Capitalizing on Australia’s offshore wind potential
A recent report from the Blue Economy Cooperative Research Center, on offshore wind energy in Australia, reveals that Australia has very high quality and abundant potential to develop a substantial offshore wind industry. It’s a counter intuitive discovery as it is commonly accepted in the industry that offshore wind power is less attractive to the market than onshore solar and wind power perceived to be much cheaper and more readily available, especially in a country like Australia with resources abundant terrestrial.
The research was funded in part by marine, electrical and manufacturing unions who are calling on all federal and state governments to take immediate action and support the development of the offshore wind energy industry. Unions believe that the development of offshore wind farms has the potential to drive transformation and create jobs for workers in traditional energy industries.
Experts predict that offshore wind will become one of the top three sources of renewable energy in the world, alongside solar and onshore wind. Are they right? And what do they (and we) see as the obstacles and opportunities?
Offshore renewables include offshore wind farms, wave and tidal energy as well as emerging technologies such as ocean thermal energy. The offshore wind energy industry is flourishing globally as costs have fallen, scale has increased, and the development of technology, including the size of turbines and the development of floating wind turbines, has increased significantly. . This is why many Australian developers are turning to offshore wind.
This growing industry offers exciting career transition opportunities for workers in the oil and gas sector.
Other benefits of offshore wind include more reliable generation capacity year round, less visual impact on the landscape, reduced risks associated with land deals, and attracting large investments to Australia’s coastal economies. .
Currently, global targets for offshore wind total around 200 GW by 2030, including 30 GW in the United States.
The offshore wind industry, technology and regulatory framework are most advanced in countries with limited capacity to develop renewables on land but with high potential for strong offshore winds, ie. Europe led by the United Kingdom, Germany, the Netherlands, Belgium and Denmark and Asia-Pacific with China in second position. The United States is lagging behind, but the Biden administration recently set a target of rapid growth with more than 110 GW of offshore wind capacity in the United States by 2050.
Among other global developers, Copenhagen Infrastructure Partners, with its dedicated expertise in energy infrastructure development and investments in Northwestern Europe, North America and Asia-Pacific, is a pioneer and global leader in offshore wind power bringing its expertise and methods to Australia.
Australia’s current offshore renewable energy sector: an overview
The early stage offshore wind projects currently announced by Australia have a combined capacity of 25 GW.
Australia’s most advanced offshore wind farm, the multibillion-dollar Star of the South project, planned to be 7 km to 25 km off the southern coast of Gippsland, intends to harvest the generous winds from the strait de Bass and take advantage of the size and stability of the electricity grid in the LaTrobe Valley. This project is huge and has the potential to supply up to 20% of the state of Victoria’s electricity needs while creating much-needed jobs and investment. Clayton Utz is proud to act both as legal advisor to the project and to its lead investor, Copenhagen Infrastructure Partners (CIP), since 2017. This multidisciplinary Clayton Utz team is led by Peter Staciwa and includes partners Rory Moriarty, Andrew Leece, Damien Gardiner, Faith Taylor, Cilla Robinson, Pip Mitchell and Alison Kennedy.
After Star of the South, many other offshore wind projects have been announced in Australia.
Australia’s future potential
The report found that there is over 2,000 GW of additional capacity for offshore wind projects that could be installed within 100 km of the Australian coastline. This includes new floating facilities that will provide access to many of Australia’s best offshore wind resources. The production potential discovered by the report is well above Australia’s existing production capacity and already excludes areas with restricted environment and low wind. Australian offshore wind resources have strong capacity factors due to the regularity of the wind and a significant proportion of the time that the generator can generate electricity, especially in the evening.
Importantly, the report found that offshore wind farms are not meant to compete, but rather complement, the growing design of Australia’s renewable energy portfolio, especially under ‘energy superpower’ scenarios. which anticipate the mass electrification of many industries and in particular transport.
So what is legally hindering the development of more offshore renewables?
At this point, one of the main challenges for the development of an offshore wind industry in Australia from a legal perspective is still an uncertain regulatory framework at both federal and state level.
At the federal level, the Commonwealth Government released the Offshore Clean Energy Infrastructure Discussion Paper for consultation in early 2020. Following public consultations and comments from industry, the parameters and legislative framework are expected to be in place and operational later this year in the form of the Offshore Clean Energy Infrastructure Bill. This regulatory framework is intended to allow the exploration, construction, operation and decommissioning of technologies. offshore wind turbines and other clean energy technologies and associated infrastructure in Commonwealth waters (beyond three nautical miles from the coast).
At the state level, the Victorian government launched the Energy Innovation Fund whose first round focused on offshore wind and it is understood that it is developing a strategy for the offshore wind sector.
Towards leadership in offshore renewable energy sector
The report presents equally valid and counterintuitive arguments backed by solid research that Australia has enormous potential to become a global leader in offshore renewables. Abundant natural conditions including favorable winds, access to sufficiently shallow water and emerging floating wind turbine technology, combined with lower costs, present attractive opportunities for domestic and foreign investors. Global industry leaders like CIP are already taking steps to use Australian offshore wind power. The regulatory framework is one of the last missing pieces of the puzzle and its rapid development should bring more clarity to investors and hopefully increase interest in harvesting this natural Australian superpower.