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Australia’s renewable energy boom - what does it mean for rural land owners and operators?

03 December 2018

#Corporate & Commercial Law

Kylie Wilson

Published by Kylie Wilson, Carl Hinze

Australia’s renewable energy boom - what does it mean for rural land owners and operators?

As the renewable energy sector continues to take centre-stage internationally – and is now one of the fastest growing industries in Australia - we continue our series of articles about the industry with an in-depth look at how the rural sector is dealing with the boom.

Since the introduction of the Renewable Energy Target Scheme (RET), the Australian Government has also launched the Australian Renewable Energy Agency (ARENA) a body offering government funding support and education opportunities including networking and knowledge sharing. As a result of ARENA, large-scale renewable energy projects have been rapidly deployed in rural and remote areas on or around agricultural land in Australia. 

A regional boom

In recent years many rural and regional parts of Australia have undergone a major boom in investment in large-scale renewables, particularly solar power. These regions consist of large scale flat land, suitable weather conditions, and close proximity to transmission lines. 

What does this boom mean for rural land owners and operators?

Rural land owners and operators are often faced with competing interests on farm land and often have to weigh the cost benefits of such projects. 

The key commercial and legal issues that have emerged since the Federal Government’s implementation of the RET and ARENA include:

Environment, planning and transport

With a boom well underway, there are many constraints involving both grid limits and the timeframes required for the Australian Government to modify local town plans and planning policies to implement new connections in support of these mass projects.
However, the allocation of appropriate funding and practical disruptive aspects of construction in rural areas are serious issues to be considered. This is particularly an issue when multiple large scale projects run concurrently either with similar or competing interests.

For example, land resumptions for the construction of new clean energy hub transmission routes could run alongside any industry planned upgrades on irrigation infrastructure, both of which are equally important and are required in the support of Australia’s future agricultural needs. 

Grazing livestock

Although renewable energy projects generally increases economic productivity and provides rural land owners with a steady stream of side income, the practicality and placement of projects on farms are often the most crucial issue facing rural land owners and operators. Care must be taken to ensure the grazing of livestock within solar farms:

  • achieves and maximises dual usage
  • controls vegetation growth
  • ensures the presence of solar modules does not affect livestock numbers
  • provides shelter to grazing livestock

However, consideration also needs to be given to the type of livestock and whether they could potentially damage equipment. 

Construction phase

During the planning phase for construction, owners and operators must consider the effects on land. For example, soil compaction and any potential damage to water mains, water bores and watercourses. 

Owners of the land may be bound by numerous statutory requirements to indemnify or make good any damage, for example if certain water entitlements are granted under a state leasehold interest and attached to the land or if certain vegetation restrictions apply as a result of a dedication of flora and fauna to the State requiring vegetation management. In these instances it may be prudent seek prior consent from state leasehold parties or relevant government departments. 

The site’s general capacity would also require consideration having regard to the livestock numbers (including future numbers and progeny). The layout of solar panels and equipment would likely have future maintenance requirements therefore, fencing and access routes are also essential in the planning and construction phase. 

Crop production

  • General crop production:

There are many options with respect to crop production on land which also serves the purpose of a solar farm, provided owners and
operators have taken into consideration any potential state and industry vegetation restrictions and guidelines which may attach to the
land. The location, timing, and type of crop in addition to the practical aspects of maintaining the crop and harvesting the crop are
also essential elements. 

  • Sugarcane farming:

ARENA has publically indicated that Bundaberg Regional Irrigators Group have received funding from ARENA ($446,000 funding in support of
the $890,000 project) to conduct a three year trial to demonstrate the economic benefits of using renewable energy (specifically solar) to
power traditional irrigation methods of sugarcane crops. The aim of the project could see the traditional methods used in Australia to
irrigate large crops such as sugarcane to be at least partly, if not fully, powered by solar energy by replacing all grid supplied
daytime electricity requirements used for sugarcane irrigation with a sustainable low carbon solar electricity supply to reduce the impact
of high cost peak demand electricity. 

The testing phase commenced in February of 2017 and will continue for a period of three years. The testing will involve a solar pumping trial
conducted on a winch irrigated sugarcane farm. The trial will examine a suite of appropriate renewable energy options and irrigation system
configurations in an attempt to change farm management practices specifically suited to renewable energy, to increase cane production
yield (as a result of increased irrigation and renewable energy integration) at the same time ensuring financial viability of the concept.                                                                                                                                                                                

It is important for agricultural landholders negotiating with renewable energy companies in respect of projects to be undertaken on the land to carefully consider the terms being offered and the effect on the farming enterprise being conducted on the land, both in the short and long term. Failure to get appropriate advice before entering into agreements can lead to unintended adverse outcomes for the farming business utilising the land. 

Authors: Kylie Wilson, Carl Hinze & Lilian Hui

Contacts

Brisbane
Kylie Wilson, Partner
T: +61 7 3135 0514
E: kylie.wilson@holdingredlich.com

Carl Hinze, Partner
T: +61 7 3135 0630
E: carl.hinze@holdingredlich.com

Melbourne
Stephen Natoli, Partner 
T: +61 3 9321 9796 
E: stephen.natoli@holdingredlich.com

Scott Schlink
T: +61 3 9321 9939
E: scott.schlink@holdingredlich.com

Sydney
Darren Pereira, Partner
T: +61 2 8083 0487
E: darren.pereira@holdingredlich.com  

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Kylie Wilson

Published by Kylie Wilson, Carl Hinze

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