Energy giant AGL has walked away from its proposed multibillion-dollar offshore wind energy project in Victoria’s Gippsland region in a move that casts fresh doubt over the economics of an industry that is central to the Allan government’s energy plans.

The AGL-backed consortium behind the proposed 2.5-gigawatt Gippsland Skies offshore wind project has surrendered its licence to develop the project, citing poor economic prospects relative to other forms of renewables in its development portfolio.