A significant political and energy development is unfolding in Victoria, after the federal government announced expanded support for the creation of Australia’s first offshore wind industry, effectively breathing new life into a project that until recently was considered politically and financially uncertain.
The Victorian government, led by Premier Jacinta Allan, welcomed the decision as an “exciting and positive breakthrough”, saying it offers a second chance to deliver one of the most ambitious energy projects in the state’s modern history. The plan had suffered major setbacks in 2025, when a scheduled auction for publicly funded support was cancelled amid unresolved issues, including port infrastructure and tight construction timelines.
The situation worsened when major energy companies, including Origin Energy, withdrew from the process, citing rising costs, supply chain pressures and restrictive conditions. As a result, Victoria’s strategy to shift away from coal-fired power towards renewables was placed in doubt.
After months of intensive negotiations between the Allan and Albanese governments, an agreement was reached to expand the Commonwealth’s Electricity Services Entry Mechanism to include offshore wind projects. This change has paved the way for a new auction, scheduled for August 2026, restoring the project’s financial viability.
Victorian Energy Minister Lily D’Ambrosio said Victoria has always been determined to host the nation’s first offshore wind industry, describing the ESEM expansion as a critical policy intervention. She said the government is working closely with developers to ensure strong competition, value for taxpayers and the selection of the most viable projects.
Federal financial support, including subsidies to cover administrative and development costs, is seen as essential, with concerns that several of the state’s 11 proposed offshore wind projects could have been abandoned without improved conditions.
The Clean Energy Council welcomed the breakthrough, calling it a crucial step towards moving projects from planning into delivery, while ensuring environmental protections, community engagement and job creation.
Victoria has legislated ambitious targets of 2 gigawatts of offshore wind capacity by 2032 and 9 gigawatts by the 2040s. The August auction is aimed at supporting the first stage of that target, placing a once-stalled project firmly back on the agenda.
