The Australian Government has recently identified six offshore wind zones that will be favoured for offshore wind development projects in Australia.
Federal Energy Minister Chris Bowen announced that the first zone identified for public consultation is in the Bass Strait located off Gippsland, Victoria. This is the first offshore wind area to be formally assessed under the Government’s Offshore Electricity Infrastructure framework.
Public consultation has commenced and will offer an opportunity for all stakeholders with interests in the proposed areas to provide feedback. Any submissions on this proposal must be received by 7 October 2022.
The other regions identified for offshore wind energy projects include the:
- Pacific Ocean region off the Hunter in NSW
- Pacific Ocean region off the Illawarra in NSW
- Southern Ocean region off Portland in Victoria
- Bass Strait region off Northern Tasmania
- Indian Ocean region off Perth/Bunbury Western Australia
This is a long-awaited step towards greater certainty for investors in offshore wind farm projects in Australia.
What is offshore wind energy and how does it work?
Offshore wind energy is a sustainable source of renewable energy that is commercially operated at a large scale in various countries (especially in Europe) and is rapidly expanding globally. It is expected to be a vital part of Australia’s clean energy transition.
Offshore turbines catch the strong offshore winds to generate electricity. The electricity is then transmitted through a network of cables and substations to connect to the existing electricity grid. Offshore wind can help with energy security and resilience due to its power capacity and availability at times when solar power and onshore wind are not available.
Australia possesses world-class offshore wind resources, which are generally located in the southern half of the country, adjacent to large population centres, industrial hubs and mining projects.
How is offshore wind energy regulated in Australia?
The Offshore Electricity Infrastructure Act 2021 (OEI Act) commenced on 2 June 2022. The OEI Act, in combination with the supporting regulations, regulates Australia's offshore wind industry in Commonwealth waters and implements a licensing scheme for those proponents wishing to develop offshore infrastructure projects. The legislation permits the construction, installation, commissioning, operation, maintenance and decommissioning of offshore renewable energy infrastructure and offshore electricity transmission infrastructure.
Work health and safety is provided for by applying the Work Health and Safety Act 2011 to offshore infrastructure activities. This Act also applies state and territory laws in relation to offshore infrastructure.
Under the OEI Act, proponents wishing to develop offshore infrastructure projects will require a licence. There are four different types of licences:
- Feasibility Licence - a feasibility licence authorises the licence holder to assess the feasibility of an offshore infrastructure project and apply for a commercial licence for the project. The term for a feasibility licence is 7 years.
- Commercial Licence - a commercial licence authorises the licence holder to carry out an offshore infrastructure project for the purpose of exploiting renewable energy resources. A commercial licence can only be granted to the holder of a feasibility licence. The term for a commercial licence is 40 years.
- Research and Demonstration Licence - a research and demonstration licence authorises research into, or demonstration of, offshore renewable energy infrastructure or offshore electricity transmission infrastructure. The term for a research and demonstration licence is 10 years.
- Transmission and Infrastructure Licence - a transmission and infrastructure licence authorises the licence holder to store, transmit or convey electricity (which may or may not be from renewable sources) or a renewable energy product. Unlike the other kinds of licence, a transmission and infrastructure licence can cover one or more areas outside a declared area. There is currently no prescribed term for a transmission and infrastructure licence.
All licences have the ability to be extended beyond the initial term at the discretion of the Minister.
In order for a licence to be granted to an eligible person, the licence must meet certain merit criteria.
The criteria are:
- Technical and financial capability – this requirement addresses the capability of the applicant to access technical advice and financial resources that will allow it to complete the project.
- Viability – this requirement assesses whether the complexity of the project, route-to-market and commercial return of the project render it viable.
- Suitability of the applicant – this requirement assesses the past performance of the applicant in respect of previous offshore infrastructure projects domestically or overseas, as well as reviewing the corporate governance structure.
- National interest – this criteria examines the economic contribution of the project in combination with its potential impact on national security, its complexity and potential conflicts.
Before an offshore infrastructure project can commence, it must meet the requirements of the OEI Act and all relevant commonwealth, state and territory environmental requirements. The licences issued under the OEI Act are separate to approvals issued under the EPBC Act. It is important for project proponents to note that state and territory requirements and approval under one piece of legislation, does not guarantee approval under another.
The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) will be responsible for monitoring and enforcing compliance with the OEI Act, environmental obligations, general operations and safety. NOPSEMA have released a guideline on offshore environmental approvals.
The National Offshore Petroleum Titles Administrator (NOPTA) will manage the administration of licences, including maintaining registers, and collecting relevant information and reports.
What next?
As the first offshore wind zone has now been declared under the OEI Act, we suspect that the next 12 months will be a busy time for project proponents as they attempt to navigate the licensing scheme and seek to apply for the relevant state and federal approvals, and we have already seen a number of projects recently being announced.
As this is a rapidly developing area of law, we expect that the Federal Government will release further guidance, particularly in relation to licensing fees and annual levies, health and safety obligations, management plans and decommissioning requirements.
We will continue to monitor the legal developments.
If you would like more information on the regulatory approvals required for an offshore wind development in Australia, please contact our Resources and Energy team.