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

Energy storage and flexibility

R1 and L1 revving up the BESS revenues

In our ‘The VFF… Very Fast and Financially rewarding market so far’ Chart of the week, the two new contingency markets, the Very Fast raise contingency FCAS market and the Very Fast lower contingency FCAS, were analysed and demonstrated the high participation of big batteries along with VPPs and DERs....

Low carbon generation

An investigation into REZ capacity factors during Victoria’s dark doldrums

As the grid transitions to much higher levels of renewable penetration, the range of generation outcomes on any given day increases. The worst of these ranges are known as dark doldrums when there is a combination of poor conditions for wind and solar generation, usually a windless day in winter....

Commercial and market outlook

The VFF… Very Fast and Financially rewarding market so far

On 9 October 2023, 1pm (market time), we saw the start of two new contingency FCAS markets. The Very fast raise contingency FCAS market, and the Very fast lower contingency FCAS. Upon commencement of the VF FCAS market, a commissioning period of two weeks with an initial max requirement of...

Commercial and market outlook

Is the sun setting on utility solar?

The Federal Government has legislated emissions reductions of 43% below 2005 levels by 2030. Sourcing electricity from renewable technologies is fundamental to meeting this, with a much-publicised target of 82% renewables in the grid by 2030 – up from a current value of 38% over the last year. Fortunately, the...

Commercial and market outlook

The Very Fast FCAS market is about to commence – a look at a possible time-of-day profile for R1

On 9 October 2023, 1pm (market time), the dispatch of the new Very Fast (VF) FCAS market in the NEM will commence and will add two new markets for contingency FCAS, Raise 1 (R1) and Lower 1 (L1). AEMO has released a final industry go-live plan to keep track of...

Low carbon generation

“Ooh, a storm is threatening, My very [interconnection] today”: Can states utilise interconnection to share wind resources?

Penetration of renewables continues to dominate the energy news, as we saw renewables as a proportion of total demand reach new heights this week to a new record of ~70% penetration. In light of this continuing march toward a renewable-dominated grid (building on some analysis we did in Chart of...

Energy storage and flexibility

How long is the ‘Golden time of day’ for batteries?

A key part of the business case for grid-scale standalone batteries is the arbitrage opportunity between low daytime wholesale prices (when renewable energy generation from solar is plentiful) and high evening prices (when the sun goes down and household demand ramps up quickly). The share of battery revenue coming from...

Low carbon generation

MLF changes in NSW in the past decade

MLF, short for Marginal Loss Factor, represents the portion of electricity losses that occur along the transmission network between a connection point and the Regional Reference Node (RRN). Within the NEM, the MLF serves as a metric to quantify these losses along the network, playing a pivotal role in determining...