NSW Draft Energy Policy Framework: key changes to consider

Important changes for the NSW renewable energy sector 15 min read

The NSW Government is seeking feedback on its long-awaited Draft Energy Policy Framework (Framework).

The Framework is an important development in the NSW renewable energy sector. It will impact new wind, solar and major transmission projects right from the early site selection process through the assessment, construction, operation, and decommissioning phases, as well as through landowner and community engagement across the project life. The Framework will replace the existing NSW Wind Energy Guideline, foreshadows changes to the existing Large-scale Solar Energy Guideline, and includes a new Private Agreement Guideline, Benefit Sharing Guideline and Transmission Guideline.

The NSW Government says the new Framework will support faster and more consistent decisions and help to achieve the transition to renewable energy. However, initial reactions from industry suggest aspects of the Framework may make it more difficult to obtain approval for new projects, particularly new wind energy developments.

In this Insight, we set out our observations and key changes to be aware of. If you would like to discuss what the changes mean for your organisation or need assistance with preparing a submission to the Department, please contact us below.

Overview

The Framework includes the following:

• Wind Energy Guideline: Updates to the wind energy guideline to deal with visual impacts, decommissioning and other issues
• Transmission Guideline: Guidance for large-scale transmission infrastructure for landscape and visual impacts and other assessment issues
• Large Scale Solar Energy Guideline Updates: Proposed revisions to the 2022 guideline to align with the benefit sharing guideline and new work on decommissioning;
• Benefit-Sharing Guideline: Guidance for benefit-sharing and planning agreements for wind and solar energy development; and
• Private Agreement Guideline: Guidance and a template agreement for landowners entering into host or impact agreements.

Timing and application

The Framework documents are on public exhibition until 18 December 2023, so any official change in policy will likely not occur until at least Q1 2024.

In most cases, the Framework documents, even once formally adopted, will not apply to projects that have already received Secretary's environmental assessment requirements (SEARs) prior to the date of adoption. However, the new Wind Energy Guideline, Transmission Guideline and Benefit Sharing Guideline will apply where an EIS is not submitted within six months of the publication date of those guidelines.

There are no transitional provisions included in the Private Agreement Guideline, suggesting that this guideline should be complied with now in relation to all future agreements entered into with host and neighbouring landowners, where practicable.

While framed as 'guidance', the Framework documents foreshadow that applicants will have to comply with the new guidelines as a requirement of their SEARs.

Key observations

Wind Energy Guideline

The draft Wind Energy Guideline will replace the existing 2016 Wind Energy Guideline and apply to all new onshore wind energy projects that are state significant development. The draft Guideline states 'the majority of investment in and development of wind energy projects will be concentrated in the Renewable Energy Zones' (REZs) but the Guideline will apply to projects both inside and outside the REZs.

The most notable change from the 2016 Guideline is the inclusion of a map (at page 21) of 'suitable areas for wind energy development', based on key commercial considerations and high-level environmental constraints. Notably, no sites are identified as 'desirable sites' for wind energy developments on the map, and limited areas marked as 'suitable sites'. The majority of the New England REZ and South-West REZ are identified as 'less suitable' for wind energy. The draft Guideline acknowledges there are a range of local and site-specific considerations that need to be considered when selecting a site, and indicates that the mapping will not be a factor in the assessment of new projects.

Like the existing Wind Energy Guideline, the draft Guideline sets out the process for assessing wind energy projects under the state significant development pathway, but the draft Guideline now also identifies key principles for the assessment of visual impacts/amenity, shadow flicker, noise and health, aviation safety and lighting, bird and bat impacts, traffic and transport, decommissioning and rehabilitation, waste management, and other assessment issues.  

Also of note, the new Guideline:

1. expressly contemplates that the addition of battery storage to an existing wind or solar development may be achieved by way of a modification application;
2. indicates that the Minister will consider requests to declare wind energy developments that include a significant energy storage system (for example, a delivery capacity of 750 MW or more) to be critical state significant infrastructure (which provides a more streamlined approval pathway);
3. indicates that a constraints map should be included in the Scoping Report for new projects, which is to identify which residences are associated and non-associated. This suggests there may be an expectation for applicants to have entered into agreements with relevant landowners prior to the Scoping Report stage; and
4. requires applicants to undertake shadow flicker modelling for all turbines, considering a worst-case scenario with the potential to impact both associated and non-associated residences.

The draft Wind Energy Guideline is supplemented by a new Wind Energy Decommissioning Calculator, a Technical Supplement for Noise Impact Assessment and Technical Supplement for Landscape and Visual Impact Assessment. These technical supplements are intended to replace the existing 'bulletins'.

The draft Technical Supplement for Noise Impact Assessment is largely similar to the existing bulletin, as it continues to apply the South Australian noise guidelines (though referring to the latest 2021 version, rather than 2009) and continues to apply the 35 dB(A) general limit. However, the draft Supplement differs in the following respects:

1. it identifies that noise caused by a wind project should not exceed 50dB(A) in national parks (a criterion it says will typically be achieved at a setback distance of 500 metres); and
2. it provides greater detail as to the potential health impacts of noise, identifying that 37dB is an appropriate maximum level of noise for residents to be exposed to, from a health perspective.

The draft Technical Supplement for Landscape and Visual Impact Assessment is more detailed than its predecessor and:

1. imposes a new requirement for turbines to setback a prescribed distance from any dwelling, unless the turbine would be fully screened by vegetation. The setback distance varies based on turbine height, with a 2km setback applicable to 250m turbines. This notably exceeds the current setback distance of 1km applicable in Victoria, which was reduced from 2km in 2015;
2. considers that turbines remain a prominent feature of the landscape between 2km and 8km away, and are noticeable up to a distance of 12km;
3. requires visual impacts to be assessed not only from those properties with actual dwellings but also properties within the applicable setback distance that have a 'dwelling entitlement' (ie. land on which a dwelling could, by virtue of its zoning, be subject of a DA in future for a residential dwelling) and from public locations including roads; and
4. provides that an EIS must include a separate landscape character assessment, with a study area of approximately 25km from the proposed development, in addition to a visual impact assessment.

Unlike the existing bulletin, the draft Supplement includes a lot of reference imagery, including diagrams and images to assist with the determination of low, moderate and high scenic qualities, visual magnitude and visual impact. There is also an increased focus on the use of photomontages to depict more significant visual impacts.

Transmission Guideline

The draft Transmission Guideline will apply to new major transmission projects declared as state significant infrastructure or critical state significant infrastructure. While it is not entirely clear what constitutes a major transmission project for the purpose of the new Guideline, it appears the intention is that the new Guideline will not apply to transmission works required to connect individual new wind and solar projects.

The draft Transmission Guideline provides guidance on route selection, community engagement, and the assessment of impacts such as visual, biodiversity, agricultural, bushfire risk, electric and magnetic fields and aviation.The draft Transmission Guideline is also supported by a Technical Supplement for Landscape and Visual Impact Assessment, which imposes a new setback requirement from dwellings that varies depending on tower height (eg 370m from an 80m tower). Like the equivalent Technical Supplement for wind, it provides reference imagery and diagrams to assist with the determination of visual impacts.

Large-scale Solar Energy Guideline

The existing Large-scale Solar Energy Guideline was published in 2022. Minor updates to that document are proposed to reflect the key policy changes set out in the Framework. The updated Guideline has not yet been published, but the proposed updates described in the Framework overview document are as follows:

1. updated details on site selection, including a map identifying desirable, suitable and less suitable sites;
2. providing a calculator for estimating decommissioning costs to ensure landowners 'are well informed about the likely costs';
3. incorporating the Benefit Sharing Guideline and Private Agreement Guideline (discussed below); and
4. clarifying assessment requirements for dwelling entitlements and updating the assessment methodology for landscape and visual impact assessment.

Benefit-Sharing Guideline

The draft Benefit-Sharing Guideline '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'. While its stated purpose is to encourage benefit-sharing, the new Guideline foreshadows that it will be referenced in SEARs, creating a binding requirement for applicants to comply.

The new Guideline advises applicants to use the following benefit-sharing rates:

1. $850 per megawatt per annum for solar energy development, or
2. $1050 per megawatt per annum for wind energy development,

paid over the life of the development and indexed to the Consumer Price Index.

The value of any benefit-sharing initiatives (which may include capital works, sponsorship, community programs or council-managed initiatives) will be in addition to any arrangements between a project developer and individual landowners, including host and neighbouring landowners. Applicants will be required to outline their proposed model for community benefit sharing in their EIS.

The new benefit-sharing arrangements are estimated to deliver estimated benefits of up to $413 million to communities over 25 years (in present value terms).

Private Agreement Guideline

The new 59-page Private Agreement Guideline will apply to all large-scale solar and wind energy projects and will replace the existing one page of 'minimum standards' for neighbour agreements (now referred to as 'impact agreements') in the current 2016 Wind Energy Guideline. The draft Private Agreement Guideline includes a template impact agreement that can be used for both host and non-host landowners. Use of the template is not mandatory.

The new Guideline provides guidance for discussions with host landowners and states that landowners must be properly informed of the implications of entering these agreements – it suggests this may 'include opportunities for the landowner to visit other similar operating renewable energy projects and/or to meet other host landowners'.

The majority of the existing 'minimum standards' for negotiated agreements have been adopted in the draft Private Agreement Guideline. As such, the new Guideline may not necessitate significant revisions to existing host and neighbour agreements, provided these comply with the existing minimum standards. However, there are some notable differences between the new Guideline and existing requirements, including:

1. Greater focus on the clear identification and scoping of the impacts that the landowner is signing up for – impacts should be 'fully particularised' in an agreement, including likely noise levels at different times of the day, and the landowner should be given photomontages to reflect the expected visual impacts.
2. Greater information to be provided to the landowner about the project – the template agreement includes clauses that require the developer to provide the landowner with copies of all consents, construction certificates and DAs for the project, as well as all assessment documents for those applications. The template also includes a clause requiring the developer to provide a 'key information sheet' to the landowner, which shows a map of the development as related to the land, details about when and where the works will occur and the duration of any construction period, and the contact details of a representative of the developer to discuss concerns with.
3. Agreements should make provision for circumstances where the solar/wind project is materially delayed, or the scope or scale of the project materially changes – the template agreement suggests additional compensation should be paid in these circumstances.
4. Agreements should provide for monitoring of impacts every six months from the date of commencement of the agreement, or such alternative timeframe for periodic monitoring as required under the relevant development consent.
5. Copies of all impact agreements must be submitted to the Department.
6. The draft Guideline suggests landowners should not accept confidentiality clauses as part of agreements unless the agreement also includes clauses to manage impacts from the development (though the template still includes a confidentiality provision).
7. The template agreement suggests that the proponent should provide the landowner with security for decommissioning costs in the form of a bank guarantee.

Unlike the existing 2016 Guideline, the draft Private Agreement Guideline does not use the language of 'minimum standards' when discussing the matters that should be addressed in an impact agreement; rather, it is generally framed as general guidance that should be considered when negotiating agreements. That being said, proponents should review their existing agreement templates and look to ensure that any new landowner agreements entered into going forward sufficiently address the matters in the new Guideline to avoid the risk that a landowner may, in future, argue that an agreement is insufficient and they should be considered non-associated for certain impacts.

Contact a member of our energy team to discuss this further.