A decision by the federal government to protect wetlands and block a critical hub for the nation's first offshore wind farm has angered Victoria's premier.
Jacinta Allan told ABC on Monday she was unhappy with Environment Minister Tanya Plibersek's decision to veto the terminal and assembly plant proposed for the Port of Hastings.
The premier said Victoria was proud to be leading the nation on establishing offshore wind as a critical part of the state's renewable energy targets and national energy security.
"We need to take the time to consider this decision, talk with the federal government," she said.
Treasurer Jim Chalmers told Sky News federal Labor continued to be "big supporters" of renewable energy and "a big part of that will be offshore wind".
"But it needs to be consistent with our obligations to communities and to the environment as well," he said.
The Victorian National Parks Association welcomed the decision to protect native endangered wildlife from "risky developments".
"This project risked an internationally protected wetland and bird sanctuary critical for 65 per cent of Victoria's threatened bird species," nature campaigner Shannon Hurley said.
Four months ago, then premier Dan Andrews said the port would be Australia's first for the huge towers, blades and turbines needed for the nation's first offshore wind farm.
The terminal was essential for cheaper, cleaner energy and thousands of jobs, according to the state government.
"The project was deemed clearly unacceptable under national environment law and cannot proceed," a spokesperson for the Department of Climate Change, Energy, the Environment and Water told AAP on Monday.
The Victorian Renewable Energy Terminal Proposal would have had "unacceptable impacts" on the internationally protected Western Port Ramsar Wetland, the spokesperson said.
The central hub was to have supported state targets of at least two gigawatts of offshore wind capacity by 2032 - enough to power 1.5 million homes - as coal-fired electricity generation is phased out.
It was also close to the proposed Star of the South development, Australia's most advanced offshore wind project, off the coast of Gippsland.
The first power from offshore wind was expected as soon as 2028 and targets of four GW have been set for 2035 and nine GW for 2040 using winds off Victoria's coastline that are among the best in the world.
Studies show the state has the potential to support 13GW of capacity from coastal regions by 2050 - five times the state's existing renewable energy generation - but lacks necessary port infrastructure.
"We're undeterred," state Environment Minister Steve Dimopoulos said in Werribee.
Victoria's opposition energy spokesman David Davis warned households faced even higher energy prices after the veto of the wind turbine facility.
He said the decision comes as 11 Victorian renewable energy projects had experienced approval delays of more than six months and households and businesses continued to struggle with increasing energy bills.
"This is a debacle and Victoria's offshore wind policy is now in tatters - meaning higher energy prices for Victorians at a time they can least afford it," Mr Davis said.
