Australia Launches First 2GW Offshore Wind Auction

en.Wedoany.com Reported - On August 26, the Victorian Government officially launched Australia's first offshore wind auction, opening the first 2GW offshore wind project Request for Proposals (RFP). Selected projects will receive government support contracts, providing long-term revenue certainty for subsequent investment, construction, and operation. The first round capacity is expected to meet the annual electricity demand of approximately 1.5 million households, with the bidding window remaining open until August 2027 and contracts scheduled to be awarded in 2028.

This auction is not a new tender for seabed development rights, but rather a further selection of projects eligible for state-level support mechanisms, building on the feasibility licenses already issued by the Australian Federal Government. A total of 12 feasibility licenses were previously granted in the Gippsland region, after which three projects—Gippsland Dawn, Kent Offshore Wind Farm, and Gippsland Skies—withdrew. There are currently 9 licensed proposed projects remaining in the area, including the 1GW Blue Mackerel, 2.2GW Star of the South, 2.5GW Great Eastern Offshore Wind, 3GW Aurora Green, and 2.8GW Gippsland 1.

Project evaluation will simultaneously examine bid competitiveness, engineering deliverability, and the driving effect on local employment, businesses, and communities. Victoria has incorporated local supply chain requirements into the first round auction conditions, with offshore wind projects required to maintain a local procurement ratio of no less than 80% on average over the 30-year operations and maintenance phase; at least 10% of labor hours for related onshore construction and operations and maintenance activities must be completed by apprentices, trainees, and related skills development personnel. Developers are also required to submit supply chain action plans and local industry development plans, and to expand procurement opportunities for local steel, equipment, materials, and engineering services.

The first 2GW of offshore wind will also proceed in parallel with the new shared transmission system in Gippsland. VicGrid is planning a 500kV double-circuit transmission line connecting from a central connection point near Giffard to the Loy Yang power station switchyard, providing a unified onshore export corridor for the first offshore wind projects. The related transmission project has completed preliminary market screening and entered the procurement phase for design, construction, financing, and operations partners.

The support contracts resulting from this auction are planned to connect to the Electricity Services Entry Mechanism (ESEM) currently being established within Australia's National Electricity Market. In December 2025, energy ministers from multiple Australian states agreed in principle to establish this mechanism, providing a long-term investment pathway for new generation projects, including offshore wind, to enter the National Electricity Market. Victoria has accordingly adjusted its originally earlier offshore wind procurement timetable to August 2026, with contract award timing adjusted to 2028.

Victoria has enshrined offshore wind in its legislated energy development targets: at least 2GW of installed capacity by 2032, increasing to 4GW by 2035, and reaching 9GW by 2040. The 2GW in the first round auction broadly corresponds to the first phase target for 2032. Existing coal-fired units in the state are entering a concentrated retirement cycle, with the 1.45GW Yallourn power station scheduled to close in 2028 and the 2.21GW Loy Yang A scheduled to close in 2035. Offshore wind, onshore wind, solar, and storage projects are simultaneously undertaking new capacity addition and replacement generation construction tasks.

From the project development chain perspective, this RFP round represents a critical juncture for Australian offshore wind transitioning from "seabed licensing and feasibility assessment" to "commercial project competition and government support contracts," but it does not mean that the 2GW projects have been awarded or that final investment decisions have been made. After bidding closes in August 2027, evaluation and contract negotiations will still be required, with successful projects scheduled to be determined in 2028, after which financial close, equipment procurement, and main construction works can proceed further.