State’s wind-power plans rocked as key hub quietly delayed by two years

Kieran Rooney and Bianca Hall, The Age, 20 November, 2024

A critical offshore wind hub at the Port of Hastings has been delayed by two years, potentially forcing turbines to be assembled interstate and putting Victoria at risk of missing its legislated renewable energy targets to replace coal-fired power.

The Allan government has also altered the project to minimise its impact on internationally protected wetlands after federal Environment Minister Tanya Plibersek this year declared the original application “clearly unacceptable”, throwing the state’s plans into chaos.

New environmental documents published by the state government reveal the Victorian Renewable Energy Terminal is now scheduled to be completed by 2030, despite the state originally pledging to have it up and running by 2028.

The terminal is central to Victoria’s offshore wind targets because it will be the focal point for the construction of coastal wind farms, which the Allan government is banking on to replace the energy lost as ageing coal-fired generators come offline.

A delayed timeline has cast doubt over whether Victoria will meet its first legislated target of delivering two gigawatts of offshore wind energy to the grid by 2032.

The state government promised “first power” from these projects by 2028, when Yallourn’s coal-fired power station is expected to close – but the terminal will now still be under construction at that time.

Victoria is already paying EnergyAustralia to keep Yallourn open until 2028, but budget papers detail an agreement whereby “under certain scenarios” it would provide some support to the company in the event of “exceptional costs” related to its operations.

That has prompted speculation the agreement could be used to extend the plant’s life if required.

The Port of Hastings delay could also force the first years of wind farm construction to be based in other locations, possibly interstate.

Proponents of Victoria’s most advanced offshore wind proposal, Star of the South, have identified Geelong Port, and the Port of Bell Bay in Tasmania as potential construction sites alongside the Port of Hastings, depending on approvals and timing.

NSW Ports has also pitched Port Kembla as a potential alternative.

Victoria Energy Policy Centre director Bruce Mountain said there were few workarounds available to the state government.

“They need a big port, and I should be surprised if they build [two gigawatts of wind farms] within two years,” he said.

“Offshore wind has become a lot dearer than was expected when the policy was announced, so I think there’s some wringing of hands as to quite what will pan out. It’s not getting any easier.”

Mountain said any delays risked prolonging the life of coal-fired power stations.

“They bank on a lot of onshore wind and solar too, but that too is taking forever because of the opposition by the community to the VNI West transmission line that the energy market operator has been pushing.

“With so much of this energy transition stuff, policymakers need to as be fleet of foot as companies are in markets. They need to adjust to new information and not tie themselves down as rigidly.”

AGL plans to close the Loy Yang A power station in the Latrobe Valley by the end of 2035, up to a decade earlier than previously announced, and its Bayswater power station in NSW by 2033. The energy giant closed its Liddell power station in NSW in April last year.

The company has not indicated there will be any changes to its plans or delays to the closure of its coal plants.

A spokesperson for Alinta Energy, which operates Loy Yang B, said offshore wind was a new industry and it was not surprising that challenges remained, such as funding, supply chains and project timing.

Alinta is also working to develop its proposed one-gigawatt Spinifex offshore wind farm off Victoria’s south-west coast.

“The position we’re fortunate to occupy is that we have a highly reliable asset in Loy Yang B – the youngest coal-fired generator in the Latrobe Valley, operating at over 98 per cent availability – and one of Australia’s most advanced offshore wind projects in Spinifex,” the spokesperson said.

“We’re well-positioned to support Victoria’s transition—whether by maintaining system stability with Loy Yang B or, in time, by using Spinifex to make a substantial contribution to Victoria’s renewables targets.”

The Port of Hastings delay has in part been driven by Tanya Plibersek’s decision in January to reject environmental approvals for the project because of its impact on areas protected by the Ramsar convention, an agreement signed by more than 170 countries that pledges to promote wetlands conservation.

Speaking to a parliamentary estimates hearing, state Department of Energy, Environment and Climate Action secretary John Bradley said the Port of Hastings proposal would be resubmitted to Plibersek with more detail for her to consider.

New environmental effects statement documents for the project, published on Tuesday, show differences between the application that was rejected by the Commonwealth and what is now being proposed.

The newer proposal says the Victorian Renewable Energy Terminal would require 18 hectares of land reclamation, compared with 29 hectares in the original. It also does not mention a 100-metre-long wharf. Maps also show a much smaller and detailed footprint for dredging near the protected wetlands, compared with the original 92 hectares of “potential” dredging area drawn over a large swath of water.

A state government spokesperson said on Wednesday: “We’ve been laying the groundwork for the development of Australia’s first offshore wind industry here in Victoria.

“We continue to work with the Commonwealth government on the Victorian Renewable Energy Terminal and will provide an update on this progress in our next Implementation Statement.”

Opposition energy spokesman David Davis said the government’s offshore wind plans had been affected by the delayed timeline for the Port of Hastings.

“Labor is now wedged through their own incompetence between the closure of a key coal plant in 2028 and delays in meeting their offshore wind targets for 2032,” he said.

“The timeline to assemble offshore wind turbines at Hastings is now more than tight. It now looks unlikely, unless Labor sends the work, and jobs offshore, that is out of Victoria.“

The Australian Energy Market Operator’s latest connections scorecard reveals that in September alone, 3.5 gigawatts of wind, solar and battery projects were registered, surpassing the number registered in all of last year, when 2.4 gigawatts was registered.

A spokesman said the agency could not speculate on what positive or negative effects the port development could have on the energy transition from coal, or on offshore wind developments.

“What we can confirm is the momentum with new projects working through the mandatory connections process.”