Feasibility licence holders will now bid for government support to establish the offshore wind industry. (Unsplash: Nicholas Doherty)
In long-awaited news for the offshore wind industry, the Victorian government has officially opened its offshore wind auction.
Energy Minister Jaclyn Symes opened the Request for Proposal process for the state's first two gigawatts (GW) of offshore wind.
This will provide enough energy to power about 1.5 million homes each year.
Victorian Energy Minister Jaclyn Symes says offshore wind will provide energy security as the state's coal plants close. (ABC News)
"This auction is a giant leap towards getting Australia's first offshore wind projects built, attracting billions in investment, creating thousands of jobs and delivering the reliable power we need as coal retires," Ms Symes said.
But what does this actually mean and why is this important?
Auctions might bring to mind dozens of property buyers jostling to secure a piece of property on a Saturday morning.
In a similar vein, offshore wind proponents will now bid for government support to help deliver their projects.
The government will assess each bidder based on their ability to deliver on power, and also on value for money.
Successful bidders through the auction will win contracts through what is called the Energy Services Entry Mechanism (ESEM).
The ESEM is a recommendation by the federal Energy Department to encourage new investment in the energy sector.
The auction is designed to provide certainty that projects will be able to sell their electricity later in their life span. (Supplied: National Electricity Market wholesale market settings review, Department of Energy and Climate Change (2025))
To secure investment, renewables projects need to show they are going to make money over the course of their lifespan, which can be decades.
But energy buyers aren't willing to sign deals that far into the future.
