Matthew Howarth, 25, had bail refused at the Ballarat Magistrates' Court for the second time relating to the alleged sexual assault in Ballarat in March.

Police prosecutor Senior Constable Giles Brown told the court Howarth allegedly made sexual advances towards the woman and when she said no, he allegedly grabbed her breasts with both hands.

Howarth was arrested nearby with allegedly found with a small bag containing a substance believed to be methylamphetamine.

The court heard he later told police he only said hello to the complainant, that he had magical powers and was "exhausted from saving the world".

He had previously been granted bail for the matter but failed to report to the police station as required, and was remanded in custody in late March.

Senior Constable Brown told the magistrate police were not opposed to Howarth being bailed - with condition.

"Not opposed as long as Mr Howarth is released to a facility ... it's more the risk to the community that is the greater concern for police," he said.

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The man's defence told the court there were concerns around his capacity to make decisions on his case.

"While Mr Howarth is keen for me to make this application ... I can't say I've received instruction, there are concerns around capacity," the defence said.

"His baseline is that he has views about saving the world and magical powers - that's his baseline."

The defence also raised concerns the man had already spent 89 days in custody.

"He has no [sexual offending] related priors and for most part it is dishonesty offences ... if we don't release Mr Howarth he will spend more time in custody than he needs to," the defence said.

"Fitness and possibly a mental impairment defence remains open."

The court heard Howarth had 15 pages of prior convictions and diagnosed mental health conditions.

Magistrate Ron Saines said Howarth had a "difficult presentation" and jail may not be suitable, but there was risk to the community if he were to be bailed on Tuesday.

"For the purpose of this bail application there is nothing the court can rely on to secure appropriate treatment ... to reduce the risks of re-offending and reduce the risk of the safety of the public," the magistrate said.

"For that reason bail must be refused ... that is not to suggest incarceration is the appropriate means of dealing with this man."

Howarth will be further assessed for his capacity to be tried.

He will remain in prison until the matter returns to court in July.

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