Abandoned Gippsland offshore wind project highlights challenges for Australian industry

The project received major project status from the federal government in November and was set to deliver a 2-gigawatt (GW) offshore wind farm which could deliver power to more than one million homes.

Blue Float Energy has now withdrawn from the offshore wind project, citing commercial viability, in a move that reflects the challenges that the sector faces moving forward.

More positively, Chris Bowen, the federal minister for climate change, announced last month the preliminary license for Bunbury Offshore Wind Pty Ltd in the northern part of the Bunbury declared area, and a shortlist of two candidates, Westward Wind Pty Ltd and a second project for Bunbury Offshore Wind Pty Ltd, in the southern part of the area.

In the same announcement, he confirmed that Novocastrian Wind Pty Ltd had requested additional time to further develop their commercial arrangements in relation to the feasibility licence for the Hunter declared area, which was offered to the project in February 2025, and that he had made a final decision not to offer a feasibility licence to the Seadragon Offshore Wind Project in the Gippsland declared area.

Equinor, the developer of the Novocastrian wind project, has now quietly dropped plans for a wind farm off the north coast of Tasmania, located in the Bass Straight.

While the announcements in the Bunbury declared area are positive for the industry, the difficulties being experienced in the Hunter and Gippsland declared areas, the double regime of federal and state approval, as well as a lack of clarity around the financial support which will be offered by various governments, is creating challenges for offshore wind projects in Australia, with more certainty required to ensure investment does not stall.

At the Offshore Wind Industry Forum 2025, held by the Clean Energy Council on 3 June, industry leaders highlighted the difficulties of managing and navigating the state and federal government approval processes.

Policy certainty was also cited as an issue by several developers at the Australian Wind Conference this week. Many original equipment manufacturers (OEMs) are currently undecided on whether they will commit to building the supply chains that are required here in Australia to ensure that the offshore wind industry takes off due to uncertainty around government support.

The recent clarification that Victoria's legislated target of 9GW of offshore wind by 2040 is actually intended to be split across the Gippsland offshore area and the Southern Ocean zone came as a surprise to industry, given the federal government last year awarded 12 feasibility licences to offshore wind projects for the Gippsland declared zone and only one feasibility licence for the Southern Ocean zone. The proposed Gippsland projects total to over 25GW alone, compared to the sole feasibility license holder, the Spinifex Project, in the Southern Ocean Zone being only just above 1GW.

This means that many of the Gippsland projects will not ultimately receive the government support to go ahead, which may lead developers to withhold investment in the requisite supply chains until they know whether they have been successful in securing government support.

Last month, Minister Lily D’Ambrosio called for the Commonwealth government to do more to ensure offshore wind projects are delivered, despite positive developments under the Labor Party.

“It’s now time for the Commonwealth to do things beyond simply providing paperwork and actually start to seriously lean into how they should be a partner in delivering first offshore wind energy projects for the country,” she said.

“No other jurisdiction globally develops these things up without national jurisdiction involved, and that’s where we’re up to right now.”
RWE’s Jens Orfelt, during the Australian Wind Energy 2025 conference, referred to the difficulties to present strong business cases even in established markets, highlighting the challenges of deploying millions of dollars in Australia without more visibility, adding that boards are asking ‘where is my offtake?’.

Victoria will hold an offshore wind auction in September, which the state hopes will help the sector regain certainty following the federal election where energy was a key battleground.

The auction will award projects with financial agreements that guarantee a price for the electricity generated through contract-for-difference and availability payments. The details of these arrangements and the auction are yet to be announced.

Considerable investment is required if Victoria, let alone Australia, is to meet its renewable energy goals, with 5.8GW of new onshore wind, 9GW of offshore wind, 2.7GW of ‘utility-scale’ solar and 3.4GW of new short and long duration storage capacity planned for by 2040.

If OEMs are ultimately to set up supply chains and factories in Australia to service the offshore wind industry, then it is important that the federal government provides legislative and financial certainty.

The federal government has set a target of generating 80% of Australia’s electricity by renewable energy by 2030 and achieving net zero by 2050. Renewables produced 43% of power throughout Australia’s energy grid in the first three months of 2025, according to AEMO.

It is important to highlight that the offshore wind industry is still gaining momentum around the country. While there may currently be headwinds faced by the industry, the announcements in Western Australia are exciting, and demonstrate that the federal government is still committed to getting offshore wind up and running across the country which should provide a confidence boost to developers and OEMs alike.

Bowen also recently announced new Capacity Investment Scheme tenders for 2025, as the federal government seeks to meet 2030 targets by fast-tracking projects.

Co-written by Jack Merlo and Lorraine Ng of Pinsent Masons.