What are the challenges to and opportunities for unlocking an offshore wind revolution in Australia?

In this Q&A, we spoke with Australia Country Manager Anil Chanana to hear more about the offshore wind market in Victoria, its unique challenges and opportunities, and what more needs to be done to kickstart the industry.

What’s the state of the offshore wind industry in Victoria?

There’s a lot of potential for offshore wind in Australia, with technical studies showing that Australia has some of the best wind resources in the world, with the ability to support 2,000 GW of power. Right now, the industry is very much in its early stages, but also at an exciting moment.

In the Victoria region, which is in the southeast of Australia and includes Melbourne the state capital, there’s been good momentum. In December 2022, an area off the coast of Gippsland covering approximately 15,000 square kilometres was declared as Australia’s first designated offshore wind area and since then, several new offshore wind projects were proposed by several international and local offshore wind project developers and awarded feasibility licenses within the area including our Blue Mackerel North site.

Beyond the Gippsland region, progress in offshore wind project bidding continues along the Victoria coast, and we recently submitted a feasibility license for Spinifex, a project we plan to develop with our partners Alinta Energy. However, the region still relies on coal for 60% of its electricity generation, so there’s a lot more that needs to be done to address this.

What are the challenges?

With any infrastructure project of the scale that offshore wind sites are, there will always be challenges because of how capital intensive and complex development can be. To add to that, there are factors specific to Victoria that need to be considered, such as the unique seabed and met-ocean conditions as well as complex environmental planning and approval processes and timelines.

Looking at Australia as a whole, one key challenge is that we need to build the infrastructure and supply chains, including electricity transmission infrastructure and setting up processes at local ports. What’s more, the distances we need to cover are vast. Over the past few years, particularly with the Covid-19 pandemic, we’ve seen how fragile supply chains can be across any industry and region, and the knock-on impacts issues can have, so ensuring that we are setting up strong supply chains is critical.

If it’s so challenging, why are we looking at offshore wind in Australia at all?

First and foremost, we can’t deny the importance of renewables in tackling climate change while ensuring energy security and affordability, and with heatwave records being broken every year, it’s clear urgent action is needed. In recognition of this, the Australian Government has committed to increasing the share of renewables in our energy system, targeting 82% renewable energy in our electricity grids by 2030. Offshore wind will play a significant role in delivering this.

There’s reason to be optimistic, and tangible progress is being made. In May, 12 projects were awarded feasibility licenses in Victoria– including our Blue Mackerel North site, and together they could generate 25GW of green electricity – enough to power the region’s annual industrial consumption a hundred times over, or more electricity that the entire state of Victoria generated last year.

How can challenges be overcome to deliver the offshore wind projects Australia needs?

There are three key things I believe we need to overcome the challenges I’ve described.

1. Collaboration with those who are further ahead in their offshore wind markets, taking onboard their experiences and learnings.

As Parkwind and JERA Nex teams are developing projects in Australia, we benefit from our global team’s strong track record of bringing projects in on time, on budget and safely. We also have experience in navigating and overcoming supply chain uncertainties and challenges – JERA completed our Formosa 2 site in a highly complex supply chain environment due to Covid-19.

There’s a lot we have learnt in more than a decade operating in the space which we can now bring to Australia, working together with local communities and partners who have the regional expertise and understanding to make our global experience local specific.

2. Support from and working with government and regulators to stimulate supply and demand.

The industry is still in its early stages, so government support to kickstart the market will be vital. Specifically, for the Victorian and the Federal governments to offer high CfD PPA prices for the first (few) offshore wind farms in Victoria, to help mitigate risk and drive development of projects. In addition, we need to work closely with governments to ensure approvals processes are as efficient as possible.

3. Scaling up the whole supply chain

Finally, the importance of the supply chain can’t be overstated. To truly deliver an ‘offshore wind revolution’ the supporting infrastructure needs to be developed too. Grid connections, port access and battery storage are all examples of elements we need to make sure are ready for then the projects come online, so we can deliver clean energy to the region as quickly as possible and minimize reliance on more carbon intensive power sources.

Finally, what does it mean to you personally to be working in the renewables industry in Australia?

I am thrilled to be a part of the fast-emerging offshore wind industry in Australia. With more than three decades of experience in developing offshore oil & gas project businesses and delivering mega size projects in the ammonia, petrochemical and mining sectors, I made the transition into the renewables industry some seven years ago in the APAC region which included managing a portfolio of onshore wind farm developments. The last two years working with Parkwind and JERA Nex teams has been the most satisfying experience of my professional life thus far.