A billion dollars of taxpayer equity now sits inside a government-owned energy company headquartered on Commercial Road in Morwell, in the middle of the Latrobe Valley’s coal country. That’s the State Electricity Commission, relaunched by the Andrews government in 2022 after roughly three decades in the wilderness following the Kennett-era privatisations of the 1990s. It’s a deliberate address. Morwell watched its power stations close one by one over the past decade, and putting the new SEC’s headquarters there was as much a political statement as a logistics decision.
The SEC’s second life #
The legislation behind the revival, an amendment to the Renewable Energy (Jobs and Investment) Act 2017 (Vic), gives the SEC a mandate to invest in renewable generation and storage with the state holding at least a 51 per cent stake in each project it backs. The initial $1 billion allocation was pitched as a down payment on a target of 4.5 gigawatts of renewable capacity by 2035, financed with equity rather than subsidy. Chair Ross Rolfe, a former Queensland energy bureaucrat, has talked about the SEC operating more like a disciplined investor than the old vertically integrated utility of the Cain and Kirner years. That’s the right instinct. The 1980s version of the SEC ran power stations, coal mines, and half the state’s payroll. This one is meant to write cheques and take board seats, not dig brown coal.
Early deployments have gone into battery storage and firming rather than headline-grabbing wind farms, which tells you something about where the SEC sees the immediate gap. Big batteries are quicker to permit, quicker to build, and easier to model for a return. Wind, especially offshore wind, is none of those things.
What the balance sheet actually buys #
A billion dollars sounds like a lot until you put it against the capital intensity of offshore wind. Star of the South, the flagship project proposed off the Gippsland coast near Wonthaggi and Inverloch, has talked about a first stage in the order of 800 megawatts, with a longer-run ambition well past 2 gigawatts. Industry estimates for offshore wind capital costs, including the CSIRO’s GenCost work, still put it meaningfully above onshore wind and well above utility batteries on a dollar-per-megawatt basis. If the SEC wants a real equity position in Gippsland wind rather than a token stake, the current pool of capital gets used up fast. Victoria’s government has signalled more funding will follow, but so far the promise is bigger than the cheque that’s been written.
Gippsland’s offshore wind zone #
Victoria was the first state to get a declared offshore wind zone off Gippsland, under the Commonwealth’s offshore electricity infrastructure framework, with a second zone declared off the state’s south-west near Portland. Feasibility licences went out to several proponents in the Gippsland zone in late 2023, Star of the South among them, giving developers a window to do the metocean studies, bird and marine surveys, and community consultation that precede a commercial development licence. Victoria’s own legislated targets sit at 2 gigawatts of offshore wind capacity by 2032, 4 gigawatts by 2035, and 9 gigawatts by 2040. Ambitious numbers. Nobody has turned a blade yet, and the 2032 milestone is now uncomfortably close for a technology that has never been built commercially in Australian waters.
I’ve spent time on the Gippsland coast around Inverloch and Venus Bay watching the local debate play out, and it isn’t uniformly hostile the way some coverage suggests. Commercial fishing operators and the Bass Coast tourism lobby have raised legitimate concerns about turbine spacing and shipping lanes. But there’s also a fair amount of local appetite for the jobs, given how much of the Latrobe Valley workforce has already gone through one transition. The comparison worth drawing is with the Illawarra zone in New South Wales, where community pushback has been sharper and the politics messier.
The transmission problem nobody has solved #
Here’s where the enthusiasm runs into physics. Offshore wind off Gippsland needs a landing point, an onshore substation, and a connection into a grid that was built around Latrobe Valley coal stations, not offshore turbines twenty or thirty kilometres out to sea. AEMO’s planning work has flagged the augmentation needed in Gippsland as a genuine constraint, not a formality, and it sits alongside the broader argument playing out over renewable energy zones and who pays for the poles and wires to serve them. Victoria’s transmission build has form for running late; anyone who has followed the Western Victoria transmission project knows approvals and easements can eat years before a single tower goes up.
The comparison with onshore projects is instructive too. Onshore wind and solar can often connect into existing REZ infrastructure with incremental works. Offshore wind generally needs new purpose-built links from a standing start, which is one reason the grid connection question keeps coming up whenever offshore and onshore proposals are weighed against each other.
Where the public ownership model gets tested #
The SEC’s equity model is popular. Polling commissioned around the 2022 relaunch showed strong support for the state having skin in the game rather than leaving the transition entirely to AGL, Origin, and a rotating cast of offshore private developers. Energy Minister Lily D’Ambrosio has framed it as insurance against the sort of gentailer retreat that’s played out elsewhere on the east coast, where companies have walked away from projects when returns didn’t stack up. Fair point. But a 51 per cent equity stake also means Victorian taxpayers carry 51 per cent of the downside if an offshore wind project blows its budget or slips its timeline, which offshore projects overseas have done with some regularity in the UK and continental Europe over the past two years as costs rose.
My honest read is that the SEC model works well for batteries and onshore renewables, where the technology and the cost curve are mature and predictable. Offshore wind is a different risk category, and the state is effectively underwriting a first-of-a-kind industry in Australian conditions. That’s a legitimate role for government capital. It is not a low-risk one, and the public conversation around the SEC hasn’t been honest about that trade-off.
The realistic timeline #
Ask anyone close to the Gippsland projects privately and the 2032 target gets a shrug rather than a confident yes. Feasibility licences don’t become commercial licences overnight, and construction on a marine project of this scale, once approved, typically runs several years. A more honest expectation is first offshore power in Victoria arriving somewhere in the back half of the 2030s, not the front. That doesn’t make the target worthless. Legislated dates focus procurement, force transmission planning forward, and give developers something to underwrite against. But treating 2032 as a load-bearing date for the state’s broader coal-exit planning, alongside the Yallourn and Loy Yang closures already scheduled, is where I’d push back on the current optimism.
Victoria’s summer demand peak still arrives the way a genuinely quick bowler does around Boxing Day: short, hostile, and gone again by the time the rest of the country has settled in. Firming that peak with gas and batteries while offshore wind matures is the unglamorous work the SEC and AEMO both need to keep doing, whatever the ribbon-cutting timeline looks like on Gippsland’s coast.
What to watch next #
The next real signal will be a commercial licence decision for one of the Gippsland proponents, and whether the SEC’s next funding round actually goes into an offshore project rather than another battery. Until then, Victoria has a well-capitalised public energy company with a clear mandate and a genuinely difficult technology bet still ahead of it. The revived SEC has already proven it can write cheques. Whether it can turn Bass Strait wind into delivered megawatts on anything like the legislated schedule is the harder question, and it’s one the next two years of feasibility work will start to answer either way.
– Marcus Wren, Editor
Photo by Robert Thiemann on Unsplash