Victoria is accelerating its renewable energy ambitions, with a dual focus on pioneering offshore wind development and fast-tracking onshore projects. These efforts are crucial to transitioning away from brown coal and achieving ambitious energy targets.
Victoria is proceeding with its first auction for offshore wind farms in Australia, scheduled to commence in August, while simultaneously fast-tracking over $9 billion in onshore renewable energy projects. These initiatives are part of the state's broader strategy to meet its renewable energy targets, including aiming for 2 gigawatts (GW) of offshore wind capacity by 2032 and 9 GW by 2040.
The state's accelerated development pathways aim to increase the pace of project delivery, though challenges related to planning, infrastructure, and community engagement persist.
Offshore Wind Development Kicks Off
The Victorian state government has announced that the initial phase of its first offshore wind farm auction will begin in August. This request for tender will target 2 GW of capacity. The auction process was previously postponed from September last year, attributed to uncertainties regarding port and transmission facilities, as well as the new energy market design. The design for the current auction is ongoing and is set to incorporate the Electricity Services Entry Mechanism (ESEM), a national framework proposed to support renewable and storage projects.
Victoria’s Energy Minister, Lily D’Ambrosio, stated the government's intention to provide industry certainty to encourage investment and expand renewable energy generation.
The state has advocated for ESEM to include offshore wind technology. Gippsland is identified as a prime region for offshore wind development in Australia. The Star of the South project, a contender for initial development, has submitted environmental approval applications and acquired land for its shore crossing.
Globally, the offshore wind sector shows varied trends, with administrative challenges in some regions like the US, while European countries plan an interconnected 100 GW offshore wind grid in the North Sea. Recent tenders in the UK secured 8.4 GW of capacity. Victoria aims for 95% renewables by 2035, with offshore wind identified as a critical resource for replacing brown coal generators. The state-owned SEC is also involved in supporting renewable and storage initiatives.
Fast-Tracking Onshore Renewables and Strategic Goals
Victoria has fast-tracked over $9 billion worth of renewable energy projects in the last two years through the Development Facilitation Program. This program allows the Planning Minister to expedite approvals, bypassing some planning panels and Victorian Civil and Administrative Tribunal (VCAT) appeals.
Originally a COVID-era initiative, it was expanded in 2024 to accelerate housing and energy agendas, classifying new renewable projects as significant economic developments. While third-party objections are still permitted, their resolution process is quicker.
Project Approvals and Capacity
Since 2024, Planning Minister Sonya Kilkenny has approved 25 renewable projects valued at more than $9 billion. These projects are projected to generate power for over 735,000 homes annually.
Additionally, battery storage projects in development could supply 2 million households during peak evening demand. Examples of recent approvals include a 300-megawatt battery in Heywood and a 400-megawatt battery in Glenrowan, strategically located near grid points to store surplus energy.
Renewables currently provide 22.6% of Victoria's electricity, surpassing an internal 2025 target, with a legislated goal of 40%. The state has nearly 100 large-scale renewable energy projects in operation, including 54 solar farms. Last year, rooftop solar contributed approximately 16% of the state's electricity, and wind farms generated about 24%. Ten additional onshore wind farms have received construction approval.
Future Pipeline
Victoria's Labor government is preparing to declare its renewable energy zones (REZs) and an industry roadmap for priority transmission projects, confirming plans for a staged mobilization and delivery of initial priority projects. Victoria's onshore renewables development pipeline totals just over 59 GW, with large battery projects being a significant driver. The state aims to add another 9 GW of offshore wind to its development pipeline by 2040, with 19.6 GW of projects currently in feasibility planning stages. Victoria requires an additional 25 GW of energy and storage by 2035 to meet its next target.
Navigating Challenges: Grid Pressure and Community Concerns
The expansion of renewable energy and storage capacity represents a significant change to Victoria's power grid, particularly ahead of the planned 2028 closure of the Yallourn power station, a 1.48 GW coal-fired generator. The year-long delay in Victoria's offshore wind auctions places additional pressure on onshore wind, solar, and battery projects to compensate for Yallourn's output.
Community Opposition and Engagement Pause
Implementation of these projects in regional Victoria, along with necessary transmission lines, has encountered community opposition. Concerns have been raised regarding land use for projects and developer consultation. VicGrid, the state's energy infrastructure planning agency, recently paused consultation on Victoria's six proposed renewable energy zones. This decision followed recent bushfires in affected communities, leading to rescheduled community sessions and an extended consultation deadline beyond February 22.
Nationally, Australia's proposed solar, wind, and battery energy storage projects exceed the capacity required for net-zero targets, but the pace of project delivery is identified as a critical factor. Improvements in planning processes are highlighted as necessary, with some states experiencing lengthy project approval times.
Economic Boost and Environmental Benefits
The Victorian government projects that the offshore wind industry will create over 6,000 jobs and attract billions in investment.
These developments are anticipated to contribute to a stable energy supply and lower power bills for Victorians. Environmental groups and developers have noted the relevance of offshore wind in the context of recent heatwaves and reliability issues with existing coal-fired power stations.