Victoria opens Australia’s first offshore wind auction

Victoria has opened the bidding process for what could become Australia’s first offshore wind projects, offering developers government support to build two gigawatts of capacity.

Energy Minister Jaclyn Symes said the projects could attract billions of dollars in investment, create thousands of jobs and provide power as the state’s coal plants retire. The planned capacity would produce enough electricity to supply about 1.5 million homes each year.

The auction will allow offshore wind proponents to compete for contracts through the Energy Services Entry Mechanism, or ESEM. The government will assess bids on their ability to deliver electricity and offer value for money. The mechanism is designed to give projects confidence that they will have a buyer for their power later in their operating lives.

That certainty is important because renewable energy projects can operate for decades, while energy buyers are often unwilling to sign agreements that far in advance. The ESEM has been recommended by the federal Energy Department, but it has not yet been introduced. Queensland remains opposed, despite broad agreement among Australian energy ministers last year in principle.

Gippsland became Australia’s first offshore wind zone in 2022. Its strong winds, relatively shallow waters and proximity to existing grid infrastructure in the Latrobe Valley helped determine its selection. Nine developers currently hold feasibility licences for projects there, although not all are expected to bid in the first auction. The process will take time: bidding ends in August 2027 and contracts are due in 2028.

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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.