Emerging Offshore Wind Markets: Australia’s Auction Reset and France’s PPE3

Intro (00:00):
Welcome to Power Pod, the renewable energy podcast from TGS 4C, a leading provider of offshore wind intelligence. In each episode, we explore the key developments shaping the offshore wind market and bring clarity to the biggest trends shaping the industry and the wider energy transition.

Jamie Bernthal-Hooker (00:23):
Hello, and welcome to another episode of PowerPod from TGS 4C. My name's Jamie Bernthal-Hooker, but today I'm going to hand you over to my colleague, who you may remember from previous episodes, Dan Wiseman, who's going to be heading up many of these episodes going forward. In today's episode, Dan is talking to his fellow analyst, Aruneesh Lakshmanavelu, and they'll be talking about the market in Australia. Really looking forward to hearing their insights on what's happening on the other side of the world, so let's get started.

Dan Wiseman (01:03):
Welcome to the podcast, Aruneesh. Why don't you start by just telling us a little bit about yourself and then what you do here at TGS 4C?

Aruneesh Lakshmanavelu (01:12):
Yeah, cheers, Dan. Hi everyone. I am Aruneesh. I'm the APAC analyst in TGS 4C. We'll be looking at all of the offshore markets around the APAC region, so that covers Australia, New Zealand, Philippines, South Korea, India, and I also have my—my hand in France actually, as well. So, APAC plus France. So I'll be looking at that. And I'm also the floating analyst, as well. So, I'm looking at floating wind globally.

Dan Wiseman (01:46):
Great. And, Australia and France are going to be the two main talking points today. We'll start with Australia because they seem to be in the middle of quite an interesting time in—in offshore wind, there specifically. Why don't you talk us through what's—what's going on in Australia at the moment?

Aruneesh Lakshmanavelu (01:59):
Sure. Yeah, so Australia actually recently announced the relaunching of their first offshore wind auction back in January 2026. And now this is scheduled for August 2026, so later in the year. So actually, this auction was set to go ahead back in September 2025. But this was actually postponed by the government for a number of reasons. One of them was high interest rates and a lot of sector-specific obstacles, such as the supply chain constraints that they faced. Also, along with the material costs and a lot of unfavorable political landscape. This kind of shifted the global outlook on offshore wind, obviously, and created a lot of uncertainty.

There was also a lot of uncertainty in their funding mechanism. There was uncertainty around the long-term federal involvement and any final financial backing in offshore wind projects. And then, kind of, these developers without really knowing whether the state or federal government was going to be involved and sitting behind these contracts that they were offering, I think the developers were kind of gradually losing confidence. So right up to now, there's like quite a couple big, big projects that kind of gave up their feasibility licenses. So that's Gippsland Dawn and Kent Offshore Wind, and Gippsland Skies. Yeah, all of these projects surrendered their licenses up to now.

So yeah, it was a rocky couple months at the near the end of 2025. But now they seem to have got everything sorted and relaunched for August 2026.

Dan Wiseman (03:47):
So, it looks like they're having a couple of teething issues. I think that's been quite a common theme with a lot of emerging markets, for sure. But what you were talking about the—the finance side of things, does Australia have a—a proper offtake structure in—in place for these wind farms?

Aruneesh Lakshmanavelu (04:02):
So yeah, as I mentioned before, there was a lot of uncertainty with this offtake in the previous release of the auction. But actually, in early 2026, the Victoria state government as well as the federal government agreed to include the offshore wind framework in their Electricity Services Entry Mechanism. So this mechanism basically creates contracts, and they function as two-way CfDs. Which is actually slowly becoming the industry standard now across the globe, that is.

But the interesting thing is the current structure of the ESCM contracts basically only come into effect between years 8 and years 15 of a project's generation. And so, the revenue that they need to get prior to the 8th year, 8th year, and then after the 15 year is basically have to be obtained directly from market. Now, obviously we know that offshore wind is very finance-intensive, and they need a lot of the revenue to start from the get-go, whereas this sort of ESCM framework doesn't really cover this and doesn't see offshore wind at all. The good thing is that the ESCM structure is actually being revised right now for specifically for offshore wind. So, we should expect the structure to change soon, so it won't just be for the years 8 and 15 in between. It should cover 20 years or 25 years.

Dan Wiseman (05:40):
Okay, so that brings it kind of nicely in line with other kind of European markets that rely on CfDs, which, like you said, is becoming kind of an industry norm because that must be kind of difficult for developers to have any confidence in the market if they're having to wait for eight years to start seeing some payout from it.

So, back to the initial point you were making about bottlenecks, we know that worldwide, ports have always been a concern, and that seems to be even more so in Australia, doesn't it?

Aruneesh Lakshmanavelu (06:06):
Yeah, so ports has been a bit of a pain for the—for the Victorian government. So back in early 2024, they actually originally had plans to build a wind turbine plant, but this was blocked by the Federal Environmental Minister. This was for the Port of Hastings, so it was a terminal that they'd planned out, and the idea of this port was to kind of facilitate the construction and delivery of up to a gigawatt worth of energy offshore wind per year. And now the Environment Minister rejected it because of concerns surrounding the impact on the wetlands around that area.

And this obviously creates a massive bottleneck if they don't have the port infrastructure. But since the port rejection, the Victorian government have actually resubmitted a modified proposal back in June 2025. And now that's kind of that's kind of under the Environment Protection Biodiversity Conservation Act. So, this proposal is reducing the dredging volume a lot, and it reduces the size of the terminal as well, so it reduces the overall impact on the environment. So yeah, we should hopefully see that approval get approved, basically, and that hopefully will bring a bit more confidence back into the sort of supply chain and bring about an end to the bottleneck.

Dan Wiseman (07:44):
And is it just this port that's been affected, or how are ports looking like for Australia in general? Is it more localized because of the areas in which they're looking to develop offshore winds?

Aruneesh Lakshmanavelu (07:53):
Yeah, so the offshore wind is mainly around the Gippsland area, so this port is kind of quite key part in the in the sort of development around that area, just south of the Victorian coastline.

Dan Wiseman (08:08):
So, yeah, I guess that's going to be a case of they'll cross that bridge when they come to it, I suppose. In terms of the capacity, I mean, is there much competition from developers in bidding for these areas?

Aruneesh Lakshmanavelu (08:21):
Yeah, so if we look at all the sites and the wind farms around that Gippsland area, the ones that have feasibility licenses, the actual capacity adds up to about 20 gigawatts, which is actually a massive amount.

Dan Wiseman (08:35):
Quite a fair amount, yeah.

Aruneesh Lakshmanavelu (08:36):
Yeah. But if we look at the—the proposal that's put out by the Victorian government, they're looking to really only allocate 2 gigawatts in this tender. So, there is a big chance of oversubscription being possible.

Dan Wiseman (08:52): So, I mean, 2 gigawatts sound like a reasonable amount to auction off, especially as a first auction, as well. Has it garnered much interest from specific developers? Has anybody come out to say that they're actually interested in these areas?

Aruneesh Lakshmanavelu (09:05):
Yeah, so the projects that do have feasibility licenses in that area are actually quite big names. So, we've got the likes of Ocean Winds, Ørsted, CIP, Iberdrola, JERA, Nex, and BP—that joint venture, as well. So, there's, yeah, there's a lot of activity, and there's a lot of big—

Dan Wiseman (09:27):
Big names.

Aruneesh Lakshmanavelu (09:28):
Yeah, there's a lot of big names in this area. Well, within this, I think there are certain sites that are very much more favorable and they do seem to be the frontrunners of this auction. So it'll be interesting to see which developers will be winning in this one. One thing to mention is Corio actually do have a project in this in this auction, or in with a feasibility license, sorry. But obviously we know that Corio have now disbanded and no longer are in offshore wind. So, it'll be interesting to see who do they sell this of this project off to.

Dan Wiseman (10:14):
Yeah, and I think this is going to be a good test to see if buying it is worth it, as well. We've seen in a lot of emerging markets where some developers have backed out, it's been quite difficult to sell your stock because, you know, you're selling something in an unproven market. So, if we don't see it prior to these auctions, maybe afterwards, as well.

So, another thing, as of recent news, we've read about Engie looking to take a deal with the US government to exit offshore winds. Obviously politics are playing a big part in renewable energies, and we're seeing that not just in the US, but in other countries as well. How strong is state support for offshore wind? Is it likely that although Engie are going to be pulling out of offshore wind potentially in the US, the Australian structure is going to be more favorable for them?

Aruneesh Lakshmanavelu (11:03)
So out of all of the states in Australia, Victoria has basically the only one that has a solid framework. So as far as state support, I think Victoria basically has the only chance as of right now to produce anything worthwhile for developers. Obviously, there's been lots of improvements since that previous auction got cancelled. The Victorian government has been working with the state government, sorry, the federal government to try and create more favorable terms and better, you know, offtake mechanism as well. So, it's good to know that they are—they acknowledge the fact that they didn't have the best terms in that previous auction.

Dan Wiseman (11:49):
Yeah, and I guess it's the same with everything. It's always trial and error. And with offshore wind still being a relatively nascent industry, it's hard to take cues from other markets when, you know, they are finding their feet as well. So, hopefully from what you said about them revising their offtake structure, they're listening to what developers are saying and they're rectifying issues that are there.

Where does that leave Australia's future for offshore wind? What are you seeing as the key milestones that are coming up for the sector?

Aruneesh Lakshmanavelu (12:21):
So obviously we've got the first one, that's in Q3 2026. We expect the auction to go ahead. Shortly after that in Q1 2027, we hope to potentially see offtake being awarded, as well as the port construction to start. So obviously this depends on if the port proposal gets accepted by the federal government. But we would expect port construction to start around this time. 2030 is around the time we expect port operations to begin and start developing 1 gigawatt a year. And that brings us on to 2032, which is Australia's target to reach 2 gigawatts of offshore wind.

Dan Wiseman (13:16):
And do you think that's feasible? What—I mean, obviously our job here is to analyze whether these milestones are reachable. What's the general feeling from an analyst point of view of these milestones and how achievable they are for Australia?

Aruneesh Lakshmanavelu (13:30):
I think considering it is offshore wind is quite a new thing in Victoria and in Australia, so things aren't going to go perfectly. I mean, they rarely do in offshore wind. So, I would obviously expect some delays in certain areas. But they've given themselves enough time, and I think they're building themselves a good framework to begin with anyway, so that should help not cause as many delays. But it's hard to say that they are going to reach but it is going to be a tough one since it is an immature market.

Dan Wiseman (14:18):
Yeah, and I hope their ambitions can drive them forward and meet these milestones. So, I want to move over to another market of yours, France, who are obviously more established than Australia. We've seen recent news of turbines switching on. We've seen changes in capacity targets; we've seen changes to auctions. So, what's going on in France at the moment?

Aruneesh Lakshmanavelu (14:41):
France actually have been making big moves. So back in early February, I believe, they released their PPE 3, so their energy plan. It was kind of a like a notice of their energy plan. So, within this, there was quite some big information on offshore wind. The first of which was they actually cut their 2035 offshore wind target by 3 gigawatts. So that went down from 18 gigawatts to 15 gigawatts for 2035. But then the original 18 gigawatt target has actually moved to 2037. So instead of a cut down on their targets, they've more kind of shifted the timeline couple years. So it's not really massively negative news on their on their half.

Dan Wiseman (15:37):
Okay.

Aruneesh Lakshmanavelu (15:38):
They’ve quoted this kind of shift in timeline mainly due to the flexibility of their electricity grid. So, this shift in timeline from 15 gigawatts, 18 gigawatts to 15 gigawatts actually is credited to the nation's electricity grid because of a lot of inconsistencies in electricity generation from wind farms, mainly caused due to the weather conditions and supply and demand. This has caused a lot of negative electricity prices recently. So, to reduce that impact on the grid, farms that were won in AO 1 have all managed to amend their power purchase agreements. So, what they are now can do is shut down their wind farms in cases of negative pricing.

Dan Wiseman (16:32):
So, is that something that's come into play already? Are they already kind of under this stipulation that they can shut down?

Aruneesh Lakshmanavelu (16:37):
Yeah, they signed the contracts already, yeah. I think the government went to them and then they did it voluntarily.

Dan Wiseman (16:44):
And I guess it makes sense from a developer point of view, as well, because it is a very volatile energy source, offshore wind. It's a known problem. So, if it's having that sort of effect on developers, it just makes sense to have some sort of safeguard financially in place because it could end up costing quite a lot of money, I suppose.

So, France also recently released its new energy roadmap, the PPE 3. So, in kind of as a big picture view, how ambitious is their plan for offshore wind in France under this new set of rules?

Aruneesh Lakshmanavelu (17:21):
Yeah, they are making big plays in the offshore wind industry. So, AO 9 and AO 10, which were their auctions that they had planned coming up, the plans for these have been in the works for a while. But they have been delayed due to a lot of political reasons. So, I think what the government has done now is that they've decided to merge the two together. So, this makes it one massive tender, which they've totaled up to about 10 gigawatts, which is - as far as tenders go - is one of the biggest ones we've seen so far.

Dan Wiseman (17:59):
And quite close to what their target is, I suppose.

Aruneesh Lakshmanavelu (18:01): Yeah, yeah, definitely. So, they've got right now, they're aiming for a 50/50 split of 5 gigawatts bottom-fixed and 5 gigawatts floating, which is really interesting to see that floating has a massive, you know, massive sort of priority in this, as well.

Dan Wiseman (18:22):
Absolutely. And I guess a lot of floating R&D has been happening with demos in France as well. So, it's something that they've definitely had a focus on, for sure.

Aruneesh Lakshmanavelu (18:32):
Yeah, so recently obviously we heard of EolMed floating floating wind farm in France, so that's three floating turbines. They've had that out at sea for quite a while, but only recently have just started testing its connection. So, it'll be good to see that come up to the full fully commissioned status soon.

Dan Wiseman (19:00):
Yeah, because for all intents and purposes, that's pretty much all done now. It's just the commissioning, they have their grid connection, so it's just a case of making sure that they're all spinning like they should do. And then, we should be seeing kind of commissioning events over the next few months. How long do you think that usually would take for—for these demos?

Aruneesh Lakshmanavelu (19:22):
It shouldn't take too long. I'd yeah, I'd say up to three to four months. But yeah, the earlier the better, because they want to get this tender underway. Which obviously is the big thing. Now, the tender, they've said they're going to be optimizing project costs, hence why they've aimed for a roughly average tariff of around €100 per megawatt.

Dan Wiseman (19:54):
Okay.

Aruneesh Lakshmanavelu (19:55):
Obviously this will take into account the fact that both floating and fixed will have different tariff costs.

Dan Wiseman (20:03):
Of course.

Aruneesh Lakshmanavelu (20:04):
So, it'll be interesting to see in the next coming days we actually have people in WindEurope right now, and one of them has told us that the France will be releasing the specifications for the tender in the next couple of days. So, it'll be interesting to see what specifically they've put in the actual framework for this tender.

Dan Wiseman (20:25):
Oh great. So, big news is coming up then. I'm sure we'll be releasing a news story and probably a LinkedIn post about that in the next couple days. Another thing that's come from WindEurope, as well, is the concerns that they're having over the upcoming elections in France. So how political is offshore wind in France? Is it a case of a change of government administration could make or break the industry, or are both sides fairly amicable in terms of renewables?

Aruneesh Lakshmanavelu (20:53):
Yeah, I think it's going to be a tough one for the future of France. Yeah, obviously recently France has put out the PPE 3, so that's a positive step in sort of renewable adoption. But then, now the rise of right-wing politics in France, that obviously puts a bit of danger on offshore wind and renewables in general. So, they have a very much sort of visual pollution sort of argument. They don't really like offshore wind and onshore wind as a whole.

Dan Wiseman (21:32):
So they seem to suffer from the same NIMBYism, the "not in my backyard" approach as quite a lot of coastal and kind of more scenic countryside countries have.

Aruneesh Lakshmanavelu (21:41):
Yeah, they see they say they quote it as like a threat to their sort of heritage and sort of imagery and maritime identity. So, yeah, it'll be if they come into seat, then I don't think France's offshore wind has much of a future, then yeah, it will struggle a lot, basically. I think they believe in nuclear power as well, but so does the current government. So, they actually in the new PPE 3, they said that they were going to repower a couple nuclear power plants. So, I think they match the nuclear side of energy, but with offshore wind, I think there's opposing views. So yeah, there will be a lot of struggles in regard to that.

Dan Wiseman (22:42):
And over the next couple months then, what are we seeing happening in France? Is there anything else that's happening or has happened that's worth noting?

Aruneesh Lakshmanavelu (22:50):
Yeah, so within that PPE document there’s an addition called the Resilience Contribution. So, this is a European Commission Act that came out back in May 2025. And it's part of the European Net Zero Industry Act. But generally the idea of this is for offshore wind specifically, it's to make it so that a wind farm isn't coming from one country, or the components within the wind turbine is not coming from one specific country that's outside of the EU.

There's a lot of focus on parts coming from China. I think the European Commission doesn't want the Chinese components kind of taking or creating a majority of the turbine. So, I think to try and move away from that, they've introduced this act. From what I'm led to believe, I think this act is going to start operating, started operating back in December 2025. And so all, I think we'll start to see auctions that are coming out and tenders that are going to start releasing, I think we'll start to see a lot of non-price criteria regarding the component side of wind farms. So, developers and farms are trying to get subsidies and CfDs, I think they'll have to really have a big focus on the localization of a lot of the components and a lot of the manufacturing, as well.

Dan Wiseman (24:34):
Yeah, and I think we've seen that in quite a lot of markets where there is domestic content caveats in contracts. And it seems to be an ever-growing conversation that we're having about Chinese turbines because recently we've seen deals made between Chinese manufacturers and Spain. More recently we've seen Ming Yang's entry into the Brazilian offshore wind coalition, as well. So, they're making footsteps into the industry outside of the APAC region.

And, we understand the reasons why the EU maybe don't want Chinese components in European waters. Obviously, there's the same concerns they've had for decades over security, but also, we know that there's the risk of devaluing European manufacturers, as well. But, I think the problem comes when multiple markets across Europe are all developing offshore wind, and it creates such a massive backlog of orders for these European manufacturers that we're going to end up seeing what's happened with vessels happening with turbine foundations and turbine blades as well, where you're having to order years and years and years in advance because there's such a backlog.

But we have seen recently that there's been quite a large percentage of Chinese foundations being installed in European waters. So, hopefully we'll find some leniency in these rules moving forward because, as we were saying previously with Australia, bottlenecks are prevalent everywhere, and the one thing you don't want to have a low supply of is turbine blades. And wind turbines, because without those, you've got nothing.

Aruneesh Lakshmanavelu (25:14):
Yes, there is a big caveat to moving away from Chinese manufacturing and Chinese imports. The problem is that, as France mentioned” is that they are trying to lower their costs. Now, the move away from cheaper Chinese manufacturing means that you have to rely on EU manufacturing as Vestas and Siemens. But the problem is that they are obviously more expensive than the Chinese manufacturing. Therefore, this will increase project costs.

What I am struggling to understand is that they are trying to lower the project cost but phasing out Chinese manufacturing increases project cost, so I`ll be interested to see what mitigation they are going to take to lower project cost because of this.

Dan Wiseman (26:05): And it's a difficult position for a lot of developers as well because it will end up having a knock-on effect where turbines, because they are in such demand, end up getting priced slightly higher. Because that's what happens with supply and demand the more in demand something is, the higher the costs are going to be, which then means are the subsidies being offered worthwhile? And although we'll see that in France, is it going to be a different story for Australia? Obviously logistically, turbines from China make a lot more sense in terms of transportation. Is it a case of we're likely to see Chinese turbines in Australian waters?

Aruneesh Lakshmanavelu (26:54):
Yeah, so that is the primary sort of idea right now. That's what we're thinking early on is yeah, it would make more sense that the turbines do come from China, purely from a transport sort of situation. But, if they were to kind of come up with their own sort of manufacturing, local manufacturing, this would be very helpful for them, but also very helpful for New Zealand because New Zealand also are trying to create a sort of offshore wind framework as well, but this relies very heavily on Australian offshore wind because most likely they will try and piggyback off the manufacturing and sort of yeah, a lot of the developments that Australia makes. So, there's a lot of sorts of chain events that can cascade because of the sort of decisions that Australia government makes. So, it'll be interesting to see who they go with for the turbine manufacturing.

Dan Wiseman (28:01):
Yeah, and I think it should really encourage European manufacturers to maybe do a bit more because obviously we've seen all these manufacturers have their troubles. You know, Siemens Gamesa have had their issues, Vinova have had their issues as well, as has Vestas. I don't think any of them have been particularly safe in terms of fiscal results. But it just means that now, while there's no competition, while it's just those three, it doesn't really encourage them to do more.

I mean, China is developing massive turbines, they're kind of pushing up kind of 20-plus megawatt turbines. And kind of having those injected into the market will give rise to companies like Van Oord, who don't really have much of an interest in building larger turbines, who are quite happy to sit back on their 15 and a half and say, "You know, this we're just going to focus on our workhorse ones," because they have no incentive to make other ones. So, hopefully this is something that will light a fire under them and get them producing kind of larger turbines because, like we were saying in France, I mean, the visual impact of wind farms is a big issue, and it's not just France, it's everywhere else, as well.

If we're here in Norwich, I mean, I live in Lowestoft, which is on the coast, and anything that you can do to reduce the impact of these wind farms, I'm sure having three or four massive turbines, high-capacity turbines, is probably a lot better than having several lower-capacity ones. It has a lowered visual impact, for sure.

Aruneesh Lakshmanavelu (29:43):
Yeah, so obviously that's where floating comes in, because floating wind, obviously, can go further—further out because it's more suited for deeper waters. But then, obviously, with this sort of phasing out from Chinese manufacturing and the hiking up of project costs, I feel like this could quite badly affect floating wind because it's an industry where recently has faced a lot of scrutiny. A lot of projects have been closing and like, you know, getting rid of their CfDs or just not going ahead. So, it's been a bit of a tough time for floating wind, and such a Resilience Act can further negatively impact it, and really, and at risk, a risk of constraining of the market and reducing developer confidence. And like, why would a developer then try and go for floating if there's no, you know, favorable condition for them?

Dan Wiseman (30:44):
Yeah, why spend the extra money in developing something that's not going to give you a good enough return, I suppose. So, seems like different problems for different markets. We've got the teething issues in Australia and then we've got potential issues with change of government in France, as well. So, I think we've managed to cover quite a lot in this episode. Thanks again, Aruneesh, for joining me today.

Aruneesh Lakshmanavelu (31:10):
Cheers, Dan. Yeah.

Dan Wiseman (31:11):
Just as a sign-off though, is there anything else that we should be looking out for when it comes to France or Australia, or APAC in general?

Aruneesh Lakshmanavelu (31:21):
Yeah, so APAC-wise, we've obviously got the Philippines auction kind of out there. It'll be interesting to see what happens with that. Obviously, just yesterday, we found out that TotalEnergies backed out of Philippines due to just unfavorable conditions and their kind of global outlook on offshore wind in general. I think they're focusing more on the EU anyway. So yeah, they've TotalEnergies obviously backed out of both Philippines and India, in fact, so that's two APAC markets they backed out of.

Australia it will be interesting to see the auction going ahead in August. And, hopefully, we'll get to see if the port does—the port application does get approved by the federal government. And yeah, France will soon, in the next coming days, look to release specifications on the tender, as well. So, it'll be a good read on that one sees what the strike prices are for—sorry, ceiling prices are for both fixed and floating. And, yeah, it's an interesting time in offshore wind, to be—that's for sure.

Dan Wiseman (32:41):
Yeah, never a dull moment when it comes to offshore wind. Excellent. Well, thank you again for joining me. And thank you for listening, and join us next time where we'll have much more to talk about, I'm sure, when it comes to offshore wind here at TGS 4C.