A tailwind for offshore wind projects: Australian Parliament introduces clean offshore energy bills - Renewables

On 2 September 2021, the Energy and Emissions Reduction Minister Angus Taylor (the Minister) introduced the much anticipated Offshore Electricity Infrastructure Bill (Main Bill) and Offshore Electricity Infrastructure (Regulatory Levies) Bill 2021 (Levies Bill) into Parliament. If enacted, the bills would unlock some of the existing barriers to development of offshore electricity projects in Commonwealth waters and establish a clear regulatory framework for offshore wind developments in Australia.

Background

Offshore wind has been a well-established and rapidly growing form of renewable energy in many countries for a number of years – with 35 GW now commissioned globally, representing 4.8% of total global wind capacity.¹

In 2020 6.1 GW of new offshore wind was commissioned. Half was in China, with steady growth also seen in Europe, with Netherlands taking the lead, followed by Belgium, UK, Germany and Portugal. The remaining installations were in the US and South Korea.²

Offshore wind development is expected to increase its market share in global new wind installations, from today's 6.5% to 21% by 2025, due to technological advances, increasing competitiveness and its potential contribution to the energy transition and the road to net zero.³

Australia has a massive amount of high quality offshore wind resources, and more than 10 projects are currently proposed for offshore wind development.

To date however, it has been unclear what regulatory pathway would apply to such development, meaning projects have progressed slowly and in an ad hoc manner. The existing potential legislative pathways (such as the Offshore Petroleum and Greenhouse Gas Storage Act 2006) did not readily lend themselves to these types of projects. Other complicating factors include the massive capital cost associated with these projects and the nature of our Federal system, where projects sited across both Commonwealth and State waters are regulated by both Commonwealth and State laws.

On 4 January 2020, the Commonwealth Government's Department of the Environment and Energy released a discussion paper setting out a proposed framework for the delivery of offshore clean energy projects in Commonwealth waters. The Main Bill develops that framework, providing a targeted regime for the delivery of offshore energy projects.

Main Bill

The Main Bill would allow licence holders to undertake certain "offshore infrastructure activities" within the "Commonwealth offshore area", which are the waters beyond three nautical miles (i.e. outside State/Territory control) to the outer edge of Australia's exclusive economic zone.

"Offshore infrastructure activities" include constructing, operating, and decommissioning:

"offshore energy infrastructure": which includes fixed infrastructure with the primary purpose of exploring, storing, transmitting, or exploiting renewable energy sources; and
"offshoreelectricity transmission infrastructure": which includes fixed infrastructure with the primary purpose of storing, transmitting, or conveying electricity.⁴

The Main Bill would empower the Minister to grant three streams of licences, each with different suitability and merit criteria:

Commercial: for commercial-scale projects intending to generate electricity through Offshore Renewable Energy Infrastructure. A feasibility licence must first be obtained, following a public invitation to industry regarding areas declared by the Minister as suitable for offshore infrastructure activities. Once feasibility work is completed, the feasibility licence holder can apply for a commercial licence to authorise it to develop an offshore electricity generation project in the licence area. Commercial licences have a duration of up to 40 years and can be extended.
Research and demonstration: for small-scale projects to research or test emerging technologies (e.g. wave, tidal or ocean thermal electricity generation). All infrastructure installed under this licence must be removed by the end of the 10 year licence period (unless the period is extended).
Transmission and infrastructure: allowing the licence holder to construct and operate infrastructure that stores or transmits electricity or renewable energy product through the licence area. These licences will allow electricity generated offshore to connect to onshore grid infrastructure or other end users. The licences can be issued for the term of the asset life. Unlike the other licence streams, it can be granted outside a declared area.

Separate licencing and approvals requirements will remain for coastal waters and for connection to the National Electricity Market.

Notably, the Main Bill will also:

prohibit unauthorised offshore infrastructure activities in the Commonwealth offshore area;
appoint the National Off shore Petroleum Titles Administrator (NOPTA) as overseer of licences for off shore projects and the National Off shore Petroleum Safety and Environmental Management Authority (NOPSEMA) as supervisor of ongoing operations and safety;
empower the Minister to declare areas that are suitable for offshore infrastructure activities, having regard to existing uses of the area;
contain environmental safeguards requiring project developers to have management plans and make financial commitments to properly decommission projects when they are no longer productive; and
contain health and safety protections, including by adopting a modified version of the Work Health and Safety Act 2011 Act (Cth) and establishing safety and protection zones to protect offshore workers and other marine users.

Tailwind for planned offshore wind and transmission projects

The current regulatory void has impeded the delivery of a number of offshore electricity projects, and the Government expects the Main Bill to provide more certainty for investors and accelerate a number of projects already under development. The Minister pointed in particular to the following:

the Marinus Link transmission line, which will connect the mainland to Tasmania's Battery of the Nation project;
'Star of the South', which proposes 2.2 GW of offshore generation capacity off the coast of Gippsland, Victoria; and
'Sun Cable', which proposes to develop a solar farm of at least 14 GW capacity and associated battery storage in the Northern Territory and connect the system to Singapore with a 3,750 kilometre undersea cable.⁵

Although its immediate impact will concern offshore wind and transmission projects, the Main Bill could also facilitate research and development of frontier offshore renewables sources – such as tidal, wave, rain, solar, current, and geothermal power. Carbon capture has not been expressly included.

Levies Bill

The Levies Bill would enable projects to be levied for the costs of regulating the offshore electricity activities not provided for by fees under the Main Bill, and will be prescribed by regulations.

Next steps

Both bills have been referred to the Senate Environment and Communications Legislation Committee for consideration, with a reporting deadline of October 14.

The Government has also indicated that the Main Bill and Levies Bill may be complemented by a third bill, the Offshore Electricity Infrastructure (Consequential Amendments) Bill 2021.

Footnotes

¹ Global Wind Energy Council (GWEC), Global Wind Report 2021.

² Global Wind Energy Council (GWEC), Global Wind Report 2021.

³ Global Wind Energy Council (GWEC), Global Wind Report 2021.

⁴ "Offshore energy infrastructure" and "offshore electricity transmission infrastructure" also include any infrastructure, structure or installation that would fit the definition but is being constructed, installed or decommissioned or that has temporarily or accidentally ceased to be fixed or tethered infrastructure. However, infrastructure for exploring or recovering minerals, "infrastructure facilities" under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth), and "facilities" under Schedule 3 to that Act are excluded.

⁵ https://www.abc.net.au/news/2021-01-28/nt-government-sun-cable-renewable-energy-project/13098002; https://www.abc.net.au/radio/darwin/programs/nt-country-hour/suncable/13513786.

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