Is Flotation out of the race? Offshore wind rumours swirl as Gippsland decision looms

Speculation is growing about who is in and who is out of the running for a feasibility licence in Australia’s first offshore wind development zone off the Victorian coast of Gippsland, but the final list is unlikely to appear until February once negotiations over seabed territory are resolved.

Media reports emerged on Monday in the Murdoch press that the federal government has “rejected” the licence application of Flotation Energy, despite its 1.5GW Seadragon project being recently dubbed the nation’s “second most advanced” and being awarded major project status – also by the federal government.

The Australian reports that despite being backed and funded by the federal government, Flotation “has been denied a development licence” as part of the preliminary decisions made by federal energy and climate minister Chris Bowen. The newspaper cites no sources for its claims.

Flotation Energy declined to comment on the claims on Monday, telling RenewEconomy that all participants in the licensing process are party to strict non-disclosure agreements while the details of the nation’s first ever offshore wind development zone are nutted out.

So what do we know?

According to a federal climate and energy department update on December 22, the feasibility licence application process for the Gippsland zone was highly competitive, with 37 applications received for the 15,000km2 declared zone.

The department says the applications were assessed by the Offshore Infrastructure Registrar against the suitability and merit requirements set out in the Offshore Electricity Infrastructure Act 2021 (OEI Act) and associated regulations. Criteria include technical and financial capability, likely project viability, applicant suitability and the national interest.

Of the 37 feasibility licence applications received:

– Six are under preliminary consideration for the granting of feasibility licences and have begun the next stage of consultation with First Nation groups;

– Another six are under preliminary consideration to progress through the overlapping application process, where applicants are invited to revise and resubmit applications to get around overlap with other projects;

For the remaining 25, a preliminary decision has been made to not to proceed to grant a feasibility licence on the basis that they are not up to scratch with overlapping applications, subject to further consultation with those applicants.

The government also said that if all six of the proposed projects under preliminary consideration for a licence were to proceed through proving feasibility to commercialisation, then these alone could generate 12GW of electricity and create more than 25,000 construction jobs and 1,500 ongoing jobs.

What we don’t know

When the successful applicants will be announced

No firm date has been given on when the final decisions on the licences will be made – or made public – but it is believed to be sometime in mid-to-late February. RenewEconomy understands the February 17 date put forward in Monday’s report from The Australian is incorrect.

The federal government says: “When licences are granted, information on the licence will be made public including the name of the licence holder, details of the licence area, and any conditions that apply to the licence.”

Who is in and who is out

Until then, the non-disclosure agreements and the rules enshrined in the OEI Act mean that speculation and rumours cannot be confirmed.

Where the information on Flotation’s Sea Dragon project is coming from is unclear, although RenewEconomy learned on Monday that some speculation might be coming from recruitment agencies, based on who in the offshore industry has recently turned up looking for new positions.

As well as gaining major project status for Sea Dragon, Flotation in July 2023 signed a multi-million dollar deal to start environmental surveys for the project, and said at the time that it had started on “all aspects of the project” to meet the 2030 commissioning deadline.

“The Seadragon Offshore Wind Project has been in development since 2019,” Flotation Energy Australia’s head of operations Carolyn Sanders told RenewEconomy at the time.

“We hoped that we would be able to reach a financial investment decision in around 2027 and be providing first power by 2030. But there are a few things that need to fall in place for that to happen.”

An industry source told RenewEconomy that because Copenhagen Infrastructure Partners (CIP) had taken the approach of trying to be so advanced as to make its 2.2 gigawatt (GW) Star of the South project unstoppable, others were attempting the same thing by investing heavily in elements such as marine studies and consultation — which they shouldn’t have begun until after the feasibility licence round.

What happens next?

Once the final decisions are announced on the top six projects said to be under preliminary consideration for the granting of feasibility licence, no action is required from those applicants, the federal government has said.

For the six applicants in the maybe basket, Bowen says that in “early 2024” they will be invited to revise and resubmit their applications to remove overlap with other possible contenders.

“They will be provided with sufficient detail on the overlapping application and nearby applications to assist with this process. If following this process any overlaps remain, they may be invited to submit financial offers,” the update says.

Before making a final decision on whether to grant a licence to these applicants, Bowen says First Nations groups will be consulted to consider native title rights and interests in the proposed licence areas.

“Submissions received through this consultation process will be taken into account when making a final decision on licensing.”

The delay in naming the final cohort is due to the second six needing to resolve territorial conflicts, and to allow the owners of the 25 rejected applications to convince the government they should be among the final contenders.

Star of the South still seems like a shoe-in

It has long been understood CIP’s Star of the South project will be the first offshore wind farm to get under construction and be completed in Australian waters.

The trailblazing project – which is being developed by CIP, Cbus and its original Australian co-founders Andy Evans, Terry Kallis and Peter Sgardelis – was awarded Major Project Status at the same time as the Gippsland zone was officially launched, in December 2022.

Major Project Status essentially amounts to tailored regulatory “facilitation” to help avoid unnecessary delays – although the federal government stressed in December 2023, when Flotation’s Sea Dragon project was awarded the same status, that it doesn’t bypass or accelerate approvals. Apparently it doesn’t guarantee their success, either, if this week’s reports are to be believed.

There’s plenty of speculation and rumour

While nothing can be properly confirmed, RenewEconomy believes applications from Parkwind/Beach Energy and Bluefloat are progressing to the next stage of consultation with Indigenous groups.

The AGL-associated Mainstream Renewables project is believed to be in the top 12, as could be the projects by France’s TotalEnergies and Macquarie-owned Corio and that of Origin/RES.

See RenewEconomy’s Offshore wind energy map of Australia