Updates to the Australian offshore wind regulatory regime

Several changes have occurred since the announcement in December 2022 of the Gippsland Offshore Wind Area, including the declaration of new and anticipated offshore wind zones and the publication by the state of Victoria of the Offshore Wind Energy Implementation Statement 2 (IS2).

We welcome the further clarification provided in relation to feasibility licence applications and the expectations for environmental assessments for offshore wind farms under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) from the Department of Climate Change, Energy, the Environment and Water (DCCEEW). We also look forward to the Third Offshore Wind Energy Implementation Statement in Victoria expected later this year in relation to the procurement process, the design of the support package and local content targets for developers.

Existing declared and proposed offshore wind zones

In July, the Hunter offshore wind zone in New South Wales (NSW) was declared with a final area of 1,854 square kilometres and a height restriction of 260 metres above sea level to address Department of Defence interactions. Feasibility licence applications are currently open until 14 November.

Consultations on the Illawarra, NSW offshore wind zone and the Southern Ocean offshore wind zone have started and will close on 16 October and 31 August respectively. The feasibility licence applications on the Gippsland offshore wind zone closed on 27 April and are now under consideration by the Offshore Electricity Infrastructure (OEI) Regulator.

The policy landscape in Victoria

Victoria is spearheading this sector and with the state likely to host the country’s first offshore wind farm, it has proposed a regulatory and legislative reform programme to ensure that the framework is fit for purpose, reflects global best practice and is complimentary to the existing Commonwealth regulatory framework.

Proposed legislative and regulatory reforms were set out in IS2 (4.27MB / 36-page PDF), which signals three significant anticipated updates:

• land access legislative amendments – amending several pieces of existing state legislation to allow offshore wind developers to obtain tenure over Crown land, and electricity safety legislation to allow the installation of energy infrastructure on public land. It is expected that the relevant amending legislation will be tabled in Victorian Parliament later in the year.
• responsive administrative solution – at the same time as progressing legislative amendments to improve land access, the Victorian government will consider introducing administrative solutions to address inefficiencies in the offshore wind framework, releasing guidance material and developing a pro-forma licence containing the rights an offshore wind developer will have if granted tenure over the Victorian seabed.
• bespoke framework: IS2 indicates that the Victorian government may consider introducing a bespoke legislative framework that would apply specifically to offshore electricity infrastructure within Victoria in the long term.

With Victoria being the most progressed in the context of policy and regulation, it will be interesting as to whether New South Wales, Tasmania and Western Australia will follow and mirror this approach.

Updates to feasibility licence application guidance documentation

The OIR has published an updated guideline on feasibility licence applications (527KB / 28-page, PDF), which applies to all such applications made after 8 August 2023.

The guide explains some of the merit criteria on which applications will be assessed.

Technical advice availability

The guide clarifies that “where contracted advice will be engaged to support the project team, a person that has a contract in place which may be conditional upon grant of licence would be assessed as higher merit than a person who does not”.

Financial resources

The guide clarifies that the ability of the proponent to carry out the activities required to reach a final investment decision will be considered together with the ability of the proponent to carry out the project.

Only drawn debt financing, and not undrawn debt financing, will be classed as “funds in place” for the purpose of the application. It may include a guarantee of funds in place by another entity, provided that the only condition of the guarantee is that the feasibility licence is approved. The guide states that the detailed funding plan only needs to consider how financial resources will be structured for the remaining term of the feasibility licence, rather than the full commercial lifespan of the project.

Project viability

Proponents must include a risk register that complements the full project development plan, and which sets out the mitigation measures recommended to reduce the risks associated with the development. If the project is phased, the risk register must assess the likelihood of delivery of each phase.

Proponent suitability

Where commercial technologies are emerging, proponents must provide confirmation that assessment of previous experience in delivery of this technology is not required at a large scale. They must also confirm that they, rather than a person delivering technical advice to the proponent, have experience in delivering similar-scale infrastructure projects.

National interest

An assessment under the national interest test may consider whether the timing of the proposed feasibility activities is likely to be completed in time for a final investment decision to be made within a reasonable period of time.

Equal merit process

The guide confirms that where the minister determines that two projects are of equal merit and invites revised applications to be resubmitted, the OEI Registrar may take anything it considers relevant into account when considering the “substantially similar” test. A proponent may choose not to revise and resubmit its application, in which case the application stands.

EPBC Act assessment guidance

In July, the DCCEEW released new guidance (3.54MB / 47-page PDF) on environmental assessment of proposed offshore wind farms under the EPEC Act.

The guidance provides additional clarification on key impact issues when assessing offshore wind farms under the EPBC Act including on Commonwealth Marine Areas, listed threatened species and communities and Ramsar wetlands. These include:

• identifying each of the key factors for assessment;
• providing generalised guidance on the approach to be taken to determining an acceptable impact; and
• providing examples of ‘good practice’ measures to minimise, monitor and mitigate impacts.

The guidance confirms that impact avoidance – through appropriate project siting, scheduling and design – should be considered first at the concept stage, in advance of considering mitigation measures and offsets; and that cumulative impacts resulting from multiple projects in the same area will require assessment. However, it provides no details as to the level of assessment required, with DCCEEW instead foreshadowing further new policies on managing cumulative impacts in the marine environment.

The guidance also provides suggestions and ‘good practice’ mitigation measures in ten areas:

• underwater noise;
• birds and bat impacts;
• electromagnetic frequencies;
• benthic habitat impacts;
• underwater cultural heritage;
• hydrodynamics and sediment transport processes;
• barrier effects and displacement of species;
• light emissions;
• vessel injury and mortality to marine fauna;
• invasive marine species;
• socioeconomic impacts arising from interference with existing uses;
• socioeconomic impacts arising from changes to the seascape and visual impacts; and
• impact on Australian marine parks and their values.

Co-written by Niren Menon and Alec Kibblewhite of Pinsent Masons.