{"id":874408,"date":"2026-08-31T00:24:23","date_gmt":"2026-08-31T00:24:23","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/874408\/"},"modified":"2026-08-31T00:24:23","modified_gmt":"2026-08-31T00:24:23","slug":"australias-first-offshore-wind-auction-has-been-called-what-does-it-all-mean","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/874408\/","title":{"rendered":"Australia’s first offshore wind auction has been called. What does it all mean?"},"content":{"rendered":"

In long-awaited news for the offshore wind industry, the Victorian government has officially opened its offshore wind auction.<\/p>\n

Energy Minister Jaclyn Symes opened the Request for Proposal process for the state’s first two gigawatts (GW) of offshore wind.<\/p>\n

This will provide enough energy to power about 1.5 million homes each year.<\/p>\n

\"A<\/p>\n

Jaclyn Symes says offshore wind will provide energy security as the state’s coal plants close. (ABC News)<\/p>\n

“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,” Ms Symes said.<\/p>\n

But what does this actually mean and why is this important?<\/p>\n

The auction explained<\/p>\n

Auctions might bring to mind dozens of property buyers jostling to secure a piece of property on a Saturday morning.<\/p>\n

In a similar vein, offshore wind proponents will now bid for government support to help deliver their projects.<\/p>\n

The government will assess each bidder based on their ability to deliver on power, and also on value for money.<\/p>\n

Successful bidders through the auction will win contracts through what is called the Energy Services Entry Mechanism (ESEM).<\/p>\n

The ESEM is a recommendation by the federal Energy Department to encourage new investment in the energy sector.<\/p>\n

\"A<\/p>\n

The auction is designed to provide certainty that projects will be able to sell their electricity later in their life span. (Supplied: National Electricity Market wholesale market settings review, Department of Energy and Climate Change (2025))<\/p>\n

To secure investment, renewables projects need to show they are going to make money over the course of their life span, which can be decades.<\/p>\n

But energy buyers aren’t willing to sign deals that far into the future.<\/p>\n

The ESEM bridges the gap by providing long-term contracts to reassure the investors that there will be a buyer for the power it produces in the later years of its life span.<\/p>\n

But the ESEM isn’t in place yet and while nearly all Australian energy ministers agreed last year in principle to introduce it, Queensland remains opposed.<\/p>\n

\"A<\/p>\n

CEO of the Clean Energy Council, Jackie Trad. (ABC News: Danielle Pope)<\/p>\n

Why build offshore turbines in Gippsland?<\/p>\n

Gippsland was declared<\/a> Australia’s first offshore wind zone by the Commonwealth government in 2022.<\/p>\n

The area was chosen for its strong winds and relatively shallow waters off the coast and proximity to existing power grid infrastructure in the Latrobe Valley.<\/p>\n

There are currently nine proponents who hold feasibility licences for wind farms off the coast of Gippsland.<\/p>\n

\"map<\/p>\n

Nine wind farm projects are vying for approval to operate in Gippsland. (Supplied: DCCEEW)<\/p>\n

It is unlikely all nine will bid for this first auction.<\/p>\n

The successful projects will move towards investment, construction and operation.<\/p>\n

But it will not be a fast process.<\/p>\n

The auction closes in August 2027 and contracts will be awarded in 2028.<\/p>\n

Why do we need it?<\/p>\n

A significant amount of coal-fired power is due to exit the grid in coming years, and Australia is in a race to replace it with renewables.<\/p>\n

\"Yallourn<\/p>\n

Yallourn coal-fired power station is slated to close in 2028.\u00a0 (ABC News: William Howard)<\/p>\n

Gippsland’s Yallourn power station is scheduled to close in July 2028, and the Eraring power station in New South Wales will follow in April 2029.<\/p>\n

The latest AEMO Integrated System Plan<\/a> says two-thirds of Australia’s remaining coal-fired plants could be retired by 2035.<\/p>\n

It warns coal plants could close faster than forecast and some are only active during times of peak energy demand.<\/p>\n

AEMO also says by 2036, data centres will consume almost as much power from the grid in a decade as all households in New South Wales and Victoria do today.<\/a><\/p>\n

This creates the risk of an energy supply gap.<\/p>\n

Victoria has a target to produce at least 2GW of offshore wind by 2032, increasing to 4GW by 2035 and 9GW in 2040.<\/p>\n

But the Victorian auditor-general warned in December last year that the state was unlikely to reach its offshore wind target due to delays in establishing the sector.<\/p>\n

Victoria was due to hold an auction for offshore wind last year, but then-energy minister Lily D’Ambrosio announced in September 2025 that the auction would be delayed.<\/a><\/p>\n

How has the announcement been received?<\/p>\n

The final announcement of the auction means certainty for the sector.<\/p>\n

\"A<\/p>\n

Erin Coldham has welcomed the opening of the auction. (ABC News: Danielle Pope)<\/p>\n

Erin Coldham is the chief development officer of Southerly Ten, the proponents behind the Star of the South offshore wind farm.<\/p>\n

The wind farm is the country’s most advanced, and has just completed its public submission hearings on its environmental approvals for its state development works.<\/p>\n

Ms Coldham said the auction was welcome news.<\/p>\n

“What this auction does is it allows the government to choose those projects that can offer the best value for money and to help provide some level of comfort around the revenue so that we can build the project with confidence and ensure that it is successful,” Ms Coldham said.<\/p>\n

Environmentalists have also welcomed the news.<\/p>\n

\"A<\/p>\n

Kat Lucas-Healey said the offshore wind auction was a step in the right direction for the energy transition. (Supplied: Environment Victoria)<\/p>\n

Environment Victoria senior climate and energy advisor Kat-Lucas Healey said offshore wind would play a crucial role in the state’s transition to renewables.<\/p>\n

“Offshore wind is a really great part of that because it’s a different wind resource than it is onshore, so it starts adding to that diversity and plugging those gaps,” she said.Why should taxpayers help fund this?<\/p>\n

Naysayers might be asking why taxpayers should help pay for this.<\/p>\n

Energy Consumers Australia said the broader benefit to society would justify the cost, in a submission to the federal government about the ESEM.<\/p>\n

“When emissions policies impact the electricity sector, such as accelerating the need to replace emissions-intensive capacity and build new transmission, we think there is a very good argument that taxpayers are the right constituency to pay, since all citizens benefit,” the report said.<\/p>\n

Clean Energy Council chief executive Jackie Trad said it was not unusual for a government to financially back an industry, citing the federal and New South Wales governments’ recent decision to provide $2.5 billion for the Tomago Aluminium Smelter.<\/a><\/p>\n

“Having a manufacturing capacity in Australia is critical and important,” she said.<\/p>\n

“I would say energy, electricity as one of the key things that powers our economy, that creates economic prosperity, that provides real momentum for jobs \u2026 particularly in the regions, that is money worth spending.”<\/p>\n

What does Victoria’s election mean for the auction?<\/p>\n

Grattan Institute senior energy program fellow Tony Wood said while the auction announcement was a step forward, there was still a lot that was unknown.<\/p>\n

\"A<\/p>\n

Tony Wood says it could be more than a decade before anything is gained from the plan. (ABC News)<\/p>\n

Mr Wood said the extra cost to build offshore, along with the upcoming November election, provided significant risks to ensuring a smooth transition.<\/p>\n

Renewables look to be a key battleground at the election, with the Coalition pledging to scrap key transmission project, VNI West.<\/a><\/p>\n

“There must be a risk that they still cancel with all this and therefore the whole thing will be called off,” Mr Wood said.<\/p>\n

\"A<\/p>\n

David Davis says the Coalition is supportive of offshore wind, but has criticised the government’s rollout of the industry. (ABC News: Richard Sydenham)<\/p>\n

The Victorian opposition says it will open up new gas supplies if it wins the election.<\/p>\n

Opposition energy spokesperson David Davis said the Coalition had always supported offshore wind in principle, but was critical of how the government had managed the rollout.<\/p>\n

“With respect to offshore wind, we have always seen that there could well be a significant role for offshore wind and indeed when the bill went through parliament, we did not oppose the bill,” he said.<\/p>\n

“We’ve always said that in the case of offshore wind, it’s a matter for the government to get matters in place, and it is the government of course that is delayed in its approach.”<\/p>\n

Mr Davis said if the Coalition won the election, it would maintain the contract process, with some oversight.<\/p>\n","protected":false},"excerpt":{"rendered":"In long-awaited news for the offshore wind industry, the Victorian government has officially opened its offshore wind auction.…\n","protected":false},"author":2,"featured_media":874409,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[32474,64,2728,63,99,19165,57480,3786,19132,8146,99539,15777,660],"class_list":["post-874408","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-aemo","tag-au","tag-auction","tag-australia","tag-business","tag-coal","tag-gippsland","tag-government","tag-offshore-wind","tag-renewable-energy","tag-star-of-the-south","tag-turbines","tag-victoria"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/874408","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=874408"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/874408\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/874409"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=874408"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=874408"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=874408"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}