Consultation opened for Illawarra Offshore Wind Zone

Claire Smith, Peter Staciwa, Stuart MacGregor, Tim Stanton and Jessica Lighton
25 Aug 2023
Time to read: 4.5 minutes

The Commonwealth Government has opened consultation on the Illawarra Offshore Wind Zone – the fourth of its kind in Australia – with the consultation period open until 16 October 2023.

On 14 August 2023, Minister for Climate Change and Energy, Chris Bowen, opened the consultation period for the Illawarra Offshore Wind Zone and released the proposed map of the zone area. The Illawarra Offshore Zone extends between Gerringong, south of Kiama, and Wombarra, a suburb of Wollongong, and could generate up to 4.2GW of wind energy – enough to power approximately 3.2 million homes and local industries. The Minister expects to formally declare the Illawarra Offshore Zone by the end of 2023.

Image of The proposed area for the Illawarra Offshore Zone

Above: The proposed area for the Illawarra Offshore Zone.

The announcement follows the formal declarations of the Gippsland Offshore Wind Zone off the Victorian coast in December 2022, the Hunter Offshore Wind Zone on 12 July 2023 and the commencement of consultation on the Southern Ocean zone off Portland on 27 June 2023 which extends offshore from Warrnambool, Victoria to Port MacDonnell, South Australia. Other areas identified by the Commonwealth for potential offshore wind zones are the Bass Strait region off northern Tasmania, and the Indian Ocean region off Perth/Bunbury.

The Illawarra Offshore Zone covers approximately 1,461 square kilometres and sits at least 10 kilometres off the coast in the north and 30 kilometres offshore at the southern tip of the zone off Kiama and Gerringong.

The Minister noted that the Illawarra region was earmarked for a potential offshore wind zone due to its strong offshore wind resources, major port infrastructure at Port Kembla and significance as a manufacturing and industrial hub. The Illawarra Offshore Zone could combine with the NSW Government's proposed Illawarra Renewable Energy Zone to help transition the region to renewable energy, including Port Kembla which is home to Australia's largest crude steel production plant. The proximity of Port Kembla will also be valuable for projects looking to import and install turbine components.

The sizeable cutback of the proposed area off the coast of Kiama and Gerringong is intended to protect significant environmental areas, including little penguin breeding habitats. The Minister, when announcing the consultation period, noted that the proposed Illawarra Offshore Zone area took into account existing concerns regarding impacts to tourism, whale migration paths, birdlife and fishing. Notably, the Gippsland Offshore Zone and Hunter Offshore Zone were also altered after community consultation to address concerns regarding visual amenity, fishing and environmental impacts. The Royal National Park is north of the proposed area and the Jervis Bay Marine Park is south of the proposed area. These areas are Matters of National Environmental Significance under the Environment Protection and Biodiversity Conservation Act 1999 and are likely to be another key area of consultation for the Minister.

Additionally, the Minister stated that the Department of Defence supported the proposed area of the Illawarra Offshore Zone and it did not conflict with the possible establishment of a nuclear submarine base at Port Kembla. The Department of Climate Change, Energy the Environment and Water is working with the Australian Maritime Safety Authority and the Port Authority of New South Wales to seek further details on vessel traffic in the proposed area.Notwithstanding the above, it is notable that final declared areas in the Gippsland Offshore Zone, the Hunter Offshore Zone and the Southern Offshore Zone varied significantly from the original areas that were put forward by the Commonwealth for consultation, so proponents should be cautious the final Illawarra Offshore Zone may differ from the proposed area released for consultation.

Sea depths in the proposed area vary from approximately 50m to 1000m, it is therefore likely that any offshore wind developments in the region will be floating technology – to date floating technology has not been deployed at commercial scale. An interactive map of the proposed area can be found here.

Hunter Offshore Zone

On 12 July 2023, the Minister officially declared the Hunter Offshore Zone which stretches between Swansea on the Central Coast and Port Stephens and could generate up to 5GW of wind energy – enough to power approximately 4.2 million homes and local industries. The Hunter Offshore Zone will be the first offshore wind zone in Australia to host floating turbines due to the significant water depth. The Minister expects the Hunter Offshore Zone will be generating energy by 2030.

The Hunter Offshore Zone overlaps with whale migration paths, key bird and sea life habitat, including the breeding and foraging area for the endangered Gould's Petrel off Cabbage Tree Island, and the shipping industry due to the zone's close proximity to the Port of Newcastle. Similar to the Illawarra Offshore Zone and Port Kembla, this proximity will be advantageous to future wind projects constructed in the Hunter Offshore Zone that need to import turbine blades and supporting equipment. In support of this, the Port of Newcastle and Energy Corporation of NSW (EnergyCo) have signed a Memorandum of Understanding to identify offshore wind opportunities.

The Hunter Offshore Zone will also play a significant role in the Port of Newcastle's transition to renewable energy along with other projects such as the Port of Newcastle Clean Energy Precinct which is supported by a $100 million funding commitment by the Commonwealth Government, designating the Port as a future hydrogen hub.

Sea depths in the Hunter Offshore Zone exceed 100m and will only be suitable for floating wind technology which, as noted above, is not yet deployed at commercial scale.

Feasibility Licence applications are now open for the Hunter Offshore Zone. The invitation to apply opened on 8 August 2023 and will close on 14 November 2023. As with the Gippsland process, proponents are busily assessing preferred sites for offshore wind development in the Hunter Offshore Zone and preparing proposals to the Minister with a significant focus on the Offshore Electricity Infrastructure Act 2021 (Cth) (OEI Act) merit criteria. We expect successful proponents in the Hunter Offshore Zone will need to demonstrate substantial in-house expertise for development of floating technology.

Proposed projects

Despite only just opening for consultation, there are several projects already expected to submit applications for a feasibility licence for the Illawarra Offshore Zone once it is formally declared, including:

  • A 2GW project developed by Oceanex Energy and Equinor; and
  • Southern Pacific Offshore wind project, a 1.6GW project developed by BlueFloat Energy.

In the Hunter Offshore Zone, there are multiple proposed projects expected to submit feasibility licence applications, such as:

  • Eastern Rise Offshore Wind project, a 1.725GW project developed by BlueFloat Energy;
  • Novocastrian Offshore Wind project, a 2GW project under development by Australia-based Oceanex Energy and Equinor; and
  • Newcastle Offshore Wind project under development by French-based EDF Renewables, who purchased the project from Newcastle Offshore Wind Energy. This project was originally proposed as 10GW but will likely be significantly reduced given the total capacity of the Hunter Offshore Zone.

The Gippsland Offshore Zone feasibility licence process attracted significant interest from offshore wind developers based in Australia and abroad, the Commonwealth Government is currently considering the proposals put forward, with only a handful expected to be granted by the end of the year. We comment on the potential next steps for the Commonwealth Government to decide between applicants in our recent article here.

Next steps for offshore wind zones

The consultation period for the Illawarra Offshore Zone is open until 16 October 2023 with community information sessions to commence on 18 September 2023. The consultation is an opportunity for the community, industry groups, and businesses to ask questions and provide feedback on the proposed zone.

In terms of the other offshore wind zones:

  • The proposed Southern Offshore Zone consultation period is open until 31 August 2023;
  • The Hunter Offshore Zone feasibility licence application period is currently open until 14 November 2023; and
  • The application period for the Gippsland Offshore Zone closed back on 27 April 2023 and applications are currently being assessed. The market expects for successful applicants to be announced by the end of this year/early next year.

All feasibility licence applications will be assessed by the Offshore Infrastructure Registrar against the criteria set out in the OEI Act and the Offshore Electricity Infrastructure Regulations 2022 (Cth). The Registrar will then make recommendations to the Minister. The merit criteria are broad and, notwithstanding the guidance released by National Offshore Petroleum Titles Administrator, there is still a high level of uncertainty for industry when it comes to demonstrating their project and the proponents not only satisfy the merit criteria but should be considered of higher merit than other applicants (which is ultimately the key test as overlapping applications will be decided on merit and will only move to a financial offer process if the applications are of equal merit).

Please reach out if you require any assistance with your applications and merit criteria for your project. Clayton Utz has leading experience in Australian and international offshore wind permitting and unparalleled experience when it comes to dealing with the Commonwealth Government on large-scale energy and infrastructure projects.

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