On 17 October 2024, the Australian Energy Market Commission (AEMC) published a final report providing an initial analysis of gaps and barriers in the National Electricity Rules (NER) to enabling offshore electricity infrastructure (OEI).

Much of the regulatory dialogue to date surrounding offshore wind developments has focused on the licensing framework established under the Commonwealth Government’s Offshore Electricity Infrastructure Act 2021 (Cth) and associated regulations which outlines how and where OEI can be installed and operate. There has not yet been any detailed consideration of the suitability of the regulatory framework set out in the National Electricity Law (NEL) and National Electricity Rules (NER), covering such areas as transmission connection and planning arrangements, power system security, and network economic regulation.

Our approach in undertaking this initial analysis was to focus on harmonising onshore and offshore electricity regulatory arrangements in key areas. We adopted this approach because the regulatory arrangements under the NER are well understood by the market, and extending the NER to include the regulation of OEI would provide for a consistent regulatory approach. However, we recognise that there will be circumstances where departures from the national framework may be warranted.  

The AEMC will leverage insights from its review, and the related reform processes being undertaken by the Commonwealth and various State governments, to inform any future regulatory changes to the NER to enable OEI.    

Final report

The AEMC’s initial analysis suggests that OEI could be enabled by extending the NER to OEI but that there are some gaps and barriers which would need to be addressed to adequately support OEI.  

Our report was shaped by targeted stakeholder engagement. We focused our attention on three key areas within the AEMC’s remit:  

• network connection and planning,  
• power system security,
• network economic regulation.

Within these focus areas, the report identifies gaps and barriers in the regulatory framework due to the specific characteristics of OEI which include asset and investment scale, new (to Australia) technology, and the multi-jurisdictional nature of transmission assets.

Stakeholders also raised two additional concerns that, although important, are not directly within the AEMC’s electricity regulation remit but for which we undertook a high-level mapping exercise:

• regulatory responsibilities and coordination,  
• stakeholder engagement requirements.  

Any future work on designing an appropriate regulatory regime for OEI would need to be subject to broader and more comprehensive consultation, including with industry given the potential for NER changes to impact on offshore wind projects that may be proposed by licence holders and the potential consequences for their design and output.  

Context for the review  

Offshore wind energy is an emerging renewable technology that can help to diversify Australia’s energy mix and support Government ambitions for net-zero by 2050.  

We recognise that both government and industry are interested in exploring offshore wind projects in Australia. The Commonwealth Government has declared five offshore wind areas —two in Victoria, two in New South Wales and one in Western Australia— demonstrating significant interest for the development and integration of offshore wind into Australia’s energy mix.

Although offshore wind generation and transmission share many characteristics with onshore developments, there are some key differences. These differences may warrant further investigation, to determine whether any reform is required to better support OEI in Australia.