Embracing the energy transition: NSW energy policy updates

The NSW Government has proposed a new draft Energy Policy Framework, consisting of a number of guidelines and supplementary documentation to support a more streamlined decision-making process for renewable energy projects in NSW. The new framework is intended to align with the introduction of the Climate Change (Net Zero Future) Act (expected to commence imminently), which will legislate emissions targets for NSW.

The Government has recognised the need to provide for greater certainty to industry and communities through replacing the NSW Wind Energy Guideline (2016), updating the Large-Scale Solar Energy Guideline 2022 and introducing three new guidelines, the Transmission Guideline, Private Agreement Guideline and Benefit Sharing Guideline.

The policy package is currently on exhibition, with the Department of Planning and Environment (DPE) calling for submissions from industry and community. Submissions can be made up until Monday, 29 January 2024.

Energy Policy Framework: overview

The Energy Policy Framework consists of the following guidelines and supplementary documentation:

• Wind Energy Guidelines, including the Wind Energy Guideline, Technical Supplement for Landscape and Visual Impact Assessment, Technical Supplement for Noise Assessment and Wind Energy Decommissioning Calculator;
• Transmission Guideline and Technical Supplement for Landscape and Visual Impact Assessment;
• Updates to the Large-Scale Solar Energy Guideline (published in 2022) and the Solar Energy Decommissioning Calculator;
• Benefit Sharing Guideline; and 
• Private Agreement Guideline.

We discuss each of these guidelines and the relevant updates below.

Wind Energy Guideline

DPE is proposing a new Wind Energy Guideline (Draft WEG) in replacement of the Wind Energy Guideline previously released in 2016. The Draft WEG reflects the NSW Government’s Net Zero Plan and Electricity Infrastructure Road Map including providing more in depth guidance on landscape, visual and noise impact assessments.

The Draft WEG applies to onshore wind energy development which is declared as State Significant Development (SSD). Wind Energy projects located offshore are not covered by the guideline. Applicants in preparing an Environmental Impact Statement (EIS) for onshore SSD wind energy projects must consider the Draft WEG and supporting technical supplements for visual and noise impact assessment where referenced in the Secretary’s Environmental Assessment Requirements (SEARs).

Where SEARs have already been issued when the guideline is finalised, the guideline applies if an EIS is not submitted within six months of publication of the guidelines. The Draft WEG and supplementary documents are also to be considered when preparing and assessing applications to modify SSD consents for large-scale wind energy development.

The level of detail is to be proportionate to the scale of modifications and additional likely impacts. Further to this, the Minister can consider requests to declare wind energy development as Critical State Significant Infrastructure if it includes a significant energy storage system (for example, a delivery capacity of 750 megawatts or more).

The Draft WEG introduces, at page 21, a map of suitable areas for wind energy development. This caused some criticism from industry at the time of release, as the original map provided a colour scale of “desirable sites” to “less suitable sites” with little, if any, sites showing as desirable.

However, DPE has since clarified and provided a note with an update to the map stating that all of the mapped areas are suitable for wind energy development and the colour coding shows varying levels of suitability within the most desirable areas of the state, based on technical, economic and environmental factors rather than excluding any areas. The map legend was also updated to show sites as “highly suitable” to “suitable” – an extract of the updated map is provided below. Notwithstanding this, there are still only a small number of areas which are shown to be “highly suitable” for development which continues to raise some concern for developers.

The Draft WEG notes that with the introduction of Renewable Energy Zones (REZ) the DPE are expecting renewable energy projects including wind energy projects to combine with storage, such as batteries and network infrastructure, in dedicated areas of NSW.

Updates have also been made to the assessment process and considerations for wind energy projects under the SSD pathway which include the following:

• visual impacts/amenity: update and overhaul the principles for assessment of visual impacts. Low, moderate and high visual impacts rating system introduced and mitigation methods to be considered and implemented where appropriate.
• shadow flicker: a detailed shadow flicker assessment for impacted residences must be included in the EIS.
• noise and health: update to the principles for assessment of noise and health impacts.
• aviation safety and lighting: addresses commonly raised concerns about aviation and night lighting. Applicants must develop and implement a bushfire management plan that includes response strategies such as shutting down and positioning turbine blades to facilitate aerial access.
• bird and bat impacts: applicants must include a biodiversity assessment in the EIS that considers all the biodiversity impacts of the proposal, including clearing of native vegetation and indirect or prescribed species impacts including potential bird and bat strike.
• traffic and transport: addresses commonly raised concerns about traffic management.
• infrastructure contributions, benefit sharing and agreements: specific impacts to local infrastructure to be assessed through conditions of development consent. Benefit sharing guidelines have been developed providing best practice for applicants to use and should be included in the EIS. Applicant to consider and implement guidance provided in the Draft Private Agreement Guideline and provide details of any host and impact agreements.
• decommissioning and rehabilitation: the Draft WEG provides updated principles for assessing the decommissioning and rehabilitation for wind energy developments, including the wind energy decommissioning calculator, which can be used by applicants and landowners to estimate potential costs for decommissioning. Applicants must identify the decommissioning and rehabilitation activities that will take place and address all relevant issues for decommissioning and rehabilitation in the project EIS.
• waste management: applicants should clearly demonstrate how waste will be minimised at all stages of the development and how reuse and recycling will be optimised.

Transmission guideline

The NSW Government has recognised that the state’s transmission network will require a capacity of 125 gigawatts of new grid scale renewable energy by 2050. The current infrastructure, however, only has an estimated capacity of 16 gigawatts. The Government recognises the need to upgrade existing infrastructure in order to facilitate demand and connect renewable energy sources to the electricity grid.

The Draft Transmission Guideline (Draft TG) supports major upgrades and expansions to the NSW transmission network and aims to provide communities, industry and regulators with consistent information and guidance on the planning and development of this infrastructure.

The guideline is applicable to development of major transmission projects that are declared as State Significant Infrastructure (SSI) and specifically excludes application to Battery Energy Storage Systems.

Proponents of major transmission projects must consider the Draft TG and the supplementary visual impact assessment document, where referenced in the SEARs, in preparing an EIS. Similar to the Draft WEG, where SEARs have already been issued when the Transmission Guideline is finalised, the guideline applies if an EIS is not provided within six months of publication of the guidelines.

SSI transmission projects are to be subject to a rigorous merit-based assessment that includes extensive community consultation with a detailed consideration of environmental, social and economic impacts. The Draft TG provides guidance on route selection, community and stakeholder engagement and further key assessment issues and considerations including landscape and visual impacts, biodiversity, agricultural land use, undergrounding, bushfire risks, electric magnetic fields, and aviation. It also provides commentary on access arrangements where a proponent may require consent to undertake preliminary field work, acquisition agreements where the proponent is at the early stage of the negotiation process for easements prior to any compulsory acquisition process, and strategic benefit payment considerations for proponents.

Large-Scale Solar Energy Guideline

The DPE is proposing minor changes to the Large-Scale Solar Energy Guideline which was released in 2022. The key changes are:

• planning framework: the Minister may consider a request to declare solar energy development as Critical State Significant Infrastructure if it includes a significant energy storage system (consistent with Section 2.6 of the Draft Wind Energy Guidelines).
• site selection: Section 4.2 of existing Solar Energy Guidelines is to be updated to identify suitable locations for solar energy development.
• decommissioning: a calculator has been proposed to be used for estimating decommissioning costs.
• benefit sharing: existing guidance in section 5.3.2 of Solar Guideline is proposed to be repealed and replaced with reference in the Draft Benefit Sharing Guideline (2023), which is discussed further below.
• private agreements: existing guidance in section 5.3.3 and Appendix B of Solar Guideline repealed and replaced with reference to the draft Private Agreement Guideline (2023), which provides more extensive general guidance on negotiating agreements with different categories of landholders, as discussed below.
• landscape and visual impact assessment: clarifications are proposed to the assessment requirements for dwelling entitlements, in accordance with the draft Wind Energy Guideline (2023) where relevant. It also proposes to update the assessment methodology to allow a more proportionate approach that does not rely exclusively on photomontages.

The DPE has provided a map of suitable locations for solar development, as shown below.

Benefit Sharing Guideline

The Benefit Sharing Guideline (Draft BSG) provides advice on how the industry can share proceeds of solar and wind energy development (financial and other benefits) with host communities to ensure they benefit from the transition to renewable energy.

The Draft BSG sets out a range of principles to ensure that benefit sharing is transparent and focussed on communities.

Specifically, the guideline proposes rates for benefit sharing of:

• $850 per megawatt per annum for solar energy development; or
• $1050 per megawatt per annum for wind energy development,

which are to be paid over the life of the development and indexed to CPI.

The Draft BSG applies to solar and wind energy generation projects that are declared SSD (in and outside of REZs) and should be read in conjunction with the Large-Scale Solar Energy Guideline 2022 and Draft WEG. The guideline is not applicable to transmission projects. In the case that SEARs are already issued when the Draft BSG is finalised and the applicant is yet to submit an EIS, where an EIS is not submitted within six months from the date of publication of the guideline, the guideline will apply. The Draft BSG is also to be considered when preparing and assessing applications to modify a SSD consent for large-scale renewable energy projects where the modification seeks to increase the generating capacity of a project.

Draft Private Agreement Guideline

The Draft Private Agreement Guideline (Draft PAG) applies to all solar and wind energy generation projects (large-scale renewable energy projects or proposals) that are declared as SSD. This guideline is to be read in conjunction with the updated Large-Scale Solar Energy Guideline 2022 and Draft WEG.

The Draft PAG covers a number of different types of agreements including:

• licence agreements, also known as access agreements, allowing applicants access rights to a landowners property.
• option agreements, which provide applicants with rights to lease some or all of a landowner’s property for the purpose of construction and operation of a renewable energy project.
• land purchase agreements where the applicant may offer to purchase the land subject to the proposed development.
• host agreements, which are long-term agreements negotiated between a project developer and landowner that places significant obligations and responsibilities on the landowner. The agreement is typically like a commercial lease allowing the developer to install, operate, maintain and decommission the project infrastructure.
• impact agreements (also known as “neighbour agreements”) where a renewable energy project may significantly impact other landowners who own land surrounding the project area.

The Draft PAG provides general guidance on negotiating agreements, guidance for “host landowners,” and “adjacent landowners,” with appendix A providing a model clause template for agreements. 

Final thoughts

While the proposed introduction of the new Energy Policy Framework aims to streamline assessment of applications for renewable energy projects, it will also bring a level of complexity in relation to new assessment criteria and considerations for proponents and consent authorities, including in respect of greater focus on community benefits and agreements with landholders.

With numerous solar and wind projects currently going through the NSW planning assessment system, and the absence of any approvals of wind farm projects in NSW over the past two years, it is clear that the timeframes and complexity are increasing and the all-important “social licence” for renewable energy projects is becoming harder to obtain.

It would be prudent for applicants who are currently in the process of obtaining approval for renewable energy projects (including modifications) to carefully consider the draft guidelines as they may be applicable to their future projects. It is expected that the DPE will likely commence integration of some of the requirements in the guidelines into SEARs being issued prior to the finalisation of the draft guidelines to fast track the implementation of the criteria.