14 April 2021
Increasing demand in Australia for power generated from renewable sources (including wind) has been met with opposition from local communities for land-based wind farms on the basis that they allegedly affect farming land and tourism.
The alternative solution is to develop wind farms offshore. The potential viability of offshore wind farms has been driven by the Star of the South wind farm project which is the first offshore wind farm under development in Australia. The project has been in the pipeline since 2012 although it has faced significant delays due to Australia’s lack of regulatory framework for this kind of development.
The Star of the South (and many future wind farms) will be located more than three nautical miles offshore meaning they will be located in Commonwealth waters and will therefore require Commonwealth legislation as opposed to state.
The Commonwealth government has developed a proposed regulatory framework, and in January 2020, released a paper on the proposed ‘Offshore clean energy infrastructure regulatory framework’ (Framework) for public feedback and discussion. Below is a summary of the Framework, issues for consideration and our thoughts on the way forward.
In developing the Framework, the government has drawn on rules that currently exist for offshore oil and gas explorations in order to develop a bespoke arrangement for the development and generation of offshore wind power.
Existing Commonwealth legislation
The current Commonwealth Acts that apply to offshore oil and gas activities include:
These laws have a number of requirements that companies must meet before commencing offshore oil and gas activities, including:
Before a company can commence activities, it must have approval from the relevant Joint Authority and the independent regulator. The government releases new offshore areas for oil and gas exploration each year which provides an opportunity for companies to bid for an exploration permit. The successful company is then granted an exploration permit which is valid for six years and can be renewed for a further two periods of five years. All companies must have an environmental plan assessed and accepted by NOPSEMA before any activity can take place.
Existing state legislation
The Victorian legislation and regulations for oil and gas exploration follow very closely to that of the Commonwealth.
The key statutes that govern the oil and gas exploration in Victoria are:
The Federal Government’s proposal was open for public comment until 28 February 2020. The main aspects that make up the Framework are set out below.
The Australian Government Minister responsible for energy matters will make all major decisions under the Framework. It is proposed to leverage the experience of NOPSEMA to operate as the regulator for any new industry. NOPSEMA would be responsible for safety, environmental and structural integrity regulation, as well as providing technical advice to the Energy Minister to support their decision-making.
Before anyone can participate in the offshore clean energy infrastructure regime, they must first apply for pre-qualification. The pre-qualification process will assess suitability to participate in the offshore clean energy industry and will include periodic re-assessment. Tests will include a fit and proper person test, an assessment of technical and financial capability, as well as measures of past performance.
For developers seeking to undertake commercial activities, the process is as follows:
A non-exclusive Non-Commercial Licence will be available for pre-commercial seismic exploration or genuinely innovative offshore clean energy demonstration projects, and will be a low-cost pathway to ensure that these activities are regulated for safety and environmental matters, and appropriately decommissioned once they cease. These licences are limited to 10 years and do not lead to a Commercial Licence.
Transmission and infrastructure permit
A separate non-exclusive Transmission and Infrastructure Permit for construction and operation of transmission or other infrastructure will be granted in conjunction with commercial or non-commercial licences. This type of permit will be awarded for the purpose of transmitting energy generated onshore through the offshore environment. This permit will allow for a safety zone to be established for infrastructure protection if required.
Management plans will be required for all licences, which will provide requirements on delivery and protections for the project and include information relating to environmental and safety management, project design, engineering, and plans for construction, commissioning, operation and decommissioning.
All licence holders will also be required to lodge a decommissioning bond. Decommissioning bonds are expected to equal the amount it would cost the government to decommission all infrastructure should the licence holder fail to meet its decommissioning obligations.
All licence holders will also be subject to regular reporting and compliance obligations.
There are a number of issues that have not been addressed in the proposed Framework, along with a number of key points that will require further consideration throughout the initial public consultation process.
Responses to the proposal
Over 40 submissions were received from industry, researchers and the community with around 250 people attending public consultation workshops in Perth and Melbourne. The majority response was support for the design and principles of the Framework, along with requests for further detail and consultation on specific measures.
The Government held submissions and consultations to provide informed updates to the framework design. The name has now been changed from ‘offshore clean energy infrastructure’ to ‘offshore renewable energy infrastructure’ to provide greater clarity on the Framework’s coverage.
The legislative settings and framework aim to be in place and operational by mid-2021 with further opportunity to consult on regulations and policy details in 2021.
While it is unclear how the proposed Framework will work in reality, this is a positive step towards providing Australia with a renewable energy solution that works for all. The hybrid Framework incorporating existing legislation from oil and gas exploration combined with bespoke drafting for wind farm specific projects should allow for a well-regulated industry. There may be some issues that will occur along the way, but as this is an ever-evolving industry, the laws and regulations will evolve as well.
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 article is accurate at the date it is received or that it will continue to be accurate in the future.