Offshore wind a dark horse in race to replace coal with renewables

Major renewable energy investors say Australia’s nascent offshore wind power industry has been overlooked in planning to date for the transition away from ageing coal-fired power stations and to replace jobs lost in the regions.

There is “a very significant pipeline already building around offshore wind from multiple domestic and overseas investors and developers”, according to the Clean Energy Investor Group, which represents developers with interests in 49 Australian power projects worth an estimated $9 billion.

Windmills off Denmark’s northern coastline. Denmark is one of the EU’s best performers when it comes to using renewable energy,Credit:AP

The Australian Energy Market Operator (AEMO) did not model the potential for offshore wind projects in its 2050 road map for the grid, despite warning that a ninefold increase in renewable electricity generation capacity was needed as quickly as possible to replace the faster than expected shutdown of coal plants.

In its official 30-year road map released on Thursday, AEMO said it expected 60 per cent of the eastern seaboard’s coal fleet to exit the electricity grid by 2030 while the last remaining plant would shut by 2042.

AEMO chief executive Daniel Westerman said offshore wind had played an important part in the energy transition for many countries around the world, notably in Europe, and he expected it to become a significant feature of Australia’s future energy generation.

But the report noted offshore wind was currently a higher-cost solution than onshore wind and solar farms, and the federal government was yet to finalise industry regulations.

Clean Energy Investor Group chief executive Simon Corbell said offshore wind projects were a “significant jobs generator” across their lifespan, which typically runs for two to three decades.

“You see many thousands of people employed in the development and construction workforce, but it’s also a very strong ongoing employer, delivering hundreds of jobs there – similar to what you would see for the workforce for an offshore oil or gas platform,” Corbell said.

Another potential positive for the industry is that projects will be developed in Commonwealth waters, more than five kilometres out to sea. This may make it easier to attain a social licence to operate than for onshore farms, which require access deals with landholders to build towers or erect transmission lines to connect to the grid.

The Star of the South offshore wind farm is the most advanced offshore project in the country. While federal rules are still being written and the project needs Commonwealth approval, it has special dispensation to pursue its mooted $8 billion development.

AEMO’s energy road map identified a need for more than a dozen new major poles and wires projects to link the growing number of onshore wind and solar farms to households and businesses across the eastern seaboard by 2040 or sooner at an estimated cost of $12.7 billion.

Star of the South acting chief executive Erin Coldham highlighted offshore wind projects’ enhanced social licence as a benefit AEMO had not factored into its modelling.

“The least-cost approach AEMO is required to use doesn’t fully consider these challenges or the benefits that offshore wind brings – large-scale generation, close to existing transmission, with lower social-licence hurdles and long-term local job opportunities,” Coldham said.

There are 19 offshore wind projects proposed for development from regional industry hubs in Victoria’s Latrobe Valley, Port Kembla and Newcastle in NSW and Gladstone in Queensland, with a combined generation capacity of 28 gigawatts, which is roughly half that of the eastern seaboard’s electricity market.

Corbell said offshore wind power would complement onshore wind and solar, which were more intermittent.

“The bottom line is, it’s windier more often in the ocean then it is on shore.”

Federal Energy Minister Chris Bowen said this week offshore wind power would grow under the Albanese government. He has argued it can supply cheap power to help fuel a jobs boom in old industrial port towns, targeting critical minerals processing, zero emissions hydrogen production and manufacturing of wind turbines and towers.

According to Beyond Zero Emissions head of policy Tom Quinn, the United Kingdom has shown Australia how to keep the gains from its booming offshore wind industry at home.

“As we’ve seen in the UK, offshore wind creates manufacturing opportunities in regional centres. We can make this stuff domestically in Australia, but we need local procurement requirements on the blades and turbines.”

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