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Offshore Wind Energy in Australia

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Charley Rattan's picture
World Hydrogen Leader Charley Rattan Associates

UK based offshore wind & hydrogen corporate advisor and trainer; Faculty member World Hydrogen Leaders. Delivering global hydrogen and offshore wind corporate investment advice, business...

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  • Jul 22, 2021

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1. A regulatory regime for the development of offshore renewable energy in Commonwealth waters needs to be established A major barrier to investment and development of current offshore wind projects in Australia is that Australia currently does not have a regulatory framework to enable timely permitting and leasing decisions for offshore renewable energy. Consultation on a proposed regulatory framework for the Commonwealth Government has been occurring since early 2020. Given offshore wind projects will typically cross Commonwealth and State jurisdictions, consideration needs to be given in the framework on the ways to provide complementary processes for activities that occur in both Commonwealth and State waters. Government targets for reducing emissions from electricity, for the electrification of other sectors and for building an integrated renewable energy system are also needed to create a clear understanding of the necessary planning, infrastructure, skills and workforce.


2. Marine allocation of space for offshore renewable energy projects should be considered With many OSW projects already in the development pipeline, Australia would benefit from proactive consideration, via Marine Spatial planning, to resolve potential conflicts in uses of the marine domain and ensuring it remains sustainably managed. This can help Australia meet its international commitments, such as Australia’s pledge through the High Level Panel for a Sustainable Ocean Economy to sustainably manage 100% of the ocean area under national jurisdiction by 2025. Offshore wind should be incorporated into national and state energy planning


3. The Australian Energy Market Operator’s Integrated System Plan (ISP) should identify and evaluate offshore wind renewable energy zones, and review electricity generation cost assumptions for offshore wind Offshore wind was not included in the assessment of renewable energy resources used to design the current Renewable Energy Zones (REZs). Offshore wind should be included in the ISP’s cost-benefit analysis for the construction of new transmission and designation of new REZs. Offshore REZs in key locations (e.g. Bass Strait, Port Kembla, Newcastle, Gladstone, Perth) should be modelled to enable transparent comparison of relative costs of offshore wind against other technologies over time, including transmission, storage and grid connection requirements. This project finds that across all states, offshore wind has potential to provide a significant amount of energy at times that other renewable energy is not producing, along with higher capacity factors. This could impact on the requirement for energy storage and other aspects of system planning. Current proposed electricity generation cost assumptions (GenCost) for the ISP assign current capital costs of offshore wind projects ~3 times greater than that of onshore wind, reducing to approximately 2.7 times for 2050 commissioning (Graham et al., 2021). This is in contrast to the global weighted mean capital cost projections reported by IRENA, where offshore wind capital costs are projected to be approximately 2.3 times onshore wind in 2050 (IRENA, 2019), and substantially greater that projected in the UK, where offshore wind is a mature sector, costs are better understood, and offshore wind construction costs are projected to be approximately 1.2 times that of onshore wind by the mid-2030’s (BEIS, 2020). Owing to the higher quality of resource and development and deployment of mega-turbines unable to be deployed on land, the UK projects the levelized cost of electricity from offshore wind to be similar to onshore wind in the 2030s (BEIS, 2020). Recommendations Our report has recommendations that span 5 key themes for the development of offshore wind in Australia: Offshore Wind Energy in Australia 16 AREA RECOMMENDATION Offshore wind should be incorporated into national and state energy planning


4. State energy planning and programs to support the development of renewable energy should also consider the potential for offshore wind energy State governments play a lead role in operating energy systems and incentivising the development of renewable energy. However, the lack of a regulatory framework for offshore renewables in Commonwealth waters and insufficient consideration of offshore wind in national energy planning has meant that states have also typically not included offshore wind in their energy planning and programs. State governments should review their future energy planning in light of the potential contribution of offshore wind to their energy systems.


5. Offshore wind energy should be incorporated into planning for the National Hydrogen Strategy and other renewable energy assessments The opportunity for offshore wind to play an integral role under ‘energy superpower’ demand scenarios should be recognised. With the scale of electricity requirements, offshore wind could be an important source of power located adjacent to many ports and industrial facilities to meet increased demand associated with large industrial loads, electrification of other energy sectors, or for the production of hydrogen to meet the needs of industrial applications such as steel and aluminium production, or for export. Further research is required to understand the potential of offshore wind energy for hydrogen, and offshore wind should be incorporated into planning for the National Hydrogen Strategy. Future editions of the Australian Energy Resource Assessment should give greater consideration to offshore wind developments, such as the emergence of floating offshore wind, roles in the energy system, and the reduction in cost. Maps of Australian wind resources should include offshore wind.



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