$1 billion. That’s the seed capital Victorians voted to hand back to a publicly owned generator in 2022, resurrecting the State Electricity Commission three decades after Jeff Kennett sold the last of it off. Fast forward to October 2026 and the SEC has a stake in a big battery near Melbourne, a renewable energy fund writing cheques, and a target of 4.5 gigawatts of state-backed storage and generation by 2035. Meanwhile the offshore wind zone off Gippsland, the project meant to be the anchor of Victoria’s whole decarbonisation story, is still sitting in feasibility licences with no turbine in the water and no final investment decision in sight. Two big bets, same state, running on very different clocks.
The honest starting point is that these were never meant to be one project. The SEC revival is about ownership and the capacity to firm the grid as coal leaves. The offshore wind push is about finding enough bulk, high-capacity-factor generation to replace Loy Yang and Yallourn once they’re gone. But in the public conversation they’ve merged into a single “Victoria’s energy plan” narrative, and that’s where the trouble starts, because one half is moving at a reasonable clip and the other is barely moving at all.
What the SEC has actually built so far #
Start with what’s real. The SEC has taken an equity position in battery storage projects and has a renewable energy fund that’s co-invested in wind and solar developments, with the government’s stated ambition of 4.5GW of SEC-backed capacity by 2035 and 2.6GW of that in storage. That’s not nothing – it’s a genuinely different model to the CIS tenders running federally, where government underwrites private capital rather than taking a direct stake. The SEC approach means Victorian taxpayers carry more of the downside risk but also keep more of the upside, including a dividend stream if the assets perform.
Is 4.5GW by 2035 ambitious? Against the scale of what’s retiring, not really. Loy Yang A and B alone account for more capacity than that target on their own. The SEC was never designed to replace coal baseload; it was designed to accelerate storage and firming capacity that the private market was under-building. On that narrower brief it’s doing roughly what it said it would, which puts it ahead of a lot of state energy initiatives that over-promise on day one and spend the next five years explaining the shortfall.
Gippsland’s licences versus a cable in the water #
The offshore wind picture is a different story entirely. The Gippsland zone was declared back in 2022, and several developers hold feasibility licences from the Commonwealth’s offshore infrastructure regulator, but feasibility licences are permission to study the seabed, not permission to build. I covered this in detail in Gippsland offshore wind: the feasibility phase grinds on, and the position hasn’t shifted much since. The projects furthest along are still working through environmental approvals, grid connection studies and the basic economics of running cable from turbines fifty-plus kilometres offshore back into a grid that wasn’t built with that load pattern in mind.
Here’s the bit that doesn’t get said enough in the Melbourne press: offshore wind anywhere in the world takes a long time between zone declaration and first power, and Australia has zero operating offshore wind farms to draw institutional experience from. The UK took the better part of two decades to go from early zones to a mature pipeline. Gippsland is roughly four years into that process. Measured against international timelines it isn’t actually behind. Measured against what Victorian energy planning assumed when it wrote the offshore numbers into its retirement schedule for Yallourn and Loy Yang, it’s a serious problem, because those plants are leaving on a calendar that doesn’t wait for seabed surveys.
Why connection, not construction, is the real constraint #
I’d point readers to onshore versus offshore wind: which one actually connects first for the mechanics, but the short version is that offshore projects in Gippsland face a double queue – marine approvals on one side and AEMO’s connection process on the other, both running in parallel but neither waiving for the other. Onshore wind and solar in the state’s renewable energy zones get built faster largely because the transmission corridors already exist or are closer to completion. Offshore wind in Gippsland needs new onshore transmission infrastructure built specifically to receive it, which means the wind farm and the wires are effectively on the same critical path. Delay one and you delay both.
That’s a genuinely different risk profile to a battery or an onshore wind farm, and it’s one reason the SEC has, sensibly in my view, put its early capital into storage and more conventional renewables rather than trying to backstop offshore wind directly. The government has flagged interest in supporting the sector through things like the Victorian Transmission Investment Framework, but actual dollars committed to offshore-specific infrastructure remain modest next to what’s been pledged to the SEC’s broader portfolio.
The coal exit clock keeps running regardless #
Yallourn is scheduled to close by 2028, and Loy Yang A’s owner AGL has flagged an earlier closure path than originally pencilled in, a point I went into in AGL Energy: the biggest gentailer’s awkward middle act. Those closure dates were set in an environment where offshore wind was assumed to be contributing meaningful gigawatts to the Victorian grid by the early 2030s. If Gippsland slips further, and on current form a slip looks more likely than not, the gap has to be filled by something else: more batteries, more onshore wind and solar, more gas peaking, or life extensions on ageing coal units that nobody particularly wants to pay for.
AEMO’s own Integrated System Plan models offshore wind as a material contributor to the east coast grid by the 2030s, but it also builds in contingency for delay, which tells you the market operator isn’t betting the house on Gippsland hitting its original schedule either. Worth reading the plan itself rather than the press release version. I broke down what it actually says in What the AEMO Integrated System Plan actually says.
A dry note on expectations management #
There’s a cricket analogy here that I can’t resist, briefly: declaring an innings closed before the openers have built a partnership is how you lose a match you were supposed to win comfortably. Victoria’s government has, in effect, set a closing total for coal based on a batting order that includes offshore wind scoring runs it hasn’t scored yet. The SEC is the middle order doing solid, unglamorous accumulation. It’s useful. It’s not going to win the match on its own.
None of which is a case against offshore wind in principle. Gippsland has genuinely strong wind resource and a coastline close to existing transmission infrastructure and a workforce used to energy construction, thanks to decades of Bass Strait oil and gas. The economics work better there than almost anywhere else on the east coast, which is exactly why multiple serious developers are still in the zone rather than walking away. The complaint isn’t that the project is bad. The complaint is that the state’s retirement calendar for coal was written as though the hard part, getting steel in the water, was a formality rather than the main event.
What the SEC can and can’t substitute for #
The SEC’s renewable energy fund has flexibility that a single offshore project doesn’t: it can shift capital between storage, onshore wind, solar and transmission support depending on what’s actually buildable in a given year. That’s a real advantage over a fixed-pipeline bet on one offshore zone. But storage firms existing generation, it doesn’t replace the bulk energy that a retiring brown coal fleet provides. Victoria still needs new, large-scale, reasonably continuous generation sources to come online this decade, and right now onshore wind and solar in the state’s renewable energy zones are carrying almost all of that weight, a pattern I touched on in State renewable targets compared: the honest scorecard.
Clean Energy Regulator data on large-scale generation certificates gives a reasonable proxy for how much new capacity is actually commissioning versus merely announced, and it’s worth checking against the government’s own claims before taking any state energy department press release at face value. Same goes for AEMO’s quarterly reports on connection queue progress: the gap between “in the pipeline” and “generating power” in Victoria’s REZs is still wider than most people assume.
The honest scorecard for Victoria right now #
Where does that leave things heading into 2027? The SEC is a modest but credible public investment vehicle doing roughly what it promised, assuming the capacity targets hold and the dividend assumptions aren’t too rosy. Offshore wind in Gippsland is a strong resource stuck in a genuinely hard approvals and connection process that no amount of state enthusiasm will shortcut. And the coal retirement schedule sits in between the two, written with more confidence in the offshore timeline than the offshore timeline has earned so far.
If I had to bet, Victoria gets its SEC portfolio roughly on schedule and its first commercial-scale offshore turbines spinning later than currently advertised, probably closer to the early 2030s than the late 2020s. That’s not a disaster. It’s a reason to stop treating the two projects as interchangeable in public statements, and a reason for whoever runs Energy and Resources in Spring Street next to start being candid about what fills the gap if Gippsland runs long. Gas peaking, more batteries, or a slower coal exit are the only real options on the table, and voters deserve to hear which one the government is actually planning for.
– Marcus Wren, Editor
Photo by Nikola Johnny Mirkovic on Unsplash