The Victorian offshore wind auction is live

The Request for Proposal (RFP) stage of Australia’s first offshore wind auction opened in Victoria on 26 August 2026. 

The RFP stage relates to the delivery of 2GW of offshore wind in two declared offshore wind zones in the Bass Strait off Gippsland and the Southern Ocean off western Victoria.

The RFP stage will run for 12 months and contracts are expected to be awarded in 2028.

A formal tender documentation package has not yet been published for proponents, including regarding registration and guidelines for the RFP stage.

The new Minister for Energy and Resources, Jaclyn Symes, announced that the support contracts are “expected to be integrated into” the national Electricity Services Entry Mechanism.¹ 

Bidders will be assessed on “value for money, deliverability and benefits for local workers, businesses and communities”.

It is not yet known how the Commonwealth and Victorian governments will divide the financial contributions to fund this scheme. 

Electricity Services Entry Mechanism

The Electricity Services Entry Mechanism (ESEM) is intended to replace the Capacity Investment Scheme from 2027. It is currently under development by an Industry-led Electricity Contract Co-Design Working Group, as such template contracts for the offshore wind auction are not yet publicly available. 

In May 2026, all NEM jurisdictions except Queensland agreed to develop a legislative package for the ESEM regime. There was some suggestion from the Energy and Climate Ministerial Council that the proposed ESEM legislative package could provide for the transfer of Victorian offshore wind support contracts from a pre-existing support scheme to the ESEM scheme. However, the recent announcements from the Department of Energy, Environment and Climate Change have not provided any information about an alternative contracting scheme for this offshore wind auction. It therefore seems likely that successful bidders will be awarded ESEM contracts. 

AusEnergy Services (ASL) advises that recommended commercial contract term sheets for the ESEM regime are expected in November 2026 with template contracts to follow in 2027.² 

There is also expected to be a consultation package in September – October 2026 with respect to amendments to the National Electricity Law and National Electricity Rules to implement the ESEM regime.³

The Industry-led Electricity Contract Co-Design Working Group released high level indicative term sheets for the ESEM contracts for industry consideration ahead of the consultation package. ⁴

The Bulk Energy Services Agreement is structured as a ‘regional reference PPA’, which is a contract for difference where the fixed price is settled against the volume generated by a ‘reference fleet’ of generators. This is a novel approach to offtake settlements, which are typically settled against the actual generation of the relevant facility. The reference fleet regime is still under consideration by the working group. The tenor is expected to be fixed and not designed as a series of options. The indicative term sheet also considers the use of ISDA documentation.

The implementation of the ESEM was recommended by the National Electricity Market wholesale market settings review report.

ASL is holding a webinar update on the Electricity Contract Co-Design Update on 1 September 2026. More information is available here.⁵ 

Social Licence Obligations

Implementation Statement 4, released by Offshore Wind Energy Victoria in April 2025 during the Request for Information stage of this offshore wind auction, states that the social impact obligations for successful projects will include requirements to:⁶

• commit to local content requirements;
• propose initiatives for supporting the participation of women, the First Peoples of Victoria and disadvantaged Victorians; and
• meaningfully engage with, and enter into genuine partnerships with Traditional Owners.

It is expected that successful projects will also need to comply with regimes including the:

• Victorian Social Procurement Framework and Local Jobs First Policy; 
• Victorian Energy Jobs Plan; and
• Women in Energy Strategy.

Transmission Infrastructure

VicGrid is coordinating the development of the transmission infrastructure necessary to connect 2GW of offshore wind in Bass Strait to the grid. This follows the transition of the transmission network planning function for Victoria from AEMO to VicGrid in November 2025.

The underground cables from the offshore wind project(s) are intended to pass through the Gippsland Shoreline Renewable Energy Zone (REZ) declared in May 2026 and connect to the Loy Yang Power Station switchyard.

VicGrid is due to appoint a development partner to develop and operate this transmission infrastructure this year. 

The transmission planning for the declared offshore wind zones in the Southern Ocean off western Victoria has received less attention. A shoreline REZ has not been declared, however, Implementation Statement 4 states VicGrid is “considering” the transmission needs and the 2025 Victorian Transmission Plan includes upgrades to onshore transmission infrastructure from Heywood to Portland to support the connection of offshore wind projects.⁷

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1. ^ https://www.premier.vic.gov.au/offshore-wind-powering-ahead
2. ^ https://asl.org.au/news/media-release/260506-sector-experts-selected-to-co-design-contracts-for-esem
3. ^ https://www.dcceew.gov.au/sites/default/files/documents/irg06-meeting-presentation.pdf
4. ^ https://asl.org.au/-/media/services/files/nem-review/260812-attachment-4-draft-high-level-product-sheets.pdf?rev=f6c3e204bb37426cb8a516c2cba5604d&sc_lang=en
5. ^ https://asl.org.au/tenders/industry-led-electricity-contract-co-design Those interested may need to subscribe to ASL’s mailing list to attend. 
6. ^ https://www.energy.vic.gov.au/__data/assets/pdf_file/0026/745235/Offshore-Wind-Energy-Victoria-Implementation-Statement-4.pdf
7. ^ https://www.vicgrid.com.au/__data/assets/pdf_file/0032/761396/2025-victorian-transmission-plan.pdf