Challenges, opportunities and land access arrangements 5 min read
Western Australia's distinctive energy system presents unique challenges and opportunities for developers considering renewable energy projects in the state. Understanding the nuances in regulatory frameworks, land access arrangements and infrastructure development requirements is critical for project success.
A fundamental step in any project is securing the appropriate land rights for development. While the majority of land in WA is Crown land, projects connected to the South-West Interconnected System (the grid supplying metropolitan Perth) are more likely to be situated on freehold land.
In this Insight, we outline the types of land options available to developers—particularly those unique to WA.
Key takeaways
- Diversification leases are a specific form of tenure that supports renewable projects.
- Various forms of land rights may need to be secured to facilitate project development.
- Securing the appropriate land right can be a lengthy process and some options require engagement with government and stakeholders, including traditional owners.
Real property options
Access for preliminary investigations and feasibility study purposes is typically secured by negotiating a licence (such as a section 91 licence or an access licence), before securing long-term land rights for development and operations such as leases.
Once the feasibility of developing a renewable energy facility on the land has been established, then a variety of long-term land access options are available for the development and operation of the facility, depending on whether the underlying land is Crown land or freehold land.
The Land Administration Act 1997 (WA) (LAA) sets out the framework for accessing Crown land.
Section 79 lease
Proponents can secure long-term tenure over Crown land through a s79 lease. This lease grants the proponent exclusive possession and can be registered on title.
However, proponents will need to obtain consent from various stakeholders for the grant of the s79 lease, such as Ministerial consents, existing lessees, holders of mining tenements, native title holders or registered claimants.
Diversification lease
The WA Government recently introduced diversification leases as a new form of non-exclusive land tenure to facilitate the development of renewable projects covering large areas of Crown land. Initially, this form of tenure was intended to streamline the approvals process and provide a solution for tenure issues related to hydrogen projects. However, diversification leases can be used for various types of renewable projects, such as solar and wind farms.
Diversification leases can co-exist with mining tenements and native title rights. However, due to the nature of diversification leases, they cannot overlap with forms of exclusive tenure such as pastoral leases. If a diversification lease is sought over an area that is subject to a pastoral lease, the pastoralist will need to voluntarily surrender that part of their pastoral lease.
The Department of Planning, Lands and Heritage has indicated that the state has no present intention of compulsorily acquiring interests in land to grant a diversification lease. As a result, we expect the proponent will need to negotiate with the pastoralist to surrender the land. Compensation and ongoing access requirements for surrendered land are likely to be important considerations in any commercial arrangements with leaseholders.
Engagement with stakeholders is key to this form of tenure due to the array of interests with which it can co-exist. For example:
- Project proposals will need to be discussed with the Department of Planning, Lands and Heritage (noting that these leases are granted by the Minister for Lands).
- Consent from the Mining Minister will be required to grant a diversification lease in a mineral field.
- Approval from the Department of Mines, Industry Regulation and Safety will be needed to protect substantial infrastructure from mining activities.
- Advice from the Pastoral Lands Board may also be required regarding the impact of any surrender of a pastoral lease.
- Project proponents will need to negotiate 'co-existence arrangements' with other affected stakeholders.
- An Indigenous Land Use Agreement with the relevant native title party(s) will be necessary in native title areas.
As more projects leverage this form of tenure, the types of terms on which the Minister for Lands will be willing to grant a diversification lease, and the corresponding timeframes, will become clearer.
In our experience, remote sites are typically situated on Crown land. If a project is proposed to be developed on freehold land, the proponent will usually negotiate commercial arrangements to either purchase or lease the land. Supporting access rights, such as easements or licences, can be obtained for associated infrastructure (eg transmission lines, roads etc).
Developers interested in projects on freehold land should consider the following factors:
- Purchasing land can be an expensive, drawn-out process, particularly when multiple landholders are affected. Proponents will also need to consider FIRB and stamp duty requirements.
- Lease of land confers 'exclusive possession’ and can be registered on title, typically satisfying bankability requirements. Generally, a project will not require the whole of the land, so proponents will need to consider long-term leases within any planning framework, as well as FIRB requirements.
- Easements run with the land and can be registered on title as a separate instrument. Easements are generally used for transmission lines (both overhead and underground) and may be granted to benefit transmission owners such as Western Power.
- Licences confer rights of access but do not grant exclusive possession and are personal to the proponent.
DevelopmentWA leases
DevelopmentWA is the WA Government’s central land development agency. It grants leases to project proponents for areas classified as WA's Strategic Industrial Areas (SIA). These areas have been identified for significant investment in downstream processing and other heavy or strategic industrial activities, based on their proximity to existing rail and port infrastructure.
Although this type of tenure is typically used for industrial activities, given the location of the SIAs, DevelopmentWA has shown a willingness to engage with proponents to utilise the SIAs for renewable projects, including microgrids.
Mining tenure
Tenure options can vary depending on the type of project. In addition to securing surface access rights to property, proponents of mining projects or related service providers can utilise mining leases, general purpose leases and miscellaneous licences secured under the Mining Act 1978 (WA) for developing remote renewable generation.
For example, renewable energy facilities can be constructed on mining leases or general purpose leases, while miscellaneous licences can be used for transmission infrastructure corridors. Mining tenure is restricted to purposes directly related to mining activities and, therefore, may not be suitable for projects intended to connect to the South-West Interconnected System or the North-West Interconnected System.
Careful consideration must be given to the useful life of energy assets, as the use of a miscellaneous licence can pose challenges at the end of a mine's life, as it must remain tied to a mining purpose. More information on (and our analysis of) mining tenure options generally is available here.
What does the future hold?
While Crown leases and mining tenure are well-known and well-entrenched tenure options in WA sectors, diversification leases present renewable projects with another tenure option.
The WA government has indicated that the first diversification lease will be granted over the course of 2024-2025. As the government develops its energy transition plan, renewable energy generation hubs will be established, and diversification leases may play a more prominent role in these areas.