A high-level gap analysis of how the existing National Electricity Rules NER) on network connection and planning, power system security, and network economic regulation relate and apply to potential offshore electricity infrastructure (OEI) development. The paper focuses on harmonising onshore and offshore regulation and identifies gaps, barriers and opportunities for reform.

The final report suggests that while it is both feasible and preferential to accommodate OEI development within the existing framework, there are gaps in the NER and little clarity on how jurisdiction specific schemes (i.e. renewable energy zones) might apply. This results in barriers for industry to fund, construct and commission offshore energy projects.

Key challenges and opportunities

• Size of Offshore Wind Energy (OffW) can drive a risk of large contingency events and may require system-level mitigation and management responses.
• Limited harmonisation between State and Commonwealth regulatory frameworks, policies and regulatory approaches which may lead to unclear onshore/ offshore regulatory boundaries.
• The Australian Energy Market Ombudsman’s responsibility for system security would extend to OEI where it connects to the national grid.
• There is a need for timely and transparent engagement, with clear purpose and information, in particular with First Nations people and organisations..
• OffW is uniquely exposed to thin supply markets.
• The first tranche of OffW projects will likely require government support for economic viability.
• The current regulatory frameworks present challenges in terms of duplication and oversight. 
• The development of an offshore wind industry in Australia depends on the ability of government and industry proponents to build social license.