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Offshore renewable energy

Offshore wind

There is rapidly growing interest in developing offshore wind in the National Electricity Market (NEM), including in New South Wales. This is consistent with recent international auctions where offshore wind developments are increasing in number and scale across Europe and Asia. While onshore wind remains a lower cost and faster-to-develop solution in Australia, there are advantages to offshore wind.

Offshore wind projects in Australia may:

  • leverage high-capacity offshore wind resources with some time diversity from onshore wind resources
  • provide economies of scale with the potential for very large project developments
  • deliver consumer price benefits due to greater resource diversity
  • be developed in proximity to existing electricity demand (which is typically along Australia’s east coast) and reduce the need for major transmission expansions further inland
  • be developed in proximity to the NSW Government’s Hydrogen Hubs in both the Hunter and Illawarra regions
  • provide an additional source of new electricity generation to support net zero emission targets and energy export opportunities
  • deliver economic and employment opportunities to regional communities directly affected by the energy transition.

The Australian Government passed the Offshore Electricity Infrastructure Act 2021 in 2021, which includes a National Framework for licensing offshore generation and transmission infrastructure in Commonwealth waters. The Act empowers the Federal Minister for Climate Change and Energy to 'declare' areas off the coastline as suitable for offshore wind development. The National Framework is an important step for developing an offshore wind industry in New South Wales and Australia.

In August 2022, the Federal Minister for Climate Change and Energy announced six proposed regions for offshore wind developments around Australia. This included both the Hunter and Illawarra regions in the State. EnergyCo is working with the Federal Government and relevant NSW Government agencies to inform the next steps under the National Framework for licensing offshore generation off the coast of the Hunter and Illawarra regions.

Offshore wind zones are also considered in the 2022 Integrated System Plan (ISP) published by the Australian Energy Market Operator (AEMO). Candidate offshore wind zones in the 2022 ISP include locations in both the Hunter and Illawarra regions, adjacent to onshore Renewable Energy Zones (REZs). The Registration of Interest (ROI) process conducted for the Hunter-Central Coast REZ in early 2022 identified significant commercial interest with seven offshore wind projects totalling 24.5 GW proposed in the region. The ROI conducted for the Illawarra REZ in mid-2022 similarly identified eight offshore wind projects totalling 12.9 GW in the region.

Importantly, while there is growing interest in offshore wind and the benefits it could deliver, there remains barriers to its uptake in Australia. The National Framework is still in initial stages and requires further development to provide guidance for potential offshore wind projects.