Offshore wind farms are becoming an increasingly prominent part of Australia’s evolving energy landscape. These projects involve generating electricity from wind turbines positioned in ocean environments, with power transmitted to shore through underwater cables. Australia’s extensive coastline and wind conditions, particularly in areas like the Bass Strait, have contributed to growing interest in this form of energy generation.
Globally, investment in offshore wind has been increasing, reflecting a broader shift in energy development. Australia is exploring its offshore wind potential, with the federal government designating the Bass Strait off Gippsland as the country’s first offshore wind zone in December 2022. The country’s participation in the Global Offshore Wind Alliance since 2022 highlights its engagement in international discussions on offshore wind initiatives.
The current state of offshore wind in Australia
Australia’s offshore wind energy sector is still in its early stages, with several key projects and evolving regulatory frameworks shaping its development.
Existing projects and proposals
One of the most advanced initiatives is the Star of the South project, located off the coast of Gippsland, Victoria. It has been granted a feasibility licence and is progressing through environmental assessments and community consultations.
In New South Wales, the Hunter Coast region has been identified as a potential site for offshore wind development. The Australian Government has offered a feasibility licence for an offshore wind project off the Hunter coast to Novocastrian Wind Pty Ltd, representing a step towards evaluating the region’s wind resources.
Government policies and regulatory environment
The regulatory framework for offshore wind development in Australia is primarily governed by the Offshore Electricity Infrastructure Act 2021 (OEI Act) and its associated regulations. These legislative instruments define the process for declaring areas suitable for offshore infrastructure and establish a licensing system for project development. The OEI Act provides the legal foundation for the construction, installation, operation, and decommissioning of offshore electricity infrastructure in Commonwealth waters.
In December 2024, amendments to the OEI Regulations introduced detailed guidance on management plans, consultation requirements, and work health and safety obligations for offshore wind proponents. These updates aim to clarify the responsibilities of developers, streamline approval processes, and support the progression of feasibility activities in designated areas.
Integration into Australia’s energy transition and economic strategy
Offshore wind energy is expected to contribute to Australia’s evolving energy mix and economic planning. The government’s goal of achieving 82% renewable energy by 2030 has increased interest in diversifying energy sources, with offshore wind being considered a potential contributor to this target.
Additionally, offshore wind development is being explored in the context of regional economic shifts, particularly in areas transitioning from traditional industries. For example, the Hunter region, historically associated with coal mining, has been identified as a potential location for renewable energy projects, with the possibility of job creation and economic activity in related industries.
However, integrating offshore wind into Australia’s energy strategy presents challenges. Political opposition and community concerns have influenced decision-making, leading to the reconsideration or cancellation of some projects. This underscores the complexities involved in balancing energy development with environmental, social, and economic considerations.
Job creation and employment opportunities from offshore wind farms
The development of offshore wind farms has the potential to generate employment across multiple sectors in Australia.
Direct employment opportunities
The construction phase of offshore wind projects requires a sizable workforce, including roles in construction, engineering, maintenance, and supply chain management. Estimates suggest that a single 2 GW offshore wind project in Australia could require around 1,200 workers during construction and approximately 600 workers for ongoing operations and maintenance. The Victorian Government’s plan to develop 9 GW of offshore wind generation by 2040 is expected to create thousands of jobs, particularly in areas near offshore wind sites.
Indirect employment opportunities
In addition to direct employment, offshore wind projects contribute to job creation in related industries such as manufacturing, logistics, port operations, and local services. These sectors experience increased demand for components, transportation, and support services linked to wind farm development and maintenance. The establishment of offshore wind farms may also contribute to port revitalisation and economic activity by attracting associated businesses and industries.
Regional benefits
Coastal communities, particularly those affected by the decline of fossil fuel industries, could experience economic benefits from offshore wind projects, depending on project implementation and outcomes. For instance, the designation of an offshore wind zone off the Illawarra coast in New South Wales is expected to support regional employment and contribute to energy security. Similarly, the Gippsland region in Victoria is projected to benefit from job opportunities linked to offshore wind developments.
Case studies and projections from other markets
International trends highlight the employment potential of offshore wind energy. In the United States, offshore wind projects – including development, construction, and operations – are projected to support between 45,000 and 83,000 jobs by 2030, depending on the scale of deployment and domestic content requirements.
In Europe, the offshore wind sector has seen notable employment growth, with estimates indicating that the wind energy workforce could expand from 300,000 to 510,000 jobs by 2030. These figures provide insight into the possible employment outcomes for Australia’s emerging offshore wind industry.
Economic growth and investment
The development of offshore wind farms in Australia presents opportunities for economic growth and investment, attracting both foreign and domestic contributions.
Foreign and domestic investment in offshore wind farms
Australia has become a notable destination for renewable energy investments. In 2022, the country ranked third globally for attracting foreign direct investment (FDI) into renewable energy, highlighting its appeal to international investors. One example is Copenhagen Infrastructure Partners (CIP), which has committed approximately A$16 billion to Australia’s offshore wind sector, reflecting strong foreign investment interest.
Subsidiaries of foreign companies are also engaging in Australia’s offshore wind sector. Goldwind Australia, the local arm of Chinese energy giant Goldwind, is involved in developing and operating wind farms across the country. Additionally, Australia’s regulatory framework and investment climate have encouraged participation from both international and domestic investors in the offshore wind sector.
Opportunities for local supply chain development and manufacturing
The expansion of offshore wind projects requires a strong local supply chain to support various aspects of development and operation, including manufacturing components, logistics services, and port infrastructure.
The Climate Council suggests that offshore wind could contribute to more affordable energy for existing manufacturing sectors and attract private investment in related industries such as renewable hydrogen production and wind turbine manufacturing. A consistent project pipeline is considered key to securing significant local investment from original equipment manufacturers (OEMs), which could strengthen Australia’s renewable energy manufacturing capabilities.
Role of government incentives and private sector interest in funding projects
Government incentives play a role in shaping investment in offshore wind. In Australia, the OEI framework provides a regulatory foundation designed to attract both domestic and international investors. The Department of Climate Change, Energy, the Environment and Water considers offshore wind project proposals that demonstrate national interest benefits favorably in the licensing process.
Private sector interest is also evident, with multiple developers announcing new projects, signaling confidence in the sector’s future potential.
Economic case studies from comparable markets
The experiences of other countries offer insights into the potential economic impacts of offshore wind development. In the United Kingdom, the offshore wind infrastructure program invested over £19 billion into the economy between 2017 and 2021, contributing to a 66% reduction in the cost of offshore wind energy since 2015.
Similarly, Taiwan has set ambitious offshore wind targets, aiming for 8 GW of capacity by 2027, reflecting its commitment to economic and energy development in this sector. These examples demonstrate how investment and supportive policies can contribute to economic activity and energy security through offshore wind development.
Infrastructure and industry development
The development of offshore wind farms in Australia requires significant advancements in infrastructure and industry to support this emerging sector.
Upgrading port facilities and transmission networks
Establishing offshore wind farms depends on enhancements to port facilities and transmission networks. Ports must be equipped to manage the assembly, transportation, and maintenance of large wind turbine components. GeelongPort has proposed a $500 million renewable energy hub to support Victoria’s offshore wind industry, with plans for operation by early 2029, highlighting the strategic role of port infrastructure in facilitating offshore wind projects.
Expanding and modernising transmission networks is also essential to connect offshore wind energy to the national grid. In Victoria, VicGrid is leading efforts to develop coordinated transmission infrastructure to integrate offshore wind, aiming to minimise landscape and community impacts while ensuring efficient energy delivery.
Potential for offshore wind hubs to stimulate related industries
Offshore wind hubs could also drive growth in related industries, such as green hydrogen production. For example, Denmark’s North Sea projects use offshore wind energy to produce hydrogen for e-methanol, which powers shipping and reduces CO₂ emissions. This model illustrates how offshore wind development can contribute to broader industrial and environmental objectives.
Impact on shipping, fishing, and tourism sectors
The development of offshore wind farms can have varying impacts on existing sectors.
Shipping
Large offshore wind farms may require adjustments to established shipping lanes, leading to new regulatory measures to ensure safe passage near installations. This presents both challenges and opportunities for ports and shipping companies to enhance navigation systems and infrastructure.
Fishing
Offshore wind farms have raised concerns among fisheries regarding potential impacts on fishing activities. Some studies indicate that wind farms can create spill-over effects, with marine populations thriving in restricted areas and increasing catches by up to 7% near wind farms due to artificial reef formations. However, AFTA, for example, has expressed concerns about potential disruptions, highlighting the importance of consultation and careful planning.
Tourism
The presence of offshore wind farms can have mixed effects on tourism. While concerns about visual impacts exist, some regions have leveraged wind farms as attractions. In the UK, for example, tours of the Rampion offshore wind farm have become a popular tourist activity, appealing to visitors interested in renewable energy and engineering.
Challenges of integrating offshore wind into the existing grid
Integrating offshore wind energy into the existing grid presents several challenges.
Transmission capacity
Expanding transmission networks to accommodate renewable energy remains a challenge. Australia has encountered bottlenecks in extending transmission to inland renewable projects, making offshore wind – which is often closer to existing infrastructure – a potential alternative for energy distribution.
Regulatory and community engagement
Securing planning approvals and addressing community concerns are key challenges. Effective consultation and transparent communication will be essential in navigating local resistance and ensuring that offshore wind projects align with community and regulatory expectations.
Energy security and market stability
Offshore wind energy has the potential to strengthen Australia’s energy security and contribute to market stability.
Diversifying Australia’s energy mix
Integrating offshore wind into Australia’s energy infrastructure could help diversify energy sources, reducing dependence on fossil fuels and enhancing energy resilience. The Australian Institute of Marine Science notes that offshore wind could play a role in supporting Australia’s efforts to reach net-zero carbon emissions by 2050, reinforcing its position within a broader energy portfolio.
Potential cost savings for consumers
The deployment of offshore wind could contribute to long-term energy price stability. In the UK, recent renewable energy auctions secured offshore wind projects projected to add less than £5 to household energy bills, with electricity prices lower than those from new gas power stations. These developments suggest that offshore wind could provide a cost-competitive alternative, potentially shielding consumers from fluctuations in fossil fuel prices over time.
Stability and reliability compared to other renewable energy sources
Offshore wind energy offers consistency and reliability advantages compared to some other renewable sources. Offshore wind speeds are generally higher and more stable than those on land, leading to a more predictable energy supply. Additionally, offshore wind turbines can continue generating electricity even when wind speeds appear low from the shore, contributing to a steady power output.
Risks and uncertainties
Despite its advantages, offshore wind energy faces challenges.
Intermittency
Although offshore winds are generally steadier than onshore winds, variability still exists, requiring backup systems or energy storage solutions to ensure a continuous power supply.
Long-term viability
The economic sustainability of offshore wind projects remains a topic of discussion. The Manhattan Institute has raised concerns that actual project costs may be higher than initial estimates, and that performance degradation over time could lead to some projects being discontinued before reaching the end of their intended lifespan. In such cases, questions have been raised about who bears the cost of decommissioning, with potential implications for both developers and taxpayers.
Challenges and economic considerations
The development of offshore wind farms in Australia involves several challenges and economic factors that need to be addressed to support the sector’s integration into the country’s energy landscape.
High initial costs of offshore wind farm development
Offshore wind projects require significant upfront capital investment, often exceeding the costs of onshore wind or solar installations. These costs include the manufacturing of specialised equipment, installation in marine environments, and the development of necessary infrastructure.
The Australian government has acknowledged that offshore wind development could surpass demand in some proposed connection centres, such as Hunter, Illawarra, and Gippsland. The feasibility of these projects may depend on future industrial expansion and the potential to support emerging markets like hydrogen and eFuels.
Supply chain constraints and workforce readiness
Building a resilient supply chain is essential for the success of Australia’s offshore wind sector. However, infrastructure readiness and modernisation remain challenges, as the country currently lacks an established supply chain for offshore wind components.
Additionally, the workforce required to support offshore wind projects is still developing, with limited expertise in offshore wind technologies. This gap could lead to delays and increased costs, underscoring the need for training programs and industry partnerships to build local capabilities.
Regulatory and environmental hurdles impacting project timelines
Navigating regulatory requirements is a key challenge for offshore wind projects in Australia. The regulatory framework for offshore wind is still evolving, and developers must address environmental concerns and community feedback, which can impact project timelines.
Expanding knowledge of policy arrangements, social values, and supply chain dynamics is seen as an important factor in ensuring the successful development of offshore wind energy in Australia.
Lessons from other countries on mitigating economic risks
International experiences offer valuable insights into mitigating economic risks associated with offshore wind development.
United Kingdom
The UK’s offshore wind sector has grown significantly, increasing its share of total electricity generation from 1% to 13% over a decade. This expansion has been driven by clear policy frameworks, financial incentives, and strategic infrastructure investments, providing a potential model for energy transition.
Denmark
Denmark has emerged as a leader in offshore wind through major investments in renewable energy and a shift away from fossil fuels. The Danish government has supported the sector with feed-in tariffs and streamlined permitting processes, which have helped encourage investment and development in offshore wind.
Opportunities vs challenges
The development of offshore wind farms in Australia presents both economic opportunities and key challenges that will shape the sector’s long-term viability.
Economic opportunities
Offshore wind is being considered as a way to diversify Australia’s energy mix, strengthen energy security, and drive economic growth. However, its long-term role will depend on successfully addressing investment, infrastructure, and regulatory challenges.
The construction and maintenance of offshore wind farms could create significant employment opportunities, with thousands of jobs expected during the construction phase and additional long-term positions in operations and maintenance.
Beyond job creation, offshore wind projects can attract domestic and foreign investment, supporting local supply chain development and infrastructure improvements. The need for enhanced port facilities and expanded transmission networks could also stimulate related industries, contributing to regional economic activity.
Economic challenges
Despite these opportunities, several challenges must be addressed to maximise the economic potential of offshore wind. High initial capital costs, supply chain limitations, and workforce readiness are major considerations.
Additionally, regulatory and environmental factors can impact project timelines, creating uncertainty for investors. Delays in approvals, evolving regulations, and community concerns can add complexity to offshore wind development.
Balanced perspective
The successful integration of offshore wind energy into Australia’s economy will require careful planning, strategic infrastructure investment, and supportive government policies.
International examples, such as the UK and Denmark, demonstrate the role of clear policy frameworks and financial incentives in managing economic risks and accelerating offshore wind development.
While offshore wind has the potential to support Australia’s economic and energy goals, its success will depend on effectively addressing economic challenges through collaboration between policymakers, industry stakeholders, and communities.