Offshore wind sector feeling the Dutton effect, even from the shadows of opposition

Federal Labor’s offshore wind energy plans are under fire from all corners of the conservative political and media landscape, as Peter Dutton’s threats – to rescind declared development zones and rip up contracts – succeed in spreading fear, uncertainty and doubt about the nascent industry.

Federal energy minister Chris Bowen on Friday released a flurry of announcements advancing Australia’s fledgling offshore wind sector, with a particular focus on projects in the two development zones the leader of the opposition has singled out for scrapping if he is elected in May.

The announcements included final decisions to offer feasibility licences to the 1.2 gigawatt (GW) Spinifex Offshore project proposed for the Southern Ocean zone off the coast of Victoria and to the 2 GW Novocastrian Wind project proposed for the Hunter offshore zone off the coast of New South Wales.

But it was two smaller bits of news buried within the releases from Bowen – a decision not to offer a licence to the up to 1.5 GW Seadragon project in the Gippsland zone, and a request from a project proponent to postpone a decision on its future – that got all the media attention.

“Victoria’s offshore wind plans in chaos after Bowen’s rejection” (AFR), and “The Nationals claim major win for Illawarra after controversial offshore wind farm put on hold” (News Ltd), were among the headlines to follow, buying in to Dutton’s narrative that the offshore wind rules that his own party legislated have been “bungled” by Labor.

Never mind that the LNP has been actively undermining Labor’s offshore wind progress almost every step of the way, ever since it set the industry in motion as one of its last acts of government in 2022.

The decision on the Seadragon project, proposed by Flotation Energy, has a bit of history, in that Bowen has rejected it once before already, due to an overlap with a with a project judged by the minister to have higher merit.

Flotation appealed this decision in the Federal Court, which found in favour of the developer, ruling that it should be able to reapply for a smaller area that doesn’t overlap. But the application of retroactive legislation has trumped the court ruling, removing Bowen’s ability to grant a licence over a revised area.

Bowen’s office says this has been a decision based on merit, alone – there were, after all, 37 applications for feasibility licences in the Gippsland offshore wind zone, a number that has been whittled down to 12 that will move to the next phase.

But Flotation Energy released a statement on Monday saying it was “immensely disappointed” by the government’s preliminary decision, which it described as “difficult to understand.”

“It’s difficult to understand this decision, which will leave one of the very best offshore wind sites in Australia empty and unused,” Flotation Energy’s general manager and executive director of Australia, Carolyn Saunders said. 

“We have undertaken extensive environmental studies and consultations, putting us years ahead of other projects.

“Due to an overlap of less than 2 km² out of a 699 km² project, the Minister has decided Seadragon can’t proceed. Without a Feasibility Licence the project team will be disbanded.  It is a hugely disappointing outcome.”

Disappointing, no doubt, for Flotation and its team to not make the cut. But according to the David Davis, the Victorian Coalition spokesman for energy and resources, it’s actually a signal that the state’s offshore wind plans are now in chaos.

“It’s a disaster for the state’s offshore wind rollout, Labor’s plans are in chaos,” Davis told the Financial Review, which chose the quote for its headline on the story.

The other bit of news that grabbed the headlines was the pause on a decision for the the sole contender for a licence in the Illawarra offshore wind zone, the 1.6 GW South Pacific project being proposed by BlueFloat Energy.

The Illawarra offshore wind zone, also off the cost of NSW, has also been a target of LNP threats to tear up contracts, although in this case a spoken threat from Nationals leader David Littleproud – less formal than the threats made in writing on the Southern Ocean and Hunter Zones.

Bowen said in a separate statement on Friday that BlueFloat Energy had requested the pause until after the election – due to the “sovereign risk created by Peter Dutton’s reckless and unprincipled opposition to investment and jobs in the renewables sector.

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BlueFloat in its own statement said: “In August 2024, BlueFloat Energy lodged an application for a feasibility licence in the Illawarra offshore wind area of New South Wales.

“The application is still under assessment, however BlueFloat has requested the Commonwealth government consider not offering any licences in the Illawarra zone until after the upcoming federal election.”

But the National Party was quick to claim the decision as a win, describing BlueFloat’s project as a “a dumb idea that was never going to work.”

“No private developer was willing to risk their own name on this fanciful idea,” Nationals senator for NSW Ross Cadell said on Friday.

“The industry has voted with its capital. I encourage the people of the Illawarra to share their frustration with Minister Bowen at the ballot box.”

Bowen agrees the company is worried about losing money, but has a different spin on the why.

“The Illawarra applicant, which … already has to overcome certain obstacles in deep floating water, they have been concerned by the politics that are being created by Peter Dutton and Ted O’Brien,” he said.

“If they get a licence, they then need to proceed to the next stage, which involves spending their money on further feasibility work, further consultations, and they say, ‘If we are going to spend the money we need a bit of certainty.’”