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Australia’s Victoria plans first offshore wind auction

  • Market: Electricity, Emissions
  • 27/01/26

A tendering process will open in August for 2GW of offshore wind power capacity, Australia's Victorian state government said today, as part of efforts to restart the stalled development of the sector.

The auction will use the proposed Electricity Services Entry Mechanism (ESEM) agreed between federal and state energy ministers to progress Victoria's ambitious plans to replace coal-fired capacity with offshore wind, mainly in the eastern Gippsland region.

Work continues with the industry and the Commonwealth to finalise ESEM's design and Victoria's auction process to ensure a "competitive and successful auction", state Labor energy minister Lily D'Ambrosio said on 27 January.

But underwriting the cost of developing offshore wind based on a yet-to-be determined subsidy scheme creates a risk to taxpayers, federal opposition energy spokesperson Dan Tehan said, citing projects cancelled by firms including domestic utility AGL, Germany's RWE and Spanish developer BlueFloat Energy.

Developer of the 2.2GW Star of the South wind scheme Southerly Ten welcomed the announcement. Its project alone could deliver 10pc of the emissions reduction needed to reach Australia's target of a 62pc cut by 2035, it said.

Failure to progress a terminal to service offshore wind farms after Canberra in 2024 rejected a planned seaport terminal to be built near endangered wetlands at Westernport Bay has stymied plans for turbines.

Two major coal-fired generators in the Latrobe Valley, the 1,480MW Yallourn and 2,210MW Loy Yang A plants, are scheduled to close within a decade. But delays to transmission projects mean renewable energy targets may not be met, according to a December 2025 report from Victoria's auditor-general.


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