The Shifting Tides for Offshore Wind: From Political Headwinds to Floating Futures
A quiet retreat is underway in the global offshore wind industry, and Australia is far from immune. Following a decision by Donald Trump to halt the Empire Wind project off the New York coast – a move described by industry insiders as turning a “bull market into a bear market” – Equinor has scaled back its ambitions in Australia, dropping plans for a wind farm in the Bass Strait. This isn’t an isolated incident; US-backed BlueFloat Energy is also considering an exit, signaling a broader trend of uncertainty and reassessment. But beneath the surface of these setbacks lie evolving technologies and strategic shifts that could reshape the future of offshore wind, particularly in a country like Australia.
The Trump Effect: A Global Chill
The intervention by the Trump administration, halting new offshore wind projects for review, sent shockwaves through the industry. While the Empire Wind project was eventually revived, the delay proved costly. The impact, as Oceanex founder Andy Evans explains, extends far beyond US shores. With most Australian projects reliant on international partnerships, global political instability and policy shifts directly influence investment decisions. This highlights the vulnerability of renewable energy projects to geopolitical forces, a risk often underestimated in long-term infrastructure planning. The uncertainty created by such interventions forces companies to re-evaluate risk profiles and potentially seek safer, more predictable investment opportunities.
Beyond Politics: Inflation and Rising Costs
Political headwinds aren’t the sole culprit. Inflation is significantly driving up the cost of raw materials, squeezing profit margins. The Global Wind Energy Council (GWEC) notes a global trend of companies prioritizing short-term, readily buildable projects over speculative ventures. This is particularly evident in the diverging costs of fixed-bottom versus floating offshore wind technologies. In 2023-24, the CSIRO estimated floating wind at $7,488 per kilowatt hour, a 36% premium over fixed wind. Recent data shows that gap widening, with floating wind now estimated at $8,362 per kilowatt hour, while fixed wind prices have slightly decreased.
The Floating Wind Challenge
Unlike fixed-bottom turbines, which are limited to shallower waters, floating wind technology unlocks access to deeper ocean areas with stronger, more consistent winds. However, it remains a nascent technology. Feasibility studies alone are expected to take around seven years, and the higher costs present a significant barrier to entry. As Evans points out, “It is more costly. It is a developing technology, but that’s why you have to start it now.” The longer the delay, the more challenging it becomes to realize the potential of floating wind.
Gippsland: Australia’s Offshore Wind Hotspot
Despite the broader industry headwinds, Australia’s offshore wind sector isn’t uniformly stalled. The Gippsland region in Victoria has emerged as the clear frontrunner, benefiting from being the first declared offshore wind zone and possessing the shallow waters suitable for fixed-bottom turbines. Twelve companies have secured feasibility licenses in Gippsland, with projects like Star of the South aiming for operation by 2030. However, progress in other zones remains slow, with only a single license granted across the remaining five.
The Role of Government Support
Government backing is proving crucial. The Victorian government has actively supported offshore wind projects through funding for feasibility studies, creating a more attractive investment climate. Stewart Mullin from GWEC emphasizes the contrast with other states, particularly New South Wales, where industry engagement appears less robust. At the federal level, Australia has largely avoided the substantial public investment seen in the UK, but a review of the National Electricity Market (NEM) could pave the way for direct funding support, potentially unlocking further investment and fostering local manufacturing and supply chains.
Looking Ahead: A Future Defined by Innovation and Investment
The current turbulence in the offshore wind sector isn’t necessarily a sign of its demise, but rather a period of recalibration. The industry is facing a confluence of challenges – political uncertainty, rising costs, and technological hurdles – but also opportunities. The key to unlocking Australia’s offshore wind potential lies in strategic government support, continued innovation in floating wind technology, and a long-term commitment to building a robust local supply chain. The path forward won’t be easy, but the rewards – a cleaner energy future and a thriving green economy – are well worth the effort. What role do you see for public-private partnerships in accelerating the development of offshore wind in Australia? Share your thoughts in the comments below!