Building up the road to the coast – can we deliver energy from Gippsland’s offshore wind?

On 19 December 2022, the Federal Minister for Climate and Energy officially declared the area in Bass Strait off the Victorian Gippsland Coast suitable for offshore wind. The declared area covers approximately 15,000 square kilometres, from Lakes Entrance in the east to south of Wilsons Promontory in the west. Based on AEMO’s latest draft 2023 Input, Assumptions, and Scenarios Report (IASR) and adjusting for the smaller REZ area, the area has a potential for 28 GW using a fixed foundation offshore wind and 47 GW using a floating foundation for a total of 75 GW of offshore wind capacity. With the significant amount of offshore wind capacity expected to be installed in this area, this Chart of the week evaluates the transmission infrastructure required to serve this new capacity in future.

This official declaration allows offshore wind developers to apply for feasibility licenses. They will help the Victorian government achieve their ambitious offshore wind targets of 2 GW offshore wind capacity by 2032, 4 GW offshore wind capacity by 2035, and 9 GW by 2040. In the Gippsland Coast area alone, there are around 10 GWs of proposed projects, three of which total 5.2 GW and have secured funding through Round 1 of the Victorian government’s energy innovation fund.

To achieve these targets, transmission infrastructure needs to be built to connect the offshore wind to the rest of the grid and deliver the energy generated from the offshore wind resources to the load centres. The first part of these infrastructure requirements is covered by the transmission schedule and plan contained in the Victorian government’s first offshore wind implementation statement. The statement shows that there should be enough time to build the required transmission infrastructure to connect the first stage of the offshore wind target by 2032.

Addressing the second infrastructure issue, the ability to actually deliver the generated energy from these offshore wind resources to the load centres is less clear when building up to the 4 GW and 9 GW targets in 2035 and 2040, respectively. In the latest Draft 2023 IASR, a 6,000 MW Gippsland transmission limit for South East Victoria is introduced to account for the generation impacts of Gippsland REZ (both onshore and offshore), Basslink, Marinus Link, and existing coal and gas plants. Figure 1 below tallies the existing generators’ installed capacity and the maximum transfer limits of the interconnectors to Tasmania. The chart uses the generator retirement schedule and interconnector build schedule from AEMO’s 2022 ISP. The optimal development path in the ISP recommends building onshore wind capacity in the Gippsland REZ up to its resource limit, which is up to 2 GW, combined with the 2 GW target by 2032 should lead to minimal curtailment based on the available transfer capacity of existing transmission infrastructure due to the expected coal plant retirements.

The transfer capacity limitation will arise when meeting the 2035 and 2040 offshore wind targets. The total installed capacity of the interconnectors (around 2 GW combined), installed onshore wind in Gippsland (2 GW), and the target offshore wind capacity (4 GW and 9 GW for 2035 and 2040, respectively) is at 8 GW and 13 GW for 2035 and 2040, respectively, will be greater than the 6 GW transmission limit of the existing transmission infrastructure. Although there is another proposed area to install the offshore wind capacity to meet its target, the South West Victoria area is already constrained due to expected onshore wind installations, based on AEMO’s 2022 ISP, as well as the energy coming from the Heywood Interconnector. Ideally, the optimal build path will change when considering the offshore wind target, and some of the onshore wind capacity required will be shifted to other REZs, but when considering Gippsland as the only option, an additional 2 GW and 7 GW of transfer capacity will be required in 2035 and 2040, respectively, to be built in order to meet the Victorian offshore wind capacity targets.

A more in-depth market analysis of the effect of the offshore wind targets can be performed using our Benchmark Power Curve, which has our 30-year energy price forecast when considering the different state renewable targets and policies. For more information on our price forecasts, please contact us at

To keep reading, please log in to your account or sign up for free

Alternatively, please sign up to receive free market insight online and direct to your inbox

Related thinking

Commercial and market outlook

Australia’s hydrogen success is tied to energy market policies

According to South Australia’s Hydrogen Power Plant study, the global demand for hydrogen is projected to reach 650 megatons in 2050, with a potential export market of $300b per year. In this market, Australia is well placed for renewable hydrogen production with a considerable penetration of variable renewable energy (VRE)....

Home supply and services

With wholesale prices falling, how many domestic customers are looking for better prices?

In anticipation of supply contracts being offered below the Energy Price Guarantee (EPG), what might happen to customer switching rates? In this week’s 'Chart of the week', we look at how many domestic consumers might be ready to switch when suppliers increasingly offer contracts below the price cap supported level,...

Commercial and market outlook

It’s finally happening; EV market hotter than ICE in 2022! Is the NEM ready?

For the first time in 30 years, Australia’s highest-selling mid-size vehicle is not a Toyota Camry - running an internal combustion engine (ICE). As reported by 7 news, it has been replaced by the Tesla Model 3. This piece of information demonstrates that the EV uptake in Australia is achieving...

Business supply and services

Help has arrived? A review of the government’s new Energy Bills Discount Scheme

Over the past year, the combination of volatile wholesale energy prices, economic recession, and both political and market uncertainty, have necessitated government intervention in UK energy markets to offer protection and stability to both domestic and non-domestic UK energy consumers. In this week’s 'Chart of the week', we further review...

Business supply and services

Newly announced Energy Bills Discount Scheme scales back support for businesses’ energy bills 

On Monday 9 January, the outcome from the long-anticipated review of the current Energy Bill Relief Scheme (EBRS) for businesses was published. With the EBRS due to end on 31 March 2023, the government announced a new Energy Bills Discount Scheme (EBDS) as its one-year replacement to run from 1...

E-mobility and low carbon

Energy crisis prompts peak prices at public charge points

Last month, three charge point operators (CPOs) rolled out dynamic pricing across their public networks, offering drivers lower rates for charging at off-peak hours, and higher prices during times of peak demand. In this week's 'Chart of the Week', we’ll look at the three tariffs introduced and ask what it...

Regulation and policy

Capacity Market prequalification

On 29 November, National Grid ESO in its role as EMR Delivery Body published the prequalification registers for the 2023-24 (T-1) and 2026-27 (T-4) Capacity Market (CM) auctions. In this week's 'Chart of the Week', we explore some of the highlights from the initial registers.

Commercial and market outlook

“There’s a hole in the bucket, dear Liza”: but maybe not as big as we think?…

There has been talk for years about the potential introduction into the National Electricity Market of a “capacity market”, with significant pushback from the industry over the potential for a capacity market to prolong the life of coal and gas and slow decarbonisation of the grid. On Friday last week...