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Experts query wind plans costs and timing

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Latrobe Valley Express, 20 March 2024

The state government is accelerating planning approvals for renewable projects as several energy experts have predicted that Victoria’s wind energy will be more expensive and will take longer to meet targets than the government has estimated.

The Premier, Jacinta Allan, last week announced renewable projects will be eligible for an accelerated planning pathway under the Development Facilitation Program (DFP).

“We will cut the red tape holding back projects that provide stronger, cheaper power for Victorians,” she said.

Since 2015, more than one in five applications have ended up in VCAT, the state government says, with about $90 billion worth of investment value stalled in the pipeline.

Under the change, all new renewable projects in Victoria will be treated as significant economic development, making them eligible for an accelerated pathway – removing the planning panel process and third-party appeals at VCAT. Stalled projects will also be able to access the accelerated pathway.

From the time a complete application is lodged, decisions can be made within four months. The government says the voices of communities who want to raise concerns will continue to be protected. Third party objections will still have a place in the approvals process, but “this change prevents time-consuming and repeated delays that hold these projects back for years”, the government says.

A dedicated facilitation team will oversee all renewable energy applications. Projects will be monitored on an ongoing basis to identify blockers earlier and resolve them faster.

However, The Australian reported last week that several experts maintain that the government’s wind plans faced greater obstacles than the recent set backs – the federal veto over the use of the Port of Hastings to assemble wind turbines, and the federal and state’s decision to cut the Southern Ocean wind zone by 80 per cent – 20 per cent of what was originally proposed – so as not to impinge on whaling habitat.

The Victorian government, in its 2022 offshore wind policy directions paper, estimated offshore wind would cost $94/megawatt hour (MWh) to produce in 2026. Victoria’s forward prices for baseload power in 2026 is $58.64/MWh.

However, the CSIRO’s GenCost 2023-24 report estimated that the current cost of offshore wind generation at $146-$190/MWh, falling to $90-$178/MWh by 2030, and $75-$170/MWh by 2050, The Australian reported.

The energy program director at the Centre for Independent Studies, Aidan Morrison, cited offshore wind projects in the US that are costing $US150/MWh – almost $230/MWh.

“Offshore wind will certainly be more expensive than almost every other alternative energy source,” he told The Australian.

“It’ll be more expensive than the coal-fired baseload system that we’re used to.”

The director of the Victorian Energy Policy Centre, Bruce Mountain, said the offshore wind targets would take longer to reach than had been hoped by policy makers.

“Australia in global energy terms is not big, and there’s a great clamour for offshore wind, and developing 1000MW here and there is difficult to attract investors to the scale of operation,” Professor Mountain told The Australian.

Government support “three to four times more than the current wholesale market average prices” would be needed to get offshore windfarms off the ground, he said.

The energy program director of the Grattan Institute, Tony Wood, said global competition for finite resources required to establish the offshore wind industry was likely to make the task “challenging and expensive”.

On the numbers being predicted by the CSIRO and seen overseas, “it would be difficult to bring electricity prices down” via Victoria’s offshore wind plan.

However, he told The Australian that costs of offshore wind and solar production had ended up being significantly lower than initially predicted. Mr Wood said he had never argued that offshore wind would be dramatically cheaper than alternatives, but with the objective to reduce emissions, “it may be that offshore wind has a role to play in that”.

The director of climate change and energy at the AiGroup, Tennant Reed, said a key issue was the policy mechanisms to underpin offshore wind, given it was initially likely to require significant government expenditure. Offshore wind had higher generation capacity than onshore wind and solar, “but the capital cost premium, as far as we can see, is high enough that really they would not expect to make the money that they need back in the wholesale electricity market alone”.

“Unless the Victorian government winds up offering its own financial support contracts, or the federal government develops a greater appetite to spend, these projects aren’t going to happen,” he said.

However, the former chief scientist, Dr Alan Finkel, said the biggest impediment to weaning the economy off fossil fuels was not technical, nor mining.

“It’s earning agreement from landholders and custodians to build the solar farms, wind farms and transmission lines that will deliver renewable electricity to make fossil fuels obsolete,” he said in an opinion piece in The Australian.

“We must build an abundance of solar and wind power generation before we tear down our coal-fired power stations. To do that, we must find a solution to the tension between local environmental protection and the imperative to reduce global greenhouse emissions.”

Victoria aims to produce 2Gigawatts (2000MW) of electricity via offshore wind by 2032, 4GW by 2035 and 9GW by 2040, as part of its renewable energy target of 95 per cent by 2035. The government last week passed legislation to this end that was supported by the state opposition.

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