2.1
Australia's potential offshore wind resource is vast. In comparison to the current 55 GW of generation capacity within the National Energy Market, the Blue Economy Cooperative Research Centre (Blue Economy CRC) has found there is the potential for 2000 GW of offshore wind capacity. This potential was noted by submitters and witnesses who were broadly supportive of the Bill.
2.2
This chapter outlines:
the broad support for the Offshore Electricity Infrastructure Bill 2021 (the Bill);
proposed offshore electricity infrastructure (OEI) projects—covering both generation and transmission—that would immediately benefit from passage of the Bill; and
views regarding the broader perspective surrounding the Bill.
Broad support for the Bill
2.3
Overwhelmingly, submitters and witnesses supported the Bill. There was strong backing for the establishment of a regulatory framework for offshore infrastructure activities to further stimulate the renewable energy sector (including offshore wind), support the ongoing transition to a low emissions future, promote new employment opportunities (particularly in regional areas) and help to ensure energy security.
2.4
The Clean Energy Council (CEC), Australia's peak body for the clean energy industry, welcomed the 'much anticipated introduction of the bills to enable and accelerate the nation's offshore wind industry'. The council and multiple submitters—including from the offshore wind industry—highlighted that there are more than 10 offshore wind projects currently waiting to move beyond the development phase (see 'Offshore wind').
2.5
The CEC also welcomed proposed provisions that will facilitate the development of offshore electricity transmission infrastructure, including for export purposes, that will allow Australia to leverage its renewable energy resources (see 'Offshore electricity transmission').
2.6
The Australian Council of Trade Unions (ACTU), Australia's peak trade union body, strongly supported the development of the offshore wind industry, noting its potential to supply both clean energy and jobs in various sectors:
Australia's outstanding offshore wind resource, located close to regions with transmission assets and energy intensive industries, offers the chance to develop an industry providing large amounts of clean power and secure unionised jobs in manufacturing, construction, operations and maintenance of offshore wind farms… It is important that this legislation is passed quickly given the delays proposed projects have experienced in the absence of a regulatory framework.
2.7
The Global Wind Energy Council (GWEC) referred to a study conducted by the International Renewable Energy Agency, which predicted that a typical 500 MW offshore wind project will generate about 10 000 jobs over a 25-year project lifetime:
Many of these jobs could leverage Australia's existing supply chains in manufacturing, construction, operation and maintenance, while others offer a green reskilling opportunity to workers in synergistic sectors such as offshore oil and gas.
2.8
Mr Tom Quinn, Head of Policy and Research at Beyond Zero Emissions, a solutions-focused climate change think-tank, told the committee that offshore wind equates to onshore jobs:
Every one job we create offshore can create eight jobs onshore, and offshore wind also creates the opportunity for our regions to become wind manufacturing hubs, producing the towers, the blades and the turbines… Going down the track a bit…it creates an opportunity for these regional areas, particularly those with deep water port facilities, to become servicing hubs for the offshore wind sector. It creates long-term, stable work that utilises our existing skill base.
2.9
Macquarie Group Ltd (Macquarie), which develops green energy projects, commented similarly on the potential employment and new skills opportunities, as well as diversification of energy resources:
Appropriately placed offshore wind projects…would further add to the existing renewable energy mix by expanding, at scale, the contribution that wind can make to the overall energy mix. Offshore wind can provide a more consistent source of generation and can also bring significant sources of generation closer to the energy demand whilst limiting the impact to onshore communities.
2.10
RE-Alliance, formerly the Australian Wind Alliance, likewise commented:
Offshore wind diversifies our energy supply, delivering power at times when solar power and onshore wind might not be. For example, studies suggest that the wind resource off Gippsland…is strong during heat waves when Melbourne's electricity demand is highest.
Proposed offshore electricity infrastructure projects
2.11
This chapter briefly illustrates some of the proposed offshore electricity infrastructure projects that would immediately benefit from passage of the Bill: the Star of the South; projects by Oceanex Energy Pty Ltd (Oceanex); and the Australia-Asia PowerLink (PowerLink).
Offshore wind
2.12
Notwithstanding earlier views about the potential for offshore wind energy in Australia (see paragraph 1.13), Macquarie submitted that the country is 'well‑positioned to harness renewable energy from a diversity of sources', including from offshore wind:
…Australia has a particular set of attributes that make it well-placed to harness this form of clean energy. These attributes include: an abundance of wind resource; characteristics of the coastal environment around Australia; substantial demand for renewable energy that will continue into the longer term, particularly as Australia develops green hydrogen capability; and availability of capital looking to invest in clean energy projects.
2.13
A number of submitters and witnesses highlighted proposed offshore wind projects around the country. They argued that the Bill would provide regulatory certainty and encourage the progression of these projects, some of which have been in the development phase for more than 10 years.
2.14
Mr Casper Frost Thorhauge, CEO of Star of the South, gave evidence that having a pathway for the future—through provision of a regulatory framework and setting out capacity ambitions—attracts industry, which is necessary for the creation of specialised supply chains and to achieve low energy costs: 'a strong signal of where the industry is heading will make everything come faster into Australia'.
Star of the South
2.15
Star of the South is a proposed wind farm seven to 25 kilometres offshore McLoughlin's Beach (Gippsland), Victoria with a 2200 MW (2.2 GW) capacity. It has the potential to provide nearly 20 per cent of Victoria's electricity needs. The project includes an electricity transmission network of cables and substations to connect the offshore wind farm to the strong electricity grid connection point at Latrobe Valley.
2.16
Star of the South and Copenhagen Infrastructure Partners (CIP), owners and developers of the proposed wind farm, strongly supported the Bill. Their submission noted that the project has reached an advanced stage, including development timeframes:
…the project is currently in the environmental assessment phase and aims to start construction in the middle of the decade, generating full power by 2030 [and] aligning with the planned retirement of several coal generators along Australia's east coast.
2.17
Ms Erin Coldham, Chief Development Officer for Star of the South, illustrated wind energy's potential contribution to energy security, saying 'typically we would match close to 85% of Yallourn's annual average generation'.
2.18
Star of the South and CIP highlighted that the development timeframes provide for a 'smooth and uninterrupted transition of large-scale generation to offshore wind, providing a stable electricity supply to all Victorians'. In addition, the project is forecast to provide significant economic benefits:
around $8.7 billion in investment in Victoria over its lifetime (approximately $6.4 billion direct to the Gippsland economy);
wider economic benefits worth more than $10.4 billion for the state; and
around 2000 direct jobs in Victoria over its lifetime, including 760 Gippsland jobs during construction and 200 ongoing local jobs once the project is operational.
2.19
Star of the South and CIP highlighted the critical nature of its project timelines, submitting that the project needs to continue at pace. Their submission expressed concern about regulatory uncertainties which could lead to delays:
The proposed framework is a critical step towards a complete regulatory path for offshore clean energy development, but further policy and regulatory development is necessary before projects can proceed with regulatory certainty.
Local community response
2.20
Wellington Shire Council, a local government association in Gippsland, Victoria, welcomed the introduction of the Bill, identifying offshore wind as a major future growth industry for the shire:
…projects will ultimately boost our local economy which is still recovering from recent floods, bushfires, drought and the decline of local industries including timber and coal-based generation. These renewable energy projects offer an exciting pathway for Wellington's community to benefit from a clean energy economy.
2.21
Regional Development Australia, Gippsland Committee (RDA Gippsland) and Gippsland Regional Partnership, both comprised of local business and community leaders, advised that their region is focused on transitioning its energy sector (traditionally brown coal-based) to a clean energy sector: 'these Bills are a significant milestone for our region and could contribute to transitioning our energy sector'.
2.22
Voices of the Valley, a community advocacy group, submitted that for five years it has been campaigning to effect a just transition for the people of the Latrobe Valley:
…we recognise that electricity generated from burning coal is coming to an end and we look forward to opportunities for our workforce to use skills built up through decades of working in the power industry to develop various forms of clean renewable energy.
2.23
RDA Gippsland and Gippsland Regional Partnership urged the Parliament 'to declare Gippsland the first area to be considered suitable for offshore infrastructure activities. This will allow regional benefits to be realised through continued investment in Star of the South'.
Oceanex Energy Pty Ltd
2.24
Oceanex, an offshore wind farm developer, expressed its 'huge' support for the Bill, whose framework it described as setting out a clear pathway for the offshore wind industry to grow and prosper:
Oceanex is currently developing up to 10,000MW [10 GW] of projects in Australia including off the coast of the Hunter Valley (Newcastle), Illawarra (Wollongong/Port Kembla), Ulladulla, Eden and Bunbury. All projects are in the feasibility phase, with all pre-feasibility activities completed satisfactorily.
2.25
Oceanex's five projects are each planned to be approximately 2 GW capacity, with the following economic benefits:
creation of 3000+ direct jobs during a construction period of 3–4 years;
creation of 300+ direct jobs during an operating life of 30 years;
capital expenditure of approximately $10 billion; and
the powering of one million+ homes.
2.26
Oceanex intends to expedite its Hunter Valley and Illawarra wind farm projects upon passage of the bills and the granting of the relevant licences. Similar to Star of the South, its submission emphasised the importance of development timeframes:
Our projects are timed to provide much-needed economic and energy benefits to coincide with numerous regional closures of power plants forecast over the next 10–15 years and Oceanex has been moving quickly to ensure that its projects can start commencing electricity production from the late 2020s to meet required demand.
2.27
Hunter Jobs Alliance, a body of local unions and community environment groups, supported the expeditious passage of the bills. While noting that the Bill would assist with energy security and costs, its submission emphasised the potential employment benefits for the Hunter region:
It offers substantial local employment opportunity. With the appropriate industry policy, skills development, pipeline coordination and local content requirements, there is also significant opportunity to develop manufacturing, supply chain capability and downstream and upstream jobs. In a region with restricted access to capital for diversification, investor interest in offshore wind is a critical opportunity that needs to be grasped, both as a discrete opportunity and a signal to the investment community regarding regional competitive advantages, project opportunities and receptiveness to clean energy investments.
2.28
Similar to Oceanex, HunterNet Co-Operative Limited, a network of manufacturing, engineering and specialist services companies in the Hunter and Central Coast regions, encouraged an 'urgent finalisation' of the bills and licensing regime 'to ensure that 'declared areas'…and associated licences are made available for application as soon as possible and granted [expeditiously] to allow projects to progress'.
Offshore electricity transmission
2.29
The committee also received information regarding Sun Cable's proposed PowerLink project. Sun Cable is aiming to create a new green energy export industry by harnessing high‑quality solar resources in the Northern Territory to supply to the Indo‑Pacific region:
Renewable electricity will be generated by a 14 GW solar farm with approximately 33 GWh [gigawatt hours] battery energy storage located near Elliott, NT. The electricity generated at the Solar / Storage facility will be transmitted 800km overhead to Darwin and then via a 4,200km undersea high voltage direct current (HVDC)…transmission network to Singapore.
2.30
Sun Cable's CEO, Mr David Griffin advised that the project is a long way into the design, regulatory approvals and resource assessment stages, and he sketched the project's key timeframes:
…our schedule is to achieve financial close and commence construction at the end of 2023, first supply of electricity to Darwin in 2026, first supply of electricity to Singapore in 2027 and full commercial operations by the end of 2028.
2.31
Sun Cable welcomed the introduction of the bills, especially regarding the framework for offshore electricity transmission infrastructure:
Minister Taylor's explanation that the Bills' purpose is in part to support the development of projects like the Australia-Asia PowerLink, in recognition of the growing role that large-scale transmission projects will play in generating export revenue, creating Australian jobs, and supplying clean, affordable electricity to Australian and overseas end‑users.
2.32
Sun Cable—as well as the NT Government and CEC—suggested that the Bill could more explicitly recognise the government's commitment to growing offshore infrastructure that supports electricity exports through an amendment to the objects clause.
Departmental view
2.33
The Department of Industry, Science, Energy and Resources (DISER) recognised the increasing interest in developing Australia's offshore area for electricity generation and transmission. It acknowledged that infrastructure projects in this area have the potential to create significant investment in Australia, with opportunities for job creation (particularly in regional coastal communities) and for contributions to Australia's future energy security.
2.34
DISER noted that the 2020-21 Federal Budget committed $4.8 million to develop the regulatory framework proposed in the Bill to enable the emergence of an OEI industry in Australia: 'the proposed bills will provide industry with the certainty needed for long term investment in offshore electricity infrastructure projects in Commonwealth waters'.
The broader perspective
2.35
Some submitters and witnesses indicated that the development of OEI should not be considered in isolation. For example, Associate Professor Penelope Crossley, an expert in renewable energy law and policy at The University of Sydney Law School, highlighted the need for legislative consistency in Commonwealth laws.
2.36
Friends of the Earth, a grassroots environmental network, argued that the Bill is a 'light touch' approach toward establishing an offshore wind industry in Australia: 'a more comprehensive suite of policies will be required to maximise the benefits of kick-starting an offshore renewable energy sector for the climate, community and environment'.
2.37
The Electrical Trades Union (ETU), Maritime Union of Australia (MUA) and ACTU agreed that Australian governments should be more engaged in policy development and planning for the offshore wind industry. The ETU and MUA submitted that a broader package is needed to fully deliver economic benefits through the energy transition:
…the Bill is framed as if there are no broader social or environmental rationale for the development of offshore wind, and only the most limited role for government in planning and facilitating these projects. Around the world, other countries are taking the following actions to accelerate the development of their offshore wind industries, and Australia is far behind:
setting clear targets for offshore wind construction with local content requirements
investing in research and development and port-side innovation and manufacturing hubs
building offshore wind training centres
doing baseline environmental research
coordinating the construction of transmission infrastructure to the offshore substation
providing long-term energy contracts
After being held back for so long, a full industry package is necessary to accelerate the development of offshore wind in Australia and the potential jobs and transition opportunities it could support.
2.38
Newcastle Offshore Energy Pty Ltd pointed out that offshore renewable energy targets have proven effective in other countries for developing a viable and sustainable offshore wind industry, and advocated the same for Australia:
These targets should be delivered in line with retiring fossil fuel plant and or growth of new industries such as green hydrogen, to facilitate a just and sustainable transition to renewables. These targets should also be considered in line with our global commitments to emission reduction targets.
2.39
Mr Glen Williams, National Vice-President and Newcastle Branch Secretary of the MUA, acknowledged however that the broader measures 'are the kinds of measures that the government could be taking in the medium term, after the legislation is passed and perhaps with a new parliament'.
2.40
Mr Paul Murphy, General Manager of the Clean Energy Branch at DISER, responded to calls for broader policy considerations, observing that 'the broader sort of energy and climate policies are not part of this bill development' which is to enable development of OEI only.