'Powering ahead' or kicking the energy crisis down the road?

CONTRACTS for Victoria’s first foray into offshore wind electricity generation may not be let until after the scheduled closure date for the Yallourn Power Station in July 2028 and not come online until Loy Yang closes in 2035.

The Carroll State Government made an announcement today, Wednesday, August 28, that it was opening “Australia’s first offshore wind auction” but many questions remain to be answered.

They include questions about the stability of the Victorian grid after the scheduled closure of Yallourn, electricity costs to consumers, how the state will meet the new supply-hungry demands of data centres and how the state will fund the taxpayer underwriting needed to make the highly capital intensive projects viable.

The government auction is designed to add 2GW of generating capacity to the state and national grid, enough to power around 1.5 million homes each year, but even the most advanced project, Southerly Ten’s Star of the South, is not likely to be fully operational until 2037.

By then, Yallourn will likely be closed (scheduled July 2028), which provides 22% of the state’s power (1.5GW) and also Loy Yang A (scheduled 2035) which provides 30% of the state’s generating capacity (2.2GW).

How these issues are to be resolved has not been spelt out in today’s announcement by the government, which comes at least 12 months behind schedule.

Headed ‘Offshore wind powering ahead’, the government claims “cheaper, more reliable power is on the way for even more Victorian households”.

Here in full is the announcement:

Australia’s first offshore wind auction is now live, creating thousands of new jobs. Minister for Energy and Resources Jaclyn Symes today opened the Request for Proposal process for Victoria’s first two gigawatts (GW) of offshore wind.

This will provide enough energy to power around 1.5 million homes each year. Victoria has some of the best offshore wind resources in the world. Making the most of them will add large amounts of new renewable energy to the grid as the state’s ageing and increasingly unreliable coal-fired generators retire.

Offshore wind will complement Victoria’s growing solar, onshore wind and storage, helping keep the lights on and put downward pressure on power bills.

Projects can now bid for contracts and will be assessed on value for money, deliverability and benefits for local workers, businesses and communities.

Successful projects will move towards investment, construction and operation, ensuring Gippsland continues its proud history as an energy powerhouse.

Contracts are expected to be integrated into the national Electricity Services Entry Mechanism (ESEM), providing a pathway towards Victoria’s target of nine GW of offshore wind.

The auction will close in August 2027, with contracts expected to be awarded in 2028.

Victoria's record investment in renewables is delivering the lowest wholesale power prices in the country. Adding more cheap renewable energy will keep driving prices down.

Renewables accounted for 45 per cent of the state’s total electricity generation. Labor’s plan for the energy transition will create 68,000 jobs in Victoria by 2040 – with 37 percent of those flowing into regional areas.

To learn more, visit: energy.vic.gov.au/renewable-energy/offshore-wind-energy.

Minister for Energy and Resources Jaclyn Symes highlighted the jobs and investment in her statement.

“This auction is a giant leap towards getting Australia’s first offshore wind projects built - attracting billions in investment, creating thousands of jobs and delivering the reliable power we need as coal retires,” said Minister Symes.

“Victoria has some of the best offshore wind resources in the world. This auction is about harnessing that advantage and building the next generation of energy right here in Victoria.”

Ms Symes didn’t miss the opportunity to take a chop at “Jess Wilson’s One Nation-Liberal Coalition” in her government announcement.

“Jess Wilson’s One Nation-Liberal Coalition want to rip up energy projects without a real plan to keep the lights on, while we’re getting on with building the energy Victoria needs for the future,” said Minister Symes.

But it’s the government which has been dragging the chain on one of the centrepieces of its strategy for the state.

The auction comes after the energy market operator on Tuesday warned the spike in data centre demand and the slower than expected rollout of new renewable energy projects will place increasing pressure on an already stressed energy market with the age-old fundamentals of supply and demand driving up energy costs for business and cost-of-living strapped householders.