Victoria to Launch Australia's First Offshore Wind Auction Amid Renewable Push
Victoria has announced it will hold Australia's inaugural offshore wind farm auction in August, aiming for 2 gigawatts (GW) of capacity. This initiative is part of a broader strategy to accelerate renewable energy development, which has seen the state expedite approvals for over $9 billion in projects through a specialized program. The expansion of renewable infrastructure comes as Victoria works towards ambitious clean energy targets and faces challenges including project delays and community opposition.
Victoria's comprehensive renewable energy strategy includes an inaugural offshore wind farm auction, aiming for 2 GW, alongside expedited approvals for over $9 billion in onshore projects.
Inaugural Offshore Wind Auction Set for August
The Victorian state government plans to launch Australia's first offshore wind farm auction in August. This initial phase will seek proposals for 2 GW of capacity, contributing to the state's targets of 2 GW by 2032 and 9 GW by 2040. The auction process, originally scheduled for September of the previous year, was postponed due to factors including uncertainties regarding port and transmission infrastructure, as well as the new energy market design.
Victoria's Energy Minister, Lily D’Ambrosio, stated that a request for tender would mark the auction's initial stage. The design process for the auction is ongoing and will incorporate the new Electricity Services Entry Mechanism (ESEM), which was proposed by the Nelson review to support renewable and storage projects nationwide. Minister D’Ambrosio emphasized the government's aim to provide industry certainty to encourage investment and expand renewable energy generation. Victoria has also advocated for ESEM to include offshore wind technology.
The announcement was met with positive reactions from environmental groups and developers, including those behind the Star of the South project, identified as a leading contender. Star of the South representatives stated their readiness for the next phases, having submitted environmental approval applications and secured land for its shore crossing. Gippsland has been identified as a key region for offshore wind development in Australia.
Expedited Approvals Drive $9 Billion in Renewable Investments
Concurrently, Victoria has expedited approvals for over $9 billion worth of renewable energy projects within the last two years. The state government utilized powers under the Development Facilitation Program (DFP), which allows the Planning Minister to accelerate approvals and modify standard objection processes.
Since 2024, Planning Minister Sonya Kilkenny has approved 25 renewable projects valued at more than $9 billion. These projects are projected to generate power for over 735,000 homes annually upon completion. Additionally, battery storage projects in development could provide sufficient power for 2 million households during peak evening demand.
The Development Facilitation Program has fast-tracked over $9 billion in renewable projects, including significant battery storage facilities, showcasing a commitment to accelerating green energy infrastructure.
The Development Facilitation Program, initially a COVID-era initiative, was expanded in 2024 to support the government's housing and energy agendas. This expansion designates new renewable projects as significant economic developments, enabling an accelerated approval pathway that bypasses planning panels and certain Victorian Civil and Administrative Tribunal (VCAT) appeals. Projects pending at VCAT are also eligible for this pathway, which is estimated to take approximately four months. While third-party objections remain possible, their resolution occurs more quickly than through standard VCAT procedures.
Recent approvals under this scheme include a 300-megawatt battery in Heywood and a 400-megawatt battery in Glenrowan. These batteries are positioned near key grid points to store surplus energy from solar and wind during the day and secure supply during periods of high demand and lower generation.
Victoria Surpasses Renewable Targets, Eyes Ambitious Future
Victoria's renewables currently contribute 22.6% of its electricity generation, exceeding an internal 2025 target. The state's legislated goal for renewable energy is 40%. Nearly 100 large-scale renewable energy projects are operational, including 54 solar farms. Last year, rooftop solar accounted for approximately 16% of the state's electricity, and wind farms generated about 24%. Ten additional onshore wind farms have received approval for construction.
The Victorian government projects that the offshore wind industry will create over 6,000 jobs and attract billions in investment, contributing to a stable energy supply and lower power bills. The state-owned State Electricity Commission (SEC) is also actively supporting renewable and storage initiatives.
Navigating Grid Transformation and Community Concerns
The expansion of renewable energy and storage capacity represents a substantial change to Victoria's power grid, particularly ahead of the scheduled 2028 closure of the Yallourn power station, one of Australia's largest coal-fired generators (1.48 GW). The delay in Victoria's offshore wind auctions by approximately a year results in increased reliance on onshore wind, solar, and battery projects to compensate for Yallourn's output loss.
The implementation of these projects and associated transmission lines in regional Victoria has encountered opposition from local communities. Concerns include land use for projects and issues with developer consultation. VicGrid, the state's energy infrastructure planning agency, recently paused consultation on Victoria's six proposed renewable energy zones. This decision was made because the affected communities are currently engaged in responding to and recovering from recent bushfires. Community sessions originally scheduled for late January and early February will be rescheduled, and the consultation deadline will be extended beyond February 22.
Despite community opposition and administrative challenges, Victoria remains committed to leveraging its significant offshore wind resources to replace brown coal generators and achieve 95% renewables by 2035.
Globally, trends in the offshore wind sector vary. While some regions face administrative challenges, European countries have announced plans for a 100 GW interconnected offshore wind grid in the North Sea. Recent tenders in the UK secured 8.4 GW of capacity at a price higher than Australia's current wholesale market prices. Advocates state offshore wind's value in Australia lies in its ability to supply power during peak demand periods. The federal government recently issued feasibility licenses for 4 GW of projects in Western Australia, but did not grant licenses for proposals in the Bass Strait due to a lack of competitiveness. Victoria states it possesses significant offshore wind resources, important for replacing its brown coal generators as it aims for 95% renewables by 2035.