The Approvals Process for Renewable Energy Projects in Victoria Submission by Pacific Hydro Pty Ltd 26 June 2009 Pacific Hydro Pty Ltd Level 11, 474 Flinders Street, Melbourne Victoria 3000 Australia Telephone +61 3 8621 6000 Facsimile +61 3 8621 6111 Email [email protected] www.pacifichydro.com.au ABN 31 057 279 508 ENRC Inquiry into Approvals Processes in Victoria 26 June 2009 Executive Summary Pacific Hydro welcomes the opportunity to submit to the Environment and Natural Resources Committees inquiry into approvals processes for renewable energy projects in Victoria. Australia will see a transformation of the energy sector in the coming decades. The expanded Renewable Energy Target and the Carbon Pollution Reduction Scheme will stimulate unprecedented investment in electricity generation from renewable and low-emission resources. To optimise its benefits Victoria should promote a new vision for renewable energy developments that is attuned to the energy needs of the 21st century and the challenges of climate change. To implement the new vision it is essential to provide a coordinated mechanism to expedite the approval of State- significant renewable energy generation projects, and facilitate strategic connections to the National Electricity Market grid. This should have a spatial expression; reflecting resources, infrastructure, and regional development policies. By bringing these two critical strands together, within one over-arching and visionary framework, the public interest in energy security and regional development will be served and substantial private investment will be stimulated. Victoria’s present system for approving renewable energy projects, particularly wind farms, is poorly coordinated, cumbersome and overly-detailed. As a consequence Victoria is the most difficult State in which to get approvals for new renewable power generation. This is reflected in the length of time required to gain a planning permit in Victoria (approximately three years in Victoria compared with around 18 months in South Australia and 12 months in Western Australia). This needs to change if Victoria is to maximise its ability to benefit from the investment opportunities. The difficulties in Victoria’s planning system arise because of the overlapping, and sometimes contradictory, approvals process which are not well aligned to wind deployment and the time taken for decision making. Foremost is the requirement to fully design the wind farm and fix wind generator positions to submit a planning application, yet the proponent cannot properly design the wind farm until a planning permit is granted. Cultural heritage clearance is also inserted ahead of the planning permit on the same impractical assumption. This causes re-work when the project is prepared for development approval (construction consent). Pacific Hydro submits that these design-dependent tasks are logically sequenced to feed into development approval and that doing this does not compromise the decision- maker’s ability to control the approved form of development or ability to protect cultural heritage. Pacific Hydro believes that by introducing statutory “clocks” on key decision milestones (ie. the length of time for the Planning Panel to submit its report to the Minister for Planning; the length of time from receipt of the Panel’s report to the Minister determining a planning application etc) would reduce the delay for granting of the initial permit and allow the process to become less cumbersome. The recommended improvements needed to facilitate approvals of Wind Energy Facilities, as submitted, are directly within Victoria’s control and for the most part, are easy to implement. However it is essential that the reforms are implemented without delay so that Victoria does not remain branded as the most difficult State in which to plan and develop renewable energy projects. Pacific Hydro Pty Ltd Page 1 ENRC Inquiry into Approvals Processes in Victoria 26 June 2009 Summary of Recommendations The submission identifies examples of the improvements needed, in particular for Wind Energy Facility project approvals. These include: Facilitate timely decisions by specifying time limits (statutory ‘clocks’); Provide flexibility for turbine locations and scale within a (suitably constrained) generator development envelope, to be approved at the primary permission stage (‘Planning Permit’); The Planning permit should specify impact (minimisation) and amenity performance criteria rather than apply prescriptive constraints on the detailed design. (cf. draft “Standard Permit Conditions” for WEF intended for Regulation). Streamline development approval for complex projects such as wind energy facilities; In relation to the effects of other legislation on wind farm approvals Pacific Hydro has recommended that: The approval of Cultural Heritage Management Plans (Aboriginal Heritage Act 2006) should apply to the Construction Consent (rather than being required prior to the Planning Permit); The Native Vegetation Management Plan should apply to the Construction Consent (as at present); however the Offset component should allow approval and implementation in accordance with the Native Vegetation Management Framework guidelines (12 months in most cases); Aviation safety lighting requirements (Civil Aviation Safety Regulation 139.370 and withdrawn Advisory Circular 139-18) should not be based on a ‘blanket’ approach that does not consider the extent of the risk (to aircraft), alternative mitigation methods or the amenity impacts on surrounding residents. Victoria should assist in resolving this impasse with CASA. In addition, Victoria should seek to use its role on bodies such as the Ministerial Council on Energy to ensure that other reviews (notably the Australian Energy Market Commission’s Review of Energy Markets in light of Climate Change Policies) provide favourable outcomes for continued investment in renewable energy projects in Victoria. In the short to medium term, the most pressing barrier to be addressed will be that of investment in new transmission infrastructure in Victoria. Pacific Hydro Pty Ltd Page 2 ENRC Inquiry into Approvals Processes in Victoria 26 June 2009 Introduction Pacific Hydro Pty Ltd Founded in 1992, Pacific Hydro is a leading Australian-owned independent power producer of renewable energy worth approximately $1.5bn, employing 204 staff across our Australian, Chile and Brazilian businesses. In Australia, headquartered in Victoria, Pacific Hydro has 200MW of operational electricity generation assets from wind and hydro, 140MW under construction and 800MW under development in several State jurisdictions. Pacific Hydro has a track record of leadership in the wind industry. In 1998 we were a founding member of the Australian Wind Energy Association (now the Clean Energy Council). We were participants in developing wind industry best practice guidelines in the early years of MRET and had a formative role in developing Victorian environmental planning practice through the EES assessment of our Portland Wind Farm. In 2001 we built Australia’s first commercial wind farm at Codrington and shortly after the first project-financed wind farm at Challicum Hills. Background Australia’s energy system will undergo a transformation in the coming decades as we transition to a low carbon economy. Driven by policies such as the Carbon Pollution Reduction Scheme (CPRS) and the expanded Renewable Energy Target (RET), Australia’s installed energy supply mix will increasingly move away from traditional fossil fuel generation to see greater investment in clean energy technologies. The RET will drive investment of approximately $25 billion in renewable energy projects out to 2020. Victoria is well positioned to capture a large proportion of this investment due to its excellent wind, solar and ocean resources, its legacy of strong commitment to renewable energy development through the Victorian Renewable Energy Target, and its currently relatively robust electricity networks. The RET, and in the longer term the CPRS, are the policies which will drive renewable energy investment in Australia. The planning system must aim to remove all barriers to the delivery of these key policies. Victoria’s planning system has been developed to ensure that required environmental, indigenous and community objectives are met during the development of new projects. However, as identified by Ernst and Young, difficult and lengthy planning process present one of the biggest challenges to renewable energy investment in Victoria1. While the Terms of Reference refer to Renewable Energy (RE) projects generally, the responses from Pacific Hydro are targeted to the issues and obstacles facing investment in wind energy facilities in Victoria. Wind power is currently one of the more commercially attractive sources of renewable energy as it applies proven technology that is scalable and has the lowest cost per unit of output. Accordingly, it is wind energy that is of most immediate relevance to the Inquiry and it is one of the sectors in which Pacific Hydro has had substantial experience. 1 Ernst & Young (2008), 20-20 Vision; Investment Challenges and Opportunities Arising from Australia’s 20% Renewable Energy Target Pacific Hydro Pty Ltd Page 3 ENRC Inquiry into Approvals Processes in Victoria 26 June 2009 Response to Terms of Reference by Pacific Hydro Pty Ltd Major obstacles facing investors in large-scale renewable energy (RE) Projects in Victoria (Term of Reference (a)) Victoria has a cumbersome