Posted on April 14, 2025
The Victorian government has walked back a timetable for delivering infrastructure central to the creation of a $100 billion offshore wind industry, leaving renewable energy developers concerned it could take far longer than first expected to deliver projects needed to phase out coal plants.
In an overdue update, the state has removed earlier references which pointed to the Victorian Renewable Energy Terminal, a marine supply base needed to get the industry off the ground, running by the end of 2028.
Instead, the Victorian government said it was “actively assessing the role of deepwater ports” including the Port of Hastings on the Mornington Peninsula, where the terminal was expected to be built, to support the construction and assembly of offshore wind projects.
The government hopes to install at least 2 gigawatts of wind generation by 2032, enough to power 1.5 million homes, in a 15,000 square kilometre region off the Gippsland coast. Eventually, it hopes to have 9 gigawatts installed, underpinning its goal of net zero emissions by 2045.
Despite interest from major investors – the federal government last year granted 12 licences to allow developers including Macquarie-owned Corio Generation, Spanish giant Iberdrola and Denmark’s Orsted to study the feasibility of building wind turbines – there has been significant uncertainty and delay in pushing ahead with plans for the precinct.
Gippsland’s coastline has some of the world’s strongest and most consistent wind, and relatively shallow waters make it ideal for offshore generation.
The change in the language of the Victorian government’s project update follows the vetoing of the Hastings project by Environment Minister Tanya Plibersek last year and reflects the push by rival ports such as Geelong and Portland, as well as Port Kembla in NSW, for a slice of the action.
Plibersek intervened in the plan to use Hastings as the base for the Gippsland precinct after her department decided that it would damage globally recognised wetlands in a way that could not be mitigated.
The project would have required dredging and construction encroaching in 121 hectares of a 60,000 hectare wetland that is protected by an international treaty put in place to safeguard wildlife.
Hastings already hosts a Bluescope Steel works and wharf, an ExxonMobil fractionation plant and a United Petroleum terminal.
The government has also dropped its plan for an expression of interest process for power supply contracts which was due to have closed by the end of last month. It now outlines a less certain and slower “registration of interest” process that commenced last month.
While Victoria remains committed to awarding contracts for the offtake contracts by the end of September next year, the timetable leaves little room for any further slippage given state election is expected two months later.
With those delays, hopes that Victoria could start producing power from offshore wind as early as 2028, the same year that EnergyAustralia’s 1.48 gigawatt Yallourn plant in the Latrobe Valley is due to close, have disappeared. Yallourn provides about one-fifth of the state’s power.
The government also expects to deliver the transmission infrastructure to connect the Gippsland projects by 2030, a timetable that Phillip Vrettakis, an energy strategy partner at advisory Rennie, described as “aggressive”.
“We have some doubts this could be delivered in five years,” Vrettakis said, pointing to typical delays in major transmission projects of between one and six years and the hundreds of landholders that could be impacted.
Charles Rattray, chief executive of Southerly Ten, which leads Australia’s most advanced offshore wind farm, the 2.2 GW Star of the South, said while he was encouraged that the Victorian government was proceeding with the project, the next stages of its planning would be critical.
“Offshore wind is expected to make up 5 per cent of the National Electricity Market by 2035, so there isn’t a moment to lose – we need offshore wind in the system as soon as possible,” Rattray said. “More positive signals from government will be key to attracting the continued investment needed to progress projects in Victoria and Australia.”
The sheer size of the turbines and towers envisaged underscore the importance of the ports and logistics capabilities to support the industry. Corio’s Great Eastern project involves up to 172 offshore turbines, reaching up to 375 metres, easily outstripping Australia’s tallest building.
Corio last week said it would shrink its global operations to focus on a smaller number of projects with the clearest pathway through construction, citing “challenging market conditions”. It declined to comment on the Victorian process, although it continues work on Great Eastern.
Rennie’s Vrettakis said the economics of offshore wind were in doubt because of a 40 per cent spike in costs over recent years.
“Given the fiscal challenges of the Victorian government, it’s now more likely than ever that the Victorian offshore wind development industry will need Commonwealth support to succeed,” he said.
