New regime to unlock investment in Australia’s offshore energy projects

On 2 September 2021, the Offshore Electricity Infrastructure Bill 2021 (Bill) was introduced into the Federal Parliament. If passed, the proposed legislation will provide the Federal Government with a framework to licence parts of the Commonwealth offshore area, more than three miles offshore to the outer limit of Australia’s exclusive economic zone. The licensing regime will allow exploration, construction and operation of offshore renewable energy and transmission projects in these areas, while managing existing rights and infrastructure in the maritime area.

Licensing framework

The Bill empowers the Minister for Energy and Emissions Reduction to grant three streams of licence options:

1. commercial licences for large scale, generation-focused activities for up to 40 years, with an ability to extend the term for a further 40 years. Applicants for a commercial licence must first obtain a feasibility licence that allows the holder to undertake scoping activities for up to seven years. The process for obtaining a feasibility licence will be a competitive process, with the Minister selecting the successful proponent based on a suitability and merit criteria
2. research and demonstration licences are intended for small-scale projects with the purpose of undertaking research, testing technologies and early stage technology assessment. A research and demonstration licence cannot become a commercial licence and will be granted for a 10-year term with a possibility of extension. All infrastructure installed under this licence must be removed at the end of the licence period
3. transmission and other infrastructure licences allow for offshore generation of renewable energy and shore-to-shore transmission, as well as construction of infrastructure used for transmission. The term is linked to the asset life rather than a set term like the other licence streams.

Under the Bill, the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) and the National Offshore Petroleum Titles Administrator (NOPTA) will administer and regulate the framework. The quantum of levies to be imposed on licence holders has not yet been published.

The licensing regime is not a one-stop shop. Licence holders will likely need to comply with additional state or territory requirements for licensing infrastructure in coastal waters, connection to on-shore infrastructure and participation in the National Electricity Market. Additional legislation to support construction, operation and decommissioning of renewable energy projects in state and territory coastal waters will likely follow.

Continued legislation development

This Bill currently remains before the House of Representatives and has been referred to the Senate Environment and Communications Legislation Committee for inquiry, with a report due on 14 October 2021.

We will provide a further update on the Bill following the Committee’s report.

Authors: Ron Eames, Grace Wimberley & Megan Cumming

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 article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Ron Eames

Grace Wimberley

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