Australia’s first offshore wind project, in the state of Victoria, would be a significant and worthwhile undertaking despite ‘over investment,’ according to a new International Institute for Energy Economics and Financial Analysis (IEEFA) report.
The Star of the South project off the coast of Gippsland in Victoria is a 2.2-GW windfarm that will be Australia’s largest electricity project with a reported A$8Bn (US$5.47Bn) investment.
The project received a significant boost in March 2019, when the Commonwealth Government approved a licence to commence technical and environmental studies off the south coast of Gippsland. The decision came not long after the Australian government was accused by the Maritime Union of Australia of stalling the project by not signing a licence allowing a detailed assessment of the wind resource to commence.
IEEFA director of energy finance studies Tim Buckley said, “Australia has the highest uptake of solar globally, and onshore wind power generates nearly a quarter of all the renewable electricity in Australia’s national energy market. But offshore wind projects have been slow to get off the ground in Australia, until now.
“Star of the South opens up the promise of local and skilled jobs, the development of a replacement industry for the Latrobe Valley, and other economic opportunities in adjacent sectors.”
The report suggests the initial capital cost estimates of Star of the South require caution, this being the country’s first entry into the offshore wind sector.
“The investment requirements of port upgrades and logistics to support the construction of the project adds to the project establishment costs,” said research analyst Kashish Shah, co-author of the note.
“However, offshore wind, although being a variable source of power, operates at a utilisation rate of 50-55% so this will offer greater reliability as well as supply [more] diversity on the grid than is currently being experienced.”
An analysis from The Australia Institute found two of Victoria’s brown coal-fired power plants, Loy Yang A and Yallourn, to be the least reliable generating facilities in Australia, accounting for a total 55 plant breakdowns between December 2017 and June 2019.
This analysis supported the Australian Energy Market Operator’s assessment of Victoria’s ageing thermal power system as being the least reliable, also experiencing 32% of gas and coal-fired blackouts during the same period.
The IEEFA believes that timely commissioning of Star of the South will allow early decommissioning of some of the old, polluting, and unreliable units of the two brown-coal fired stations in Victoria.
“The penetration of low cost but variable renewable generation in Australia’s national electricity market has been rapidly growing,” said Mr Buckley.
“IEEFA expects offshore wind to be increasingly viable as a third alternative source of zero emissions renewable energy globally over the coming decade, complementing the penetration of onshore wind and solar. The zero emissions generation as well as industry and employment development opportunities are significant.”