BlueFloat considers Victorian wind sale as it mulls Australian future

Offshore wind developer BlueFloat Energy is weighing a potential sale of its Victorian project as it considers its future in Australia, posing a significant setback for the green energy transition.

Victoria has earmarked offshore wind to replace coal power generation in the state. Picture: Ian Currie.

You can now listen to The Australian's articles. Give us your feedback.

You can now listen to The Australian's articles.

Offshore wind developer BlueFloat Energy is weighing a potential sale of its Victorian project as it considers its future in Australia, posing a significant setback for the green energy transition as a major electricity transmission line ­between NSW and Victoria was hit with a two-year delay.

Bluefloat, headquartered in Spain, last year secured a feasibility licence to develop an offshore wind project off Victoria’s Gippsland region and also won a preliminary development licence in NSW, a project that garnered sizeable local opposition.

Sources said they expected BlueFloat to exit Australia, though no final decision had been made. A spokesman for BlueFloat declined to comment.

Concerns over the transition to renewables have also deepened after the major Victoria–NSW electricity interconnector project was hit with a fresh two-year delay amid opposition to the development from farmers worried about the route. The VNI West project will now be delivered in late 2030 compared with the original 2028 deadline, adding to fears over a botched transition to renewables, with major coal plants such as Victoria’s Yallourn station set to shut its doors in 2028.

Surging costs, protracted regulatory timelines and persistent uncertainty over federal and state policy support have clouded the outlook for the industry, further soured by recent moves by US President Donald Trump to roll-back support for renewables.

While any final decision remains pending, the prospect of a BlueFloat retreat is likely to raise concerns within the Albanese government and the Victorian state government, both of which have backed offshore wind as a key pillar of Australia’s decarbonisation strategy.

Offshore wind has been earmarked by the federal Labor government as a critical piece of its plan to deliver net-zero emissions by 2050, while Victoria – one of Australia’s most fossil fuel dependent states – has placed the generation type at the heart of its transition plan.

Offshore wind has been earmarked by PM Anthony Albanese’s federal Labor government as a critical piece of its plan to meet its green energy targets.

Victoria has set an ambitious target of 9 gigawatts of offshore wind capacity by 2040 – enough to power more than 6.5 million homes – and is counting on the technology to help replace the state’s rapidly retiring coal-fired power stations, including Energy­Australia’s Yallourn and AGL Energy’s Loy Yang A, which are both scheduled to close within the next 10 years.

But the offshore wind industry faces enormous costs, logistical barriers, a lack of transmission infrastructure, port capacity and local manufacturing capabilities – and many are concerned about the vulnerability of Victoria should its plan fail to materialise.

The International Energy Agency has warned that, globally, offshore wind project costs have risen as much as 40 per cent over the past two years due to inflation, supply chain pressures and rising interest rates – conditions that are now hitting Australia’s pipeline.

Victoria insists its plan remains viable and has committed to launching the first stage of its ­contract-for-difference auction, which many proposals have said will determine the viability of the industry.

BlueFloat is not the only developer facing headwinds. The Australian has revealed Norwegian energy giant Equinor has yet to formally consider whether to ­accept an offshore wind development licence in NSW.

NSW is far more technically challenging than Victoria, and industry sources said projects falling by the wayside in Australia’s second largest state was a warning.

“Victoria is the most appealing state in Australia for offshore wind. If projects can’t get up there, that doesn’t bode well for the rest of the country,” said one source.

Victoria plans to build renewable energy zones covering 7 per cent of the state’s land area, with 5.2 million solar panels, nearly 1000 onshore wind turbines and four new transmission projects, as it chases a target for clean energy to provide 95 per cent of its electricity by 2035.

The Victorian government this year laid out a draft blueprint through to 2040 that targets seven giant ­renewable energy zones and a string of new transmission lines, with several deemed “urgent”, to prepare for major coal-fired power stations closing later this decade.

Victoria aims to reach a 40 per cent renewable electricity target this year and then turbocharge the rollout of solar, wind and batteries over the next decade to hit goals of 65 per cent by 2030 and 95 per cent by 2035 when AGL Energy’s Loy Yang A coal plant is due to shut.