By Peggy Shu-Ling Chen, Associate Professor in Logistics and Supply Chain, Australian Maritime College (AMC), University of Tasmania; Stephen Cahoon, Professor in Logistics and Supply Chain, Australian Maritime College (AMC), University of Tasmania; Hongjun Fan Postdoctoral Research Fellow, Australian Maritime College (AMC), University of Tasmania and Blue Economy Cooperative Research Centre; Marcus Haward, Professor in Oceans and Antarctic Governance and Marine Resources Management, Blue Economy Cooperative Research Centre and Institute for Marine and Antarctic Studies (IMAS), University of Tasmania
All of Australia’s six identified offshore wind areas have now been formally declared[1]. Thus far, 12 feasibility licenses have been granted for Gippsland, totalling a possible capacity of 25GW[2]. Assuming a 40% capacity factor, this 25GW could produce approximately 87.6TWh per year, which accounts for 32.1% of Australia’s total 2023 electricity generation of 273.11TWh, of which 65% (177.14TWh) relies on fossil fuels[3]. As offshore wind capacity grows, it offers a clear pathway to reduce fossil fuel reliance. However, a robust and resilient supply chain is crucial to realise this transition, and Australia faces supply chain challenges.
Related article: AEMC report examines barriers to offshore wind in Australia
Offshore wind supply chain
Once a final investment decision (FID) for an offshore wind project is completed, the offshore wind supply chain progresses through the four stages identified in Figure 1, which forms the basis of our research.
Demand: a case study
To quantify the demand for Australia’s offshore wind supply chain, we developed an analysis model based on three clusters: Cluster 1 (NSW waters), Cluster 2 (Bass Strait and Southern Ocean), and Cluster 3 (near Bunbury, WA). Cluster 2, encompassing Victoria and Tasmania, was chosen as a case study, given its advanced project timelines compared to the other clusters.
Victoria’s installation targets are 2GW by 2032, 4GW by 2035, and 9GW by 2040. Although Tasmania has yet to establish official targets, preliminary project goals from developers like Nexsphere and TasRex in northern Tasmanian waters are used as estimates[4, 5]. Table 1 presents the combined targets considered for Cluster 2.
Table 2 shows the projected supply chain demand for low, medium, and high installation targets for 2032, 2035, and 2040, based on the current developers’ views of using fixed-bottom wind turbines. It assumes 18MW per unit until 2035, and 22MW per unit from 2036 to 2040.
Supply challenges
Components
Under the medium target scenario in Cluster 2, cumulative WTG demand is projected to rise from 195 units in 2032 to 609 units by 2040. Annual installation needs for WTGs are calculated to reach 39 units per year (0.7GW total) from 2028 to 2032, increasing to 48 units per year (0.85GW total) from 2033 to 2035, and reaching 54 units per year (1.19GW total) from 2036 to 2040.
The GWEC’s Global Offshore Wind Report 2023 highlights global nacelle production capacity at 27.4GW, with China holding 55%, Europe 35%, and the rest divided among other APAC regions and North America[6]. While global capacity may appear sufficient to meet Australia’s demand, demand pressures in key manufacturing countries pose a challenge.
Europe’s demand will surpass its 2023 capacity by 2026, China will reach capacity balance by 2026, and APAC and North America are likely to face shortages between 2025 and 2027. Blade production also sees heavy concentration in China (60%), with smaller shares in Europe, India, and North America. Australia’s modest market may see lower priority from global suppliers, emphasising the need for domestic manufacturing to mitigate long-term supply chain risks.
Australia currently has no nacelle or blade manufacturing capabilities. In Geelong, Vestas operates a turbine assembly plant supporting onshore wind projects[7], however, this facility lacks the capacity to support offshore wind development. Establishing a domestic supply capacity for offshore wind components would require substantial investment. According to Schlink[8], companies would consider investing in local manufacturing only if annual installations reach at least 2GW—a challenging scale for the Australian market.
Australia has some capabilities in steel component manufacturing, with firms like Victoria’s Keppel Prince Engineering (KPE) and Tasmania’s Haywards having experience in producing onshore wind turbine towers. However, KPE has recently ceased operations[9]. However, offshore wind components are considerably larger, requiring expanded production equipment and facilities. For instance, onshore towers are roughly four metres in diameter, whereas 18MW offshore turbines require towers between seven and 10 metres.
Interestingly, Victoria appears to have the only local content recommendations advising to maximise local content for the construction phase, but specifying an 80% local content requirement for operations and maintenance[10]. While local content requirements could stimulate domestic supply chain development and reduce risk, they may also hinder initial progress.
Ports
Some Australian ports are making plans to support offshore wind construction, including Geelong Port and TasPorts that have unveiled their plans[11.12]. The optimal transport distance between a port and an offshore wind farm is approximately 120–200 nautical miles (roughly 220–370km)[11]. For Cluster 2, four ports—Geelong, Hastings, Bell Bay, and Burnie—are within 200 nautical miles of the Bass Strait offshore wind area, making them suitable for a collaborative port strategy.
Ports must prepare for the growing size and weight of wind turbines, which will significantly affect storage space, load-bearing capacity, and quayside infrastructure. However, insufficient investment, which requires support from federal and state governments, and lengthy environmental approval processes are the major challenges to ports’ development. These challenges add uncertainty to the development timelines of ports that will impact the on-schedule delivery of Australia’s offshore wind projects.
Vessels
As shown in Figure 2, fixed-bottom and floating offshore wind turbines require different types of vessels. The main challenge in vessel availability lies with wind turbine installation vessels (WTIVs) and heavy lift vessels (HLVs) for installation of foundation structures. These ultra-large vessels cost $300-400 million each and take about three years to build. Due to this investment, shipowners often seek long-term charter contracts before committing to build. According to GWEC’s 2024 report[12], the limited number of WTIVs makes them highly sought in the charter market as only 160 are in operation or planned worldwide.
Australian offshore projects are expected to deploy large wind turbines with capacities of 16-22MW, featuring nacelle weights between 759 and 1,187 tonnes. Of concern is that currently, only 102 vessels worldwide can lift over 800 tonnes, including those on order, with nearly all already under contract. A major challenge for Australian projects is securing WTIV charters before FID to avoid delays from vessel shortages. Large international developers with extensive resources may navigate this challenge, but local developers need early preparations to mitigate risks.
Operational planning for O&M vessels is also critical. If SOVs are required, preparations should start two to three years before project operations. A single SOV costs around $70 million. While crew transfer vessels (CTVs) could be used as an alternative to SOVs, this would require a larger fleet of CTVs.
Workforce
For Cluster 2, the medium target scenario (Table 2) shows construction labour growing from 420 FTE jobs annually in 2032 to 713 FTE by 2040. O&M labour demand rises sharply, from 1050 FTE jobs in 2032 to 3,600 FTE by 2040. Industry stakeholders suggest that as the fossil fuel sector phases out, its workforce could transition to renewable energy. However, the skillsets required for these two sectors differ significantly, making workforce planning and training critical to meet offshore wind labour needs.
Recycling
From a circular economy perspective, offshore wind projects should plan for the recycling and reuse of decommissioned components from the earliest stages. Circular economy practices are also a key criterion in project approvals. Metal components, like nacelles, towers, and foundations, are relatively straightforward to recycle, however, blades still pose a greater challenge.
Recommendations
To address the identified challenges, the following recommendations are proposed:
- Domestic supply chain: Establishing a domestic supply chain for offshore wind components is essential. Collaboration between government and industry to achieve greater certainty can foster investor confidence and drive supply chain development.
- Port development: A two-pronged approach to port infrastructure investment is recommended for both fixed-bottom and floating projects. First, immediate action should focus on funding facilities capable of supporting initial commercial deployments with minimal upgrades, enabling gradual expansion to specialised or larger multi-use ports over time. This approach would ensure early project deployment, stimulate commercialisation, and attract future investment. Second, investment should target key ports, developing them as (1) large-scale integration hubs for the region, and (2) optimal sites for manufacturing and assembly.
- Vessel availability: Although large international developers with broader resource networks can leverage their assets to ensure vessel availability, local Australian developers should plan proactively for new builds or chartering options, potentially adopting flexible financing strategies to mitigate investment risks.
- Workforce development: Given commencement of offshore wind construction around 2028–2030, establishing training programs now is critical for key trades including coastal seafarers. Collaborations with vocational institutions and universities could facilitate the development of specialised courses.
- Recycling: Cost-effective methods to recycle or repurpose blades, including potential reuse in construction as structural elements, require urgent attention as this may determine future suppliers.
In conclusion, proactive planning and collaborative efforts across supply chain sectors will be instrumental in establishing Australia’s offshore wind industry.
Related article: New offshore wind zone declared in northern Tasmania
Acknowledgement: The authors anowledge the financial support of the Blue Economy Cooperative Research Centre (BECRC), established and supported under the Australian Government’s CRC Program, grant number CRC-20180101. The CRC Program supports industry-led collaborations between industry, researchers, and the community. This work draws on findings from BECRC project 5.22.001—Pre-conditions for the Development of Offshore Wind Energy in Australia, specifically Work Package 3: Logistics and Supply Chains. Furthermore, the authors would like to thank the industry participants for their valuable contributions to this research.
References: [1] Australian Government. Australia’s offshore wind areas. 2024.Retrieved from https://www.dcceew.gov.au/energy/renewable/offshore-wind/areas.
[2] Australian Government. First round of offshore feasibility licences granted. 2024.Retrieved from https://www.dcceew.gov.au/about/news/first-round-offshore-feasibility-licenses-granted.
[3] Australian Government. Australian Energy Statistics, Table O Electricity generation by fuel type 2022-23 and 2023. 2024.Retrieved from https://www.energy.gov.au/publications/australian-energy-statistics-table-o-electricity-generation-fuel-type-2022-23-and-2023.
[4] BOWE. The Bass Offshore Wind Energy project (BOWE). 2023.Retrieved from https://bassoffshorewindenergy.com.au/.
[5] TasRex, Government T. MOU between TasRex and The Crown in Right of Tasmania. 2023.Retrieved from https://www.stategrowth.tas.gov.au/__data/assets/pdf_file/0003/456609/TASREX_MOU_April_2023.pdf.
[6] Williams R, Zhao F. Global offshore wind report 2023. Brussels, Belgium: Global Wind Energy Council; 2023.Retrieved from https://gwec.net/gwecs-global-offshore-wind-report-2023/.
[7] Advanced Fibre Cluster Geelong. Vestas Renewable Energy Hub opens in Geelong. 2019.Retrieved from https://www.advancedfibrecluster.org.au/news/vestas-renewable-energy-hub-opens-in-geelong/.
[8] Schlink S. Wind turbine manufacturing resumes in Australia. 2019.Retrieved from https://www.holdingredlich.com/wind-turbine-manufacturing-resumes-in-australia.
[9] Vorrath S. Australia’s only wind turbine tower maker to close shop, prompts Coalition to ignore its own history. 2024.Retrieved from https://reneweconomy.com.au/australias-only-wind-turbine-tower-maker-to-close-shop-prompts-coalition-to-ignore-its-own-history/.
[10] Victoria State Goverment. Offshore Wind Energy Victoria Implementation Statement 3. 2023.Retrieved from https://www.energy.vic.gov.au/__data/assets/pdf_file/0026/691181/Offshore-Wind-Energy-Implementation-Statement-3.pdf.
[11] KPMG. Analyse af havnekapacitet i relation til udbygning af dansk havvind. 2023.Retrieved from https://cipfonden.dk/wp-content/uploads/2024/04/Kapacitetsanalyse-december-2023-KPMG.pdf.
[12] GWEC. GLOBAL OFFSHORE WIND REPORT 2024. 2024.Retrieved from
https://gwec.net/wp-content/uploads/2024/06/GOWR-2024_digital_final_v2.pdf.
