Energy giant abandons offshore wind project citing rising costs
Energy giant AGL has canceled a bid to build massive wind turbines off the coast of Victoria, raising doubts about the sustainability of Australia’s nascent offshore wind sector.
AGL, Australia’s largest energy producer, was part of a consortium that received federal permission to study the feasibility of building wind farms off the coast of Gippsland that could convert ocean winds into electricity and help offset the impending closures of aging coal-fired power plants in the Latrobe Valley.
But on Friday, the AGL-backed Gippsland Skies consortium became the third joint venture to abandon early-stage studies for an offshore wind farm in Victoria and return its feasibility license to the government. The company said it would instead prioritize investments in onshore wind farms, batteries, pumped hydroelectric power and fast-response gas-powered generators.
Offshore wind projects in Australia and around the world have been hit by rising interest rates, rising equipment and construction costs, supply chain disruptions and the ongoing effects of major policy changes in the US, where President Donald Trump has halted government support for projects and canceled permits.
AGL’s exit from the industry comes a week after Victoria’s auditor general said the state would fail to meet its 2032 target of having two gigawatts of offshore wind energy, a key plank in efforts to offset the shutdown of coal-fired power.
Delays to key projects pose a risk of power outages across Victoria and the market operator may be forced to secure the state’s supply, the auditor general has warned.
Governments have touted the promise of offshore wind farms to help advance the clean energy transition as older fossil fuel-powered generators face a downturn as older fossil fuel-powered generators reach end-of-life, while creating hundreds of new construction and service jobs in coal industry regions such as the NSW Hunter Valley and Victoria’s Latrobe Valley.
Proponents say locating the turbines far offshore could harness stronger, more reliable winds than onshore wind farms, while also reducing the risk of developments facing objections from nearby communities concerned about visual and environmental impacts.
The Victorian government has set a target of meeting around two gigawatts – 20 per cent of the state’s total energy needs – from offshore wind by 2032, then increasing to four gigawatts in 2035 and nine gigawatts in 2040.
Gippsland Skies is the third project to collapse in Victoria, following the withdrawal of BlueFloat Energy’s proposed Gippsland Dawn project between Paradise Beach and Ocean Grange and German energy giant RWE’s Kent project.
The Navigator North project, supported by Origin Energy, has also been put on hold. Nine offshore wind feasibility permits in the Gippsland region are currently active.
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