Jilted offshore wind power developer Flotation Energy wins legal case against minister

Chris Bowen was wrong to reject an application from Flotation Energy and must now reconsider, a Federal Court has ruled in an embarrassing decision for the Albanese government.

The Federal Court has dealt the government an embarrassing defeat, after concluding Energy Minister Chris Bowen wrongfully interpreted legislation when he rejected an offshore wind application from a developer backed by one of Japan’s largest companies.

The Australian revealed this year that Flotation Energy and its proposed Seadragon project in Gippsland, widely seen as Australia’s second-most advanced offshore wind-powered electricity generation project given it held government grants and major project status, had been informed it would not get a so-called feasibility licence.

In a move that underscored the depth of anger and frustration, Flotation launched legal action against Mr Bowen, arguing the minister had the capacity to alter Flotation’s proposal for a licence after finding a boundary overlap with Iberdrola, one of the world’s largest renewable energy developers.

The crossover was marginal, but Mr Bowen said Iberdrola had priority for the region.

Under Australian rules, if both Flotation and Iberdrola had been deemed equally meritorious, the two parties would have had to enter boundary disputes, though the federal government concluded Iberdrola had greater merit.

Lawyers for Mr Bowen said the legislation – which Labor has endorsed – did not have the power to tweak applications, although Justice Nye Perram in a judgment seen by The Australian said Mr Bowen had erred in that conclusion and would need to set aside his initial decision and reconsider whether to award Flotation with a licence – a decision described by industry sources as “embarrassing”.

Flotation executive director for Australia Carolyn Saunders said the decision was welcomed, and the “ball was now in the court of the minister”.

“It provides useful clarity and assists in helping Australia meet its energy goals and support energy transition,” Ms Saunders told The Australian.

Energy Minister Chris Bowen. Picture: Martin Ollman

A spokeswoman for Mr Bowen said the ruling illustrated the nascent nature of the legislation and the industry.

“Establishing Australia’s offshore wind industry is a complex but critical step in decarbonising our energy market,” she said.

“Government and industry alike have an interest in regulatory certainty and that is what this process in the Federal Court is about.

“The minister will review the judgment and consider next steps in relation to Seadragon’s application.”

The Australian understands Mr Bowen has yet to decide whether to award Flotation a licence and no timetable has been placed on a decision.

The ruling is a predicament for the Mr Bowen. The Albanese government and its Victorian state counterpart have earmarked offshore wind-powered generators as a critical part of plans to reach net zero emissions, and Flotation could play a role in helping Australia meet its goals. But by going to court, industry figures have questioned what kind of strain the ruling will place on Flotation’s relationship with Mr Bowen.

Flotation is a major offshore wind player and is backed by Japanese giant Tokyo Electric Power Company (TEPCO). It has offshore projects in the commissioning and planning stages in the UK, Ireland, Japan, Taiwan and Australia.

To reach its lofty goal, the federal government and Victoria will need all the projects it can secure – especially with many industry figures indicating they believe many of the projects that have secured a feasibility licence may not materialise.

The Victorian government in 2022 set a target of generating the equivalent of about 20 per cent of its energy needs from offshore wind generators within a decade.

The target then doubles to 4GW by 2035 and 9GW by 2040. In all, the state foresees potential for 13GW of offshore wind capacity by 2050, which is five times the current renewable generation in Victoria.

Victoria’s coastline is ideal for generating power offshore. Winds are very strong and consistent by international standards, while a large area of shallow ocean less than 50m-60m deep is suitable for wind turbine platforms to be fixed to the seabed. It’s a much cheaper technology than the floating turbines which have to be used in deeper water.