What does it take to build an offshore wind industry in Australia?

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17 March 2025 | 8 min | Article

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Offshore wind: a mature, competitive and scalable global industry

Offshore wind presents a compelling answer to the question of how to replace coal-fired power in Australia. It has the potential to provide the scale and reliability needed to power homes and businesses while supporting the growing electricity demands of industrial electrification, transport and data centres.

Offshore wind energy captures high speed and consistent winds, enabling consistent power dispatch with low intermittency, complementing other forms of renewable generation like solar that peaks during the day. With feasibility licenses totalling 25GW awarded in Victoria and proposed projects in other states, offshore wind could become a potential cornerstone of Australia’s energy transition.

Yet getting this industry off the ground in Australia is a first-of-its-kind challenge. How do these projects become bankable and cost competitive? A streamlined regulatory framework, community understanding of potential impacts and solutions, investment in ports, supply chains, and grid infrastructure to prevent bottlenecks will be critical to accelerate industry growth.

Watch video. Aurecon’s Billy Mullin, Offshore Wind Specialist, explores challenges, opportunities and innovations emerging in bringing offshore wind industry to life in Australia.

Unlocking offshore wind investment

Financial viability is key for Australia's offshore wind industry to succeed. While the Levelised Cost of Electricity (LCOE) matters, investors also consider the balance of technology in their portfolios, project and site factors, and supply chain reliability.

Offshore wind is more expensive than onshore, but costs are expected to fall as installation volumes grow, supply chains mature, and economies of scale kick in. These cost reductions, combined with higher capacity factors and the scale of offshore wind projects may ultimately deliver a more reliable and comparable ROI to onshore wind.

Advantages of offshore wind energy include:

its potential for large-scale deployment
access to strong wind resources with a profile that coincides with peak electricity demand times and potentially lower output from other renewable energy sources
the centralisation of grid connections to be located near population centres, allowing offtake into high-demand areas

To unlock this potential, bankability is key. Investors and developers need a flexible strategy to manage uncertainties around approvals, supply chains, and technology. While recent offshore wind auctions in Denmark and the UK stalled due to financial uncertainty, the introduction of structured, inflation-linked incentives like Contracts for Difference (CfDs) can alleviate uncertainty for investors, drive down costs and improve project bankability.

Clear, coordinated regulatory framework required for approvals

Cross-jurisdiction collaboration is critical for streamlining Australia’s offshore wind and energy regulatory approval frameworks. To achieve environment and planning approvals, developers and regulators alike are navigating and responding to established local, state, and federal assessment pathways.

In some jurisdictions, the assessments required under state and Commonwealth legislation are coordinated. While separate approvals are still required, opportunities for coordinated engagement with government agencies and the community, along with joined up technical studies through the environmental impact statement, are being pursued. How to ensure the unique environmental, maritime, and land-use considerations are taken into account while minimising duplication, lengthy project timelines, and costs remains a challenge.

Strong leadership, positive community engagement, and streamlined approvals that are consistent across jurisdictions are critical for offshore wind project delivery.

Offshore wind developments must also comply with fishing and maritime laws, port regulations, and grid connection requirements. Community interest in these aspects, along with environmental impacts, visual amenity, and the protection of marine ecosystems will need to be proactively managed. Strong leadership and positive community engagement is crucial and, wherever possible, projects should deliver tangible benefits, such as meaningful partnerships with Traditional Owners, community, and fishery industries.

For faster offshore wind project delivery, a streamlined approval process is critical. For example, a single government agency could simplify assessments, provide clearer environmental guidelines, and create consistency across jurisdictions – a model successfully implemented in the United Kingdom and European Union.

Mitigating supply chain risk through central planning

Certainty in the offshore wind supply chain will help to de-risk investments. Whether it’s developers, port operators, manufacturers, or vessel owners, all stakeholders need confidence that the industry will not only materialise but will do so at a scale that justifies the significant financial investment required.

Every stakeholder in the offshore wind supply chain is considering potential profit margins, and how likely those returns are. Right now, some are hesitant, building in contingency with flexible options to offset the risk – an approach that is less than ideal for the industry. For the first generation of offshore wind projects, any gaps in the local supply chain will have to be supplemented from the global market. Procuring items such as the foundations and inter-array cables internationally will enable projects to be delivered according to government targets while allowing time for local manufacturing capabilities to be established.

However, the ability to rely on global supply chains comes with challenges. As offshore wind markets in other regions reach saturation, demand for critical components such as offshore substations, now exceed supply. This imbalance has led to extended lead times, meaning that the procurement of some high-cost items may need to happen before a project reaches Final Investment Decision (FID). Understandably, this creates unease among developers. State and federal governments, along with their respective agencies, could mitigate this risk through central planning, as seen in other countries.

On this page

Financial viability

Regulatory framework

Supply chain risk

Case study: Netherlands

Floating vs fixed foundations

Ports capacity

Grid connection

What does it take?

Case study: Netherlands

CASE STUDY

Lessons from the Netherlands: Central planning for industry confidence

The Netherlands transmission system operator, TenneT, has taken a proactive central planning role by procuring a series of 2GW high-voltage direct current (HVDC) platforms and associated offshore transmission infrastructure from the
GE Vernova and Seatrium consortium.

While this system dictates the transmission technology developers must use, it also ensures these critical components are secured in advance. This approach signals an ongoing commitment to the offshore wind sector and encourages further investment from others in the supply chain. While Australia may not replicate this exact model, it highlights the benefits of central planning as a foundation for further investment.

Floating vs fixed foundations and the benefit of standardisation

To ultilise all of Australia’s declared offshore wind areas, floating offshore wind foundations will need to be used, for example, in the greater water depths of the Hunter and Illawarra regions of New South Wales.

Floating offshore wind foundations present an additional layer of complexity, particularly in the standardisation of substructures and assembly processes. Unlike fixed-bottom offshore wind, which has largely settled on a few dominant foundation designs, floating wind still features hundreds of competing substructure concepts. For the industry to scale efficiently, it must converge on a handful of proven designs. Ideally these designs would have different features (Figure 1) to respond to various projects’ needs such as cost, speed of construction and assembly, or hydrodynamic performance.

Standardisation would provide greater supply chain certainty, allowing factories and ports to optimise manufacturing, assembly, and installation processes. This shift could ultimately accelerate deployment while reducing costs.

Figure 1. Overcoming challenges to harness the benefits of floating wind farms.

Offshore wind providing clean energy for Australia.

Ports capacity: from bottleneck to vital offshore wind hub

Offshore wind facilities need specialised port infrastructure such as heavy-lift quays, deep-water access, and large-scale turbine storage. With timelines of four to five years, port upgrades typically must commence before offshore wind projects reach financial investment certainty, thereby introducing some risk to investors and port operators. Government can help to alleviate this risk through funding programs, policy incentives, and strategic planning and approvals to ensure ports upgrades are completed as needed.

Importantly, a phased approach to port development is crucial to managing demand. By staging infrastructure upgrades in alignment with project timelines, congestion can be minimised and resources can be deployed efficiently. Collaboration between government, developers, and port operators can ensure Australia’s ports are ready to meet the offshore wind industry’s needs – without becoming a costly bottleneck.

Grid connection: the missing link to reach consumers

Without effective grid connection, the power generated from offshore wind won’t reach consumers. Grid infrastructure is the critical enabler of offshore wind viability, yet it remains one of the biggest challenges. Australia’s transmission network is not designed for large-scale offshore generation, and issues like grid congestion, curtailment risks, and connection delays could hinder project success.

Grid congestion is already a problem for onshore renewables, with many solar and wind farms struggling to secure timely and cost-effective grid access. Offshore wind, with its high-capacity and steady power output, will face similar hurdles unless a proactive, coordinated approach is taken.

Global leaders in offshore wind, such as Germany and the UK, have tackled this challenge by adopting centralised grid planning models. For example, in Germany, the transmission system operator is responsible for offshore grid connections, ensuring infrastructure is ready before projects come online. Australia can learn from these models by considering shared grid infrastructure, strategic planning for offshore hubs, and government-backed investment in transmission upgrades. Without action, grid limitations could become the single greatest barrier to Australia’s offshore wind ambitions.

The momentum of offshore wind in Australia

Australia’s offshore wind industry holds immense promise for local communities and in securing Australia’s energy future, but overcoming key challenges – from achieving financial close and streamlining environmental approvals to bolstering supply chains, upgrading ports, and solving for grid connectivity – will be essential to its success. Lessons from global offshore wind leaders demonstrate that strategic planning, collaboration, and policy support can unlock its full potential as a reliable, large-scale renewable energy source.

Now is the time for industry, government, and investors to work together. By de-risking investment, coordinating infrastructure development, and creating a clear regulatory framework, Australia can establish offshore wind as a potential cornerstone of its energy transition.

Contributing author & reviewer: Michael Treadwell