5 November 2019 (IEEFA Australia): Australia’s first offshore wind project in Victoria is a step in the right direction despite the over investment, according to a new IEEFA note out today.
The ‘Star of the South’ off the coast of Gippsland in Victoria is a massive 2.2 gigawatts of wind capacity proposal and will be Australia’s largest electricity project with reportedly $8 billion investment.
Offshore wind projects have been slow to get off the ground in Australia, until now
“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,” says co-author of the note Tim Buckley, director of energy finance studies at IEEFA.
“But offshore wind projects have been slow to get off the ground in Australia, until now.
“The “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 note 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,” says 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 diversity on the grid than is currently being experienced.”
The penetration of variable renewable generation in Australia’s national electricity market has been rapidly growing
An analysis from The Australia Institute found two Victorian 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.
Timely commissioning of the 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,” says 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.”
Media Contact: Kate Finlayson ([email protected]) +61 418 254 237
About IEEFA: The Institute for Energy Economics and Financial Analysis (IEEFA) conducts research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy. (www.ieefa.org)