a robust offshore wind industry. “We continue to work with the Commonwealth government on support for Australia’s first offshore wind industry, which is critical to the nation’s energy security and pushing down energy bills for Victorian families,” the spokesperson affirmed.
A representative for federal Climate Change and Energy Minister Chris Bowen echoed this sentiment, stating that the Gippsland wind projects are vital to the nation’s energy landscape. “The number of projects in the Gippsland zone is a testament to the work put into establishing the industry and the great renewable capacity off our shores,” the spokesperson remarked.
As the offshore wind industry in Victoria navigates these turbulent waters, the need for clarity, investment, and a streamlined process has never been more critical. The future of projects like Navigator North may depend on the ability of both state and federal governments to provide the necessary support and infrastructure to realize their ambitious renewable energy goals.
