Gippsland offshore wind: Less transmission, lower electricity prices
18 March 2026
Study by Jacobs finds Gippsland offshore wind lowers household electricity bills because it reduces the need for new transmission lines
Offshore wind reduces the need for new transmission by over 900 kilometres, which reduces system costs and therefore the price of electricity
Helps keep east coast grid stable as coal exits, generates during the dinnertime peak and reduces wholesale electricity prices in NSW, Queensland and Tasmania
Gippsland offshore wind will lower wholesale electricity prices by reducing the amount of new transmission needed by over 900 kilometres, a National Electricity Market Study by Jacobs and commissioned by Star of the South revealed today.
Reducing the amount of new transmission needed reduces total system costs, the report found. The research measured the total system effects of offshore wind, such as reducing the need for new transmission to be built and reduced fuel costs, which are not typically included in the narrower assessments of technology build costs.
The study modelled having seven gigawatts of Gippsland offshore wind in the grid by 2040 versus a scenario without offshore wind. The study also found that with offshore wind:
There would be a $5/MWh reduction in wholesale price on average across the entire National Electricity Market between 2033-2040, rising to a $15/MWh by 2040 (a $5.2 billion total saving).
Lower household energy bills by $151 a year per typical Victorian household and $84 a year per typical east coast household from 2040 onwards.
Between 500 and 2000 kilometres less transmission (likely 934 km less) required to be built, lower “social licence and landholder compensation costs”, cheaper electricity.
A reduction of $4.9 billion in transmission capital costs.
A further reduction of $1.2 billion in transmission operating costs.
The avoidance of 7.7 GW of REZ transmission capacity augmentations.
At least $2.5 billion of fuel cost savings from reduced gas and hydrogen use at peak times.
Less backup gas in the grid, bringing wholesale electricity prices down.
Reduced wholesale electricity prices in other states, including Queensland, because of the increased energy supply during the evening peak.
Offshore wind is perfectly matched to the dinnertime energy use peak. Onshore wind comes online after the dinnertime peak and solar generation reduces before it.
Offshore wind can help fill gaps during winter and summer peaks to meet seasonal electricity demand.
The study found that without offshore wind:
The electricity market must rely on an additional 8.3 GW of onshore wind capacity by 2040, primarily built in “increasingly constrained Renewable Energy Zones” in Victoria, New South Wales, and Queensland. This requires new transmission, in addition to all the transmission currently underway and planned to be built.
An extra 3.4 TWh of gas is required by 2040, costing $2.5 billion in fuel and raising the price of electricity (the true cost would be higher as the report’s figures do not include the cost of obtaining and maintaining adequate gas supply, only the running costs).
Victoria becomes a net importer of electricity from other states in the mid 2030s.
The study used standard figures and documents: AEMO’s Integrated System Plan, CSIRO’s GenCost report, and the AEMO step change figures. The work was commissioned by Star of the South.
QUOTES ATTRIBUTABLE
Nexa Advisory CEO, Steph Bashir: “Offshore wind can play an important role in strengthening system reliability and diversifying Australia’s renewable mix — but projects need urgent cross-government support to move forward.
“And offshore wind shouldn’t come at the expense of onshore wind. Australia needs all forms of renewable generation.
“Delaying key infrastructure only forces Australia to rely on more expensive options like gas — and that ultimately costs families and businesses.”
“Prioritising essential infrastructure is critical to ensure the clean energy transition is coordinated, cost-effective, and keeps power secure, reliable and affordable for Australians.”
Farmers for Climate Action CEO, Verity Morgan-Schmidt: "Transmission on farmland has become the toughest part of the clean energy shift.
"While many farmers are eager for the diversified and drought resilient income that hosting solar and wind projects provides, transmission presents unique challenges and as an essential part of the clean energy shift needs to be done in a way that works for farmers, rural communities and nature.
"Gippsland's offshore wind zone is close to existing transmission in a region where coal is closing over the next decade. If offshore wind means we build less transmission and get projects built faster, then great. We need big-scale generation in the mix to replace coal and gas during the dinnertime energy use peak and into the night, and, done well, offshore wind is really well suited to that.
"Farmers for Climate Action and the 8000 farmers we represent will keep pushing for deep emissions reductions this decade, and that means we need to replace coal and gas as quickly as we can practically do so.”
Jacobs Senior Director of Energy and Power APAC, Aaron Hochwimmer: “Our study found Gippsland offshore wind can reduce the need for new transmission and gas while helping lower electricity prices. With strong evening and winter generation and proximity to major demand centres, offshore wind can play an important role in supporting a reliable and affordable electricity system.”
Star of the South CEO, Charles Rattray: “The study shows offshore wind produces big benefits for the entire grid. Offshore wind is a steady hand which generates power most strongly during winter and evening peaks, and when families need it most.
“Using Gippsland’s natural strengths can boost our energy security and prevent overusing our backup gas by 3.4 TWh by 2040, saving $2.5 billion in fuel costs. We know gas is a finite resource. Offshore wind helps give our National Electricity Market independence from volatile global gas and oil prices. As the owners of coal power stations close them down, we need a mix of energy supplies all doing their bit for the National Electricity Market.”
Clean Energy Council Chief Policy and Impact Officer, William Churchill: “We need a mix of clean energy generated at different times of the day, and offshore wind is a key part of that. Offshore wind would supply lots of electricity at dinnertime when lots of people are using it, as well as creating thousands of jobs for tradies, concreters and truck drivers in Gippsland as coal hands over to clean energy.”
QUOTES FROM THE REPORT
Two scenarios were modelled in this study to assess the comparative benefits from offshore wind to the NEM:
• A scenario without offshore wind, in which offshore wind does not form part of the generation mix.
• An offshore wind scenario, in which 7 GW of offshore wind is developed in Bass Strait, off Gippsland, by 2040.
“Offshore wind reduces overall system costs, through reduced transmission investment, lower fuel expenditure, and avoided social licence costs.”
“Offshore wind provides reliability benefits by being able to generate during periods of low onshore renewable generation coinciding with high demand.”
“Offshore wind improves system resilience during onshore renewable droughts and reduces reliance on last- resort peaking plants.”
“Offshore wind has higher capacity factors, stronger correlation with winter and evening peak demand.”
“The study finds that offshore wind creates an average annual wholesale savings of $1.6 billion, from:
A $5/MWh reduction in wholesale price on average across the NEM, between 2033–2040.
An annual reduction in wholesale price in 2040 by:
$15/MWh on average across the NEM.
$26/MWh in Victoria.
An annual electricity bill savings (by 2040) of:
$84 per annum for a typical east-coast Australian household.
$151 per annum for a typical Victorian household.”
“Offshore wind in Gippsland connects close to major load centres, reducing the need to transport energy over long distances.”
“Reduced transmission investment is the largest contributor to system cost savings under the Offshore Wind scenario.”
“Offshore wind reduces exposure to land access and social licence constraints. As high-quality onshore renewable projects become saturated, new projects face increasingly higher costs from difficulties in obtaining land, more complicated planning approval arrangements, or extended engagement with community and traditional landowners. Offshore wind in Gippsland avoids $0.6 billion in social licence costs which would have otherwise been incurred from new onshore projects.”
“In the no offshore wind scenario, there is an increased reliance on imports from other regions, becoming a net importer from the mid-2030s. Increased imports to Victoria in this scenario are largely from NSW and Tasmania, relying on greater utilisation of Marinus Link and VNI West.”
“Offshore wind can reduce gas-fired generation volumes due to higher capacity factors than onshore wind, and stronger generation during winter and evening periods when demand is high.”