Australian Financial Review: Coleman to chair ambitious offshore wind start-up
Angela Macdonald-Smith, Senior resources writer, 21 June 2022.
Former Woodside Energy CEO Peter Coleman has been appointed to chair ambitious offshore wind developer Direct Infrastructure to helm its multibillion-dollar plans to become a big player in the growing sector.
Direct aims to develop three huge floating wind farms off the coasts of Victoria, NSW and Western Australia with a combined capacity of between six and nine gigawatts. It is targeting first commercial generation in about 2030 and expects to secure backing from large overseas infrastructure investors.
“These are going to be massive energy and infrastructure projects,” said Jacob Jonker, a former Rio Tinto senior executive who set up Direct 18 months ago with Brendan Warn, a former oil and gas analyst at Macquarie, BMO and Jefferies & Co.
London-based Guy Outen, a former Shell head of strategy, is also joining the board as a non-executive director, further adding to the heavyweight resources-focused leadership team.
“It’s the oil and gas sector, the resources sector which has delivered the largest projects in Australia, and particularly when you think of offshore energy infrastructure, it’s really been in that oil and gas background,” Mr Jonker said.
“You’ve got to go to the heart of the sectors that need to decarbonise to decarbonise Australia, and that’s why we’ve worked together this team to look at offshore wind.”
Mr Coleman, who is has also taken board roles at hydrogen companies Infinite Green Energy and H2EX and at engineering giant Schlumberger since announcing his exit from Woodside in April laat year, said he was convinced offshore wind would play a big role in Australia.
Despite being in its infancy in Australia, the sector was well established and proven in the North Sea in particular, he said. The Gippsland coast was “a natural place to start” with its location close to the existing grid, availability of infrastructure and a workforce used to offshore environments.
“It’s just natural that we’re going to need [offshore wind] at some point. The business model has already been proven elsewhere in the world,” Mr Coleman told The Australian Financial Review.
“I think once you see it start, it will give confidence to more and more customers that this is a real potential solution.”
Legislation was passed by federal parliament last year to allow offshore wind, providing a catalyst for the emergence of several aspiring players following the lead set by the most advanced project, Star of the South. Meanwhile, Victoria has announced aggressive targets for offshore wind, including at least 2 GW of capacity by 2030, 4 GW by 2035 and 9 GW by 2040.
However, the head of the Australian Energy Market Operator earlier this month tempered expectations about the sector here, while the Australian Energy Council has also raised cost concerns about costs.
Still, Direct, which is advised by Miro Capital, is targeting levelised cost of energy production of between $50 and $70 a megawatt-hour by 2030, making it cost competitive considering advantages such as higher availability compared with onshore wind and expected lower transmission losses.
Factors such as increasing turbine size, economies of scale and efficiency digitisation are all expected to help bring costs down to that range, from $150-$180/MWh in 2020.
“Costs can be more competitive than Australian ‘experts’ currently think,” Direct says in an introductory presentation, nothing that offshore wind costs are expected to be just 1.2 times higher than for onshore wind by the mid-2030s.
Mr Coleman. who pointed to the size of offshore turbines of upwards of 15 MW each, said: “I think once you get offshore wind up and running, you will find the marginal cost to get into the grid will be the most competitive of all sources of renewable power.”
“The scaling-up of this industry will drive those costs down,” Mr Jonker said, noting that offshore wind had become the renewables sector with the most rapidly declining cost base compared to onshore wind and solar, where costs declines are plateauing.
Direct’s projects will start with the one in Gippsland, where licences for offshore wind are expected to be granted in the December half, followed by the Hunter project and then Bunbury in WA. Each of the projects will have a capacity of at least 2 GW.
Mr Warn said Direct was lining up global partnerships with technology providers and potential financiers, and was in early talks with customers including big “gentailers” as well as large-scale industrial users looking for scaled-up renewables to reduce emissions.
“That’s why offshore wind is really important because there’s the ability to scale as well as the very consistent generation profile to support Australia’s industries to decarbonise.”