Flotation Energy bemused by its rejection and the cold shoulder from Chris Bowen

An offshore windpower developer rejected for a licence says it is mystified why its project wasn’t supported and its efforts to engage with the federal minister have gone largely unanswered.

The decision to reject Flotation Energy’s application to develop an offshore windpower project has set back Australia’s renewables industry, the head of the jilted developer has declared.

Carolyn Sanders revealed federal Energy Minister Chris Bowen for months ignored pleas for last-ditch talks to revive the project.

The comments from Flotation’s executive director of Australian operations underscore the anger felt by the developer and its Japanese owner over the decision, revealed by The Australian.

“Rejecting our project means it will take longer to get multiple offshore wind developments in Victoria up and running. It will take longer to deliver that renewable power into the grid and that electricity that they do deliver will be more expensive. It does not make sense to reject us and leave one of the best sites unused,” Ms Sanders told The Australian.

Flotation Energy executive director Carolyn Sanders.

Victoria is Australia’s most fossil fuel-dependent state, relying on three major coal power stations, but has pinned its hopes on wind power. Flotation was considered Australia’s second most advanced offshore wind project and had secured $2.5m from the Victorian government to accelerate works.

The state government in 2022 set a target of generating 20 per cent of its energy needs from offshore wind within a decade.

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

Victoria‘s strong winds and shallow coastlines make it ideal for offshore wind power, and 12 developments led by foreign and domestic giants are doing early works.

Ms Sanders said the rejection of the Seadragon project would stoke concern in the industry. Flotation, which she have been left frustrated. Ms Sanders said Flotation, which was acquired by Tokyo Electric Power Company (TEPCO) in 2022, had spent more than $15m on the project but now the development team would disband.

“We don’t know the basis for the rejection. They have rejected all approaches to engage and we don’t have any insight into why they have taken this action. TEPCO is bemused by it. We have put an incredible lot of effort and money into the development of the industry as well as the Seadragon project. That does create some sovereign risk. Why would anyone take those risks?”

The rejection came months after Flotation won a legal challenge to the rationale used by Mr Bowen, with the Federal Court accepting that 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.

Some of Australia’s energy industry had insisted the ruling would eventually be counter-productive as Labor was unlikely to favour a development that had taken it to court, let alone been victorious.

But Ms Sanders said the project had no alternative and the challenge was its attempt to provide clarity.

“We had no choice. We were left with no alternative but to try and fight for the project and all the work we have done on it. If they objected to that action then that is really unfortunate,” said Ms Sanders.

A spokeswoman for Mr Bowen did not respond to specific questions but said the decision was made to choose the more meritorious applicant.

“The Minister has made a preliminary decision not to offer a licence to Seadragon in the Gippsland zone given overlapping licences of higher merit.” she said.

Labor has since moved to tighten the legislation – removing the capacity of the Energy Minister to tweak boundary applications.

The Flotation row comes as Australia’s offshore wind industry worries about its prospects. While Gippsland is the epicentre of the industry, the decision of Mr Bowen to delay a decision on a project in NSW and the Coalition’s commitment to scrapping some regions has raised alarms about a sector that was expected to form a key part of Australia’s plan to reach net zero emissions by 2050.

Mr Bowen said last week he would not make a decision on a development licence in the Illawarra region until after the election.

Mr Bowen said he was asked by lead developer Bluefloat to delay the decision, but it frees Labor from a contentious issue.

Originally published as Flotation Energy bemused by its rejection and the cold shoulder from Chris Bowen