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Time is right for Australian offshore wind, says developer

IN DEPTH | After years of under-the-radar planning, a Victoria developer claims market conditions are right to advance Australia's first offshore wind farm, writes Andrew Lee

Tumbling costs and a growing national focus on energy security have helped to put offshore wind firmly on Australia’s power agenda, claimed the developer of what would be the country’s first project.

Andy Evans, managing director of Melbourne-based Offshore Energy, told Recharge his company is in “detailed discussions” with major international offshore wind developers and infrastructure investors, as it seeks partners to advance its 2GW-plus ambitions off the state of Victoria.

Offshore Energy broke cover earlier this month with plans for the A$8bn ($6bn) Star of the South project after years of under-the radar work on the proposed development, which it wants to start constructing in 2022.

Evans said he and his colleagues became accustomed to being treated as “dreamers” in the early years of investigating the project – but insists Star of the South is far from a fantasy.

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Although the site itself has yet to be measured, two permanent met-masts not far from the area indicate robust wind resources and a preliminary study by engineering specialist Parsons Brinckerhoff revealed no fundamental barriers to development.

“We’re confident we’ve put together a good proposal,” said Evans.

The company hopes to secure an exploration licence from the Australian government later this year, giving the green light for a formal feasibility study of a 574 square km area in Commonwealth waters.

Evans – a former executive with Spanish energy group Acciona with experience of the onshore wind sector – said he and his colleagues have played a waiting game while offshore wind’s global progress converges with the requirements of the Australian power sector.

“We spent the first three years of our existence waiting for policy certainty, waiting for technology and policy to advance in Europe,” Evans said, citing recent auctions in Germany that foresee no need for subsidies by the middle of the next decade.

“The project's being set up on the basis of construction in 2022 and beyond, by which stage we’re very hopeful that technology and pricing will be in the situation where it can compete on a standalone basis,” said Evans.

That timescale could allow Star of the South to contribute to a revised federal renewable energy target (RET), and compete in auctions run by the state of Victoria as it pursues its own ambitious 40% renewable power target by 2025.

Evans said of the Victoria procurement programme: “Certainly if it gets up and running and we’re eligible, and we believe we will be, it would help bring the project on a lot quicker.”

But Evans claimed regardless of the targets, Star of the South can tap into a burgeoning need for clean power as Victoria – home to Melbourne, Australia’s second-largest city – wrestles with the need to replace gigawatts of retiring coal generation.

He said rising Australian power prices – currently above A$110/MWh on the spot market – are “creating a recognition that things need to change” in the country’s energy mix.

“Australian electricity prices are going up and offshore wind prices are going down,” said Evans.

He also believes offshore wind development can avoid the social acceptability concerns that have plagued onshore wind in Australia, home to one of the world’s most vocal anti-wind lobbies.

"Australian electricity prices are going up and offshore wind prices are going down"

The potential project site – between 10km and 25km offshore and in depths of 20-40 metres (see carousel map above) – benefits from its proximity to a major hub for Australia’s oil and gas sector, with the infrastructure and expertise that can bring to offshore wind.

Evans admitted the project would rely on infrastructure gearing up to support the development, but said: “We’ve modelled to set the project up at such a size that there is an incentive to make an investment.”

The developer is planning the fixed-foundation wind farm on the basis of 250 of the 8MW turbines already in the market. “But if you go on recent German auctions and forecasts by developers you’re looking at 12MW-plus turbines” by the time Star of the South is scheduled to put steel in the water. The transmission link to shore is expected to be bundled as part of the project.

The project, which could supply some 8,000GWh of power annually – almost one-fifth of Victoria’s needs – and create 12,000 jobs, has already received a warm welcome from the state’s government.

“A new renewable power generator of this size would drive down electricity prices, and we’ll support Offshore Energy wherever we can to progress this study,” said Lily D’Ambrosio, Victoria state’s minister for energy, environment and climate change.

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