Controversial new draft wind and solar energy policy in NSW

Claire Smith, Nick Thomas, Alison Packham and Vincent Collins
24 Nov 2023
4 minutes

The NSW Department of Planning and Environment has released its Draft Energy Policy Framework comprising a series of guidelines which, if implemented, could have significant impacts on the rollout of new wind and solar energy projects in NSW.

The drive in NSW and other Australian States to deliver a renewable energy revolution in response to the nation's energy crisis has raised concerns in local communities, and some conservation interest groups, about potential impacts of wind and solar energy generation projects and the transmission infrastructure which supports them.

As a result, the NSW Department of Planning and Environment (DPE) has released a series of draft guidelines, described as the Energy Policy Framework.  DPE says the goal of the Framework is to support faster and more consistent decision-making and greater certainty for the energy industry and communities.  The guidelines outline how the impacts of renewable energy projects and transmission infrastructure will be assessed and managed, and are intended to promote transparency and clarity about where and how development occurs.

There are four draft guidelines, as indicated in Figure 1 below. These new guidelines follow the release of DPE's Hydrogen Guideline which was published in March 2023.

In this article, we provide some initial comments on four of the draft guidelines - wind energy, solar energy, benefit sharing and private agreements.

The new wind and solar energy guidelines will have supporting technical guidelines for noise or visual impact assessment, decommissioning calculators, and visual impact assessment tools.  The benefit sharing guideline includes a brief "model and total value for benefit sharing, and the private agreement guideline includes a draft template agreement between an energy project proponent and a "host" or an adjoining landowner.

Draft Wind Energy Guideline

The draft Wind Energy Guideline proposes to update the current wind energy guideline and supporting technical bulletins (published in 2016) to:

  • identify "desirable" areas for wind energy development based on a range of considerations including wind resource potential, proximity to transmission, and land use constraints;
  • provide advice to assist the industry in selecting sites and designing projects;
  • include new guidance on landscape and visual impact assessment in a technical supplement; and
  • provide that the Planning Minister will consider requests to declare wind energy development to be Critical State Significant Infrastructure if it includes a significant energy storage system (for example, a delivery capacity of 750 megawatts or more).

The most controversial aspect of the draft wind guideline was the initial map which was released showed the majority of NSW as "less suitable sites" based on a consideration of key commercial factors and high-level environmental constraints. DPE has since revised and reissued the map which depicts sites ranging from "suitable" to "highly suitable" sites.

Only a small number of areas are deemed "highly suitable" for new projects. The Government claims that “The mapping does not preclude development outside of the mapped areas, nor does it affect the assessment process for projects in these areas".

The draft wind guideline also provides detail on how noise, visual and other community impacts should be evaluated and managed through the development assessment process though the Technical Supplement for Landscape and Visual Impact Assessment and the Technical Supplement for Noise Assessment.

The new visual impact methodology builds on foundational principles from the existing guideline but provides a wholly revised approach to provide greater certainty and expedite decision-making. This includes a substantial setback for wind turbines that are fully visible from people’s homes (for example 2 km from a turbine 250m tall).

The new noise impact assessment material includes minor updates to align the noise impact assessment methodology with updates to the South Australian wind farm noise guidelines (2021) and adopt a new noise criterion of 50dB(A) for passive recreation areas within National Parks at setback distances of 500m to minimise land use conflicts.

Finally, the draft wind guideline contains a Wind Energy Decommissioning Calculator, which is a pre-populated excel spreadsheet that seeks to assist applicants and landholders to estimate the likely costs of decommissioning projects in the future and includes labour and plant rates as well as recovery estimates.

Draft Solar Energy Guideline

The Large-Scale Solar Energy Guideline, which was published in 2022, will be updated to align with the Draft Energy Policy Framework, including the Benefit Sharing Guideline (discussed below). The draft Energy Policy Framework provides that updates to the Solar Energy Guideline will be relatively minor, however, they will include the following amendments:

  • consistent with the draft Wind Energy Guideline, the Planning Minister will consider requests to declare solar 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); and
  • the introduction of a Solar Energy Decommissioning Calculator which is poised to  assist landowners and applicants in estimating the likely costs of decommissioning.

The Draft Energy Policy Framework also includes a map showing the desirable locations for solar development, which appears more opportunities for potential project locations for solar developments than the draft wind guideline map.

Draft Benefit Sharing Guideline

The draft Energy Policy Framework includes a Draft Benefit Sharing Guideline which refers to and provides guidance on the growing practice of developing community benefit sharing initiatives for renewable energy projects. The guideline proposes new fees for wind and solar projects to provide funds to local communities as a way of overcoming social licence issues and are ostensibly about fast-tracking the planning process for new projects. The stipulated fees for “benefit sharing”, which are new developer contributions over and above any deal struck between project developers and landowners, could amount to the following paid over the life of the development and indexed to CPI:  

  • $850 per megawatt per annum for solar farms (or about $85,000 a year for a 100MW project), and
  • $1,050 per megawatt per annum for wind farms (or about $105,000 a year for a 100MW project).

The draft benefit sharing guideline will be implemented through the development application process under the Environmental Planning and Assessment Act 1979 for large-scale renewable energy projects and will require project proponents to engage with the relevant council, local communities, and neighbours in the vicinity of the proposed project, to consider options for distributing and sharing the proceeds of the project at different levels.  Proponents will then be required to develop a proposed model for community benefit sharing in the Environmental Impact Statement for the project, which will likely become conditions of the development consent.

Draft Private Agreement Guideline

The draft Energy Policy Framework includes a Draft Private Agreement Guideline which applies to all solar and wind energy generation projects that are declared to be State significant development (SSD). Through the draft agreement guideline, the Government has identified a range of matters that applicants and landowners should consider when entering into licence, option, land purchase, host, and impact agreements.

Significantly, the draft agreement guideline provides that project proponents will be required to submit to DPE copies of all impact agreements entered into and maintain the currency of these agreements over the life of the project (for example, if the agreement term is extended or the nature of impacts covered by the agreement changes).

Feedback and next steps

Feedback is sought from industry, councils and residents on the draft Energy Policy Framework before 18 December 2023 with a review and finalised guidelines to be completed in early 2024. Given that some aspects of the guidelines may hinder the rapid uptake of renewable, particularly wind, energy developments in NSW, either through "benefit sharing" fees or earmarking areas as "less suitable" for such developments, you may also wish to provide a submission or contribute to an industry led submission.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.