“A lot of the issues happening in the US around the cancellation of some projects have occurred because the period from when the contracts are signed to when projects are getting constructed is so long that costs have blown out due to inflation,” Quan said.

‘The governments have come up with policies that give us confidence that there is a market.’

Albert Quan, Orsted’s head of market development in Australia

“That’s been our consistent message to the Victorian government, and, credit to them, they have really listened to industry and worked closely with everyone.”

Victoria’s world-class wind resource, combined with a strong state government target to source two gigawatts from offshore wind by 2032 and nine gigawatts by 2040, had given companies such as Orsted and other global players the confidence to invest.

“The governments have come up with policies that give us confidence that there is a market – hence why we are here,” Quan said.

“We are confident the [challenges] are things we can resolve – we think the government is heading in the right direction.”

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A Victorian government spokesperson on Sunday said the government was learning from global leaders in the sector to “make sure we get the design of our auction process right”.

Expressions of interest for the first tranche of offshore wind projects will start later this year, before final contracts are awarded later in 2026.

Offshore wind – an energy source that can supply power more consistently and reliably than land-based wind farms – has received strong support from state and federal governments and investors as a way to help compensate for the approaching closures of the majority of the coal-fired power stations along the eastern seaboard over the coming decade.

The federal government this month granted Orsted an immediate feasibility licence for the first of its proposed projects off Gippsland. Other successful applicants included consortiums involving Australian power supplier AGL, investment giant Macquarie, and France’s Engie.

The government signalled it also intended to grant a licence for a second Orsted project in a neighbouring permit area, subject to First Nations consultations.

Under Orsted’s Gippsland “cluster” vision, the company is proposing to develop two wind sites 50 to 100 kilometres off Gippsland with a combined capacity of 4.8 gigawatts.

Victoria’s Gippsland is home to the Latrobe Valley, which houses the state’s three remaining coal-fired generators.

According to Orsted, the two projects could generate up to 6000 jobs during initial development and construction phases in the region, and another 420 ongoing jobs for their 30-year operational phase.

Victorian Energy Minister Lily D’Ambrosio said the government was proud to be paving the way for the nation’s first offshore wind farms that would harness the state’s world-class offshore wind resources while supporting thousands of jobs in the Gippsland region and across the supply chain.

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