The Approvals Process for 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 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.

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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.

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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 . 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. 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

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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 and overly-detailed permitting process for renewable energy projects and provides insufficient support for essential electricity transmission infrastructure.

Renewable energy, energy security and carbon emissions abatement are priorities of the Commonwealth and State governments. However while these priorities have been enshrined in policy and legislation, they have not yet been reflected in efficient planning and approvals processes which will enable delivery of these policies.

While Victoria currently has robust transmission and distribution networks which will not constrain large-scale renewable energy development in the short term, in the longer-term a mechanism will be required to facilitate construction of new grid infrastructure, recognising that renewable energy projects must be built at the site of the resource, which is often remote to existing networks.

[This response is further elaborated in Terms of Reference b), c) and d) below.]

How Victoria compares to other jurisdictions (Term of Reference (b))

Victoria remains an attractive state to invest in renewable energy projects due to a strong commitment by government to support renewable energy development and excellent renewable energy resources.

However, with respect to planning processes and approvals Victoria is more ‘red-tape heavy’ than other jurisdictions. A wind farm considered via the typical Planning Panels process averages 17 months from lodgement to decision. This results in an overall time frame of three years to obtain planning approval allowing for the necessary environmental assessments and application preparation. This is significantly longer than in other States where, for example the overall time frame is around 18 months in South Australia and 12 months in Western Australia.

The initial planning approval is really only an approval to plan. No works or construction of the wind farm project may be carried out, until further approvals have been gained. Comprehensive pre-construction conditions applied to Victorian wind energy facilities involve substantial additional investigations, the approval of specified management plans, and the satisfaction of other conditions before construction is permitted under a secondary consent. In some cases this task takes as long as, or even longer than the time taken to achieve the initial planning permit.2

2 The planning approval for Portland Wind Energy Project took 18 months; however approvals to construct the four stages have taken place over six years of elapsed time with secondary consents comprising 15 months (); 18 months (); and 3 months (Cape Nelson South). (Stage 4 construction is yet to be approved.) While some of the unaccounted

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While no information has been tabulated on the total time for obtaining secondary consents (i.e. to allow construction), it is Pacific Hydro’s experience that the pre-construction requirements for wind farms in South Australia and Western Australia are much less complex and easier to complete than in Victoria.

The New South Wales Government is currently undertaking a review of their planning system to accelerate investment in new renewable energy projects in the state. This includes creating Renewable Energy Precincts for wind energy, within which development proposals will be subject to streamlined planning and approvals processes, and classifying more than 30MW of new generation as “critical infrastructure”, affording them the same priority planning consideration as other vital infrastructure such as major roads and hospital upgrades. These changes to the planning system will increase New South Wales’ attractiveness for investment in renewable energy projects, and Victoria should consider adopting a similar approach.

Major projects facilitation Pacific Hydro is aware that Victoria is expected to introduce a Major Projects Facilitation Bill. While it is understood that this legislation is being prepared in response to an injection of Commonwealth infrastructure funds, and more particularly to implement the recommendations from the Eddington Report3, it is recommended that the legislation be worded to allow consideration of other projects of state significance in the future, including renewable energy projects and associated connection infrastructure.

It is noted that Queensland has broadly-based legislation in support of projects of state significance for 38 years. The State Development and Public Works Organisation Act 1971:  Establishes a Co-ordinator-General;  Provides criteria and a mechanism for declaration of significant projects;  Enables co-ordination of agency requirements by the Co-ordinator-General; and  Results in a report that covers conditions for development and the co-ordination of infrastructure.

This legislation thus provides for efficient decisions on significant projects with State-coordinated consideration of economic, environmental and social impacts. A similar approach should be considered and, if suitable, emulated in Victoria’s Major Projects Facilitation Bill.

Suggestions to improve process We believe there is merit in setting time limits for the Minister to grant a decision once a planning application has been received. This would be similar in approach to the Federal EPBC Act or the Victorian Aboriginal Heritage Act 2006, both of which operate “clocks” on key decision milestones. We propose wind farm decision-making in Victoria would benefit from time limits on decisions for the following milestones:  Panel submitting its report to the Minister for Planning; delay time (within the balance 3 years) is attributable to insufficient policy incentives and industry ‘teething’ constraints, the time taken to fulfil complex conditions and complete management plans is attributable to the planning system. 3 Eddington, R. (2008). Investing in Transport: East West Link Needs Assessment. A Study by Sir Rod Eddington.

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 Minister determining a planning application (i.e. from receipt of the Panel’s report);  Referral Authorities making a decision on secondary consents. For example, for DSE to approve a Native Vegetation Management Plan; and a Vegetation Offset Management Plan.  Minister determining requests for secondary consent (i.e. approve final plans, assess condition compliance, etc).

While the Planning and Environment Act 1987 already contains a number of statutory clocks, these do not apply to Panels or the Minister. Where they do apply to a responsible authority they are routinely and significantly exceeded.

Opportunities to reduce risks and delays (Term of reference (c))

There are several points in the planning and approvals chain where risks and delays are introduced. These are particularly present in the timing of provision of detailed project design and the requirement to provide supplementary management plans, notably Cultural Heritage Management and Native Vegetation Management Plans.

With this in mind regulatory processes (and permit conditions) need to be amended to:  Accommodate an iterative design process with respect to turbine design and scale and wind farm layout;  Formally recognise the secondary consent stage (i.e. Construction approval); and  Allow supplementary management plans to be contingent on later development stages.

Accommodate an iterative design process

In the development of a wind farm, different manufacturers compete to supply wind turbines with different dimensions, features and performance characteristics. With very few exceptions this cannot be settled prior to obtaining the initial planning permit because companies cannot enter into commercial arrangements with turbine suppliers until the permit has been granted, affording the developer some certainty that the project will proceed.

Turbine selection, blade length and hub height configurations depend on site attributes, environmental and social impacts and costs per MWh produced.

Dimension specifications at planning permit stage should be sufficiently flexible to accommodate technology changes and the subsequent selection of turbine supplier (and model characteristics) between permit approval and the secondary consent for construction. This can be done whilst ensuring the form of development upon which the permit approval was granted is still adhered to.

Furthermore, flexibility in wind generator positioning is essential. Wind farm design is achieved for any given site initially by maximising energy production relative to construction and operating costs, optimised in relation to the site constraints. This design is included in the initial permit application.

Opportunities to maximise production need to be weighed up against number of physical, environmental and social constraints and known performance criteria. Typical constraints arise in consideration of visual, landscape and possible noise impacts, avoidance of cultural heritage and native vegetation losses, and setbacks from natural features,

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infrastructure and property boundaries. Native title requirements must be negotiated and agreed on Crown Land. Access issues and slope steepness need to be considered, along with the necessity of maintaining sufficient spacing between turbines to avoid wake turbulence.4

Generally these issues are resolved for planning approval in a manner which enables the development to be defined within allowable assessed environmental impacts. However the final position of wind generators cannot be reasonably determined until the turbine model is known and detailed design is done, and detailed design cannot proceed until a permit is granted.

The planning approval process has historically emphasised ‘getting it right first time’. As a consequence the planning permit is seen mainly as an end-point approval, and constraints are placed on proponents to prevent final adjustments to wind generator positions and further refinement of environmental management plans. While this approach works well for most small-scale land use and development applications, it is less appropriate for complex developments with multiple economic, environmental, social and policy implications. It is imperative that further attention be given to better reflect the needs for flexibility and certainty in the sequential consent stages. To continue with current practice not only acts as an anchor on desirable developments, it also inhibits the achievement of better quality outcomes.

Streamline the secondary consent stage

The ‘Specifications’ condition in most wind energy facilities planning permits states:  The wind energy facility must be constructed in accordance with the following specifications…except with the prior written consent of the Minister for Planning; (emphasis added).

This is generally a satisfactory condition, provided that the responsible authority recognises that such requests for written permission will be the norm rather than the exception, especially where the supply of turbines is a commercially competitive process.

It is noted that the ‘Model’ Planning Permit conditions for Wind Energy Facilities (Feb 2009), intended to be included in Planning Environmental Regulations 2005 (Form 11, s97F) does not include the above Ministerial discretion. As a minimum this discretion should be reinstated as ‘standard’ for all wind energy facilities greater than 30MW.

While a permit for wind energy facilities requires design changes, it also constrains the extent of such changes. Typically:  The plans must be generally in accordance with the application plans, but modified to show…(site-specific items then follow).

The acceptability of design modifications then relies on case law precedents; or (as proposed in the ‘Model’ Planning Permit conditions for wind energy facilities (Feb 2009)):

4 The manufacturer of the turbines will model the spacing requirements for the site; breaches may void manufacturer’s warranty on performance and repair costs.

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 …the micro-siting of wind turbines and consequential micro-siting of associated tracks and reticulation lines does not require consent … where the micro-siting of a wind turbine is not altered by more than 100 metres5 … (other qualifications added); however  Is only allowed where the Minister for Planning is satisfied that the relocation of turbines and associated access tracks and reticulation lines will not give rise to an adverse change to…(eight impacts listed).

These two conditions may conflict at least partially. As a matter of principle it is inappropriate to simultaneously require design changes while artificially limiting the freedom to implement the changes within the approved development envelope.6

The upshot of this is that the Model Planning Permit conditions for wind energy facilities envisage a needlessly constrained flexibility to amend the design and layout of the original application without supporting material resubmitting evidence on the eight listed impacts.

The Minister for Planning has over-arching power to approve the development plans and may seek whatever information is needed in order to be satisfied before endorsing the modified plans. The above draft conditions are at best unnecessary and at worst contradictory.

A recommended approach to design

Recognising that:  an iterative design process is implied by the Policy and Planning Guidelines7, is inevitable and required in planning permit conditions, and is considered best practice in the wind energy industry;  a wind farm that is optimised for commercial viability and the relevant social, environmental and social outcomes is desirable; and  that the accepted norm for wind farm approvals in Victoria effectively comprises two approval stages: (Planning permit; Construction consent8); both stages of the pre-development approval process should be designed to manage and achieve the desired outcomes.

5 The most recently approved wind farm (Lal Lal) states: the micro-siting of turbines… will be regarded as generally in accordance with the endorsed development plan(s) if the Responsible Authority is satisfied that it will not give rise to any material adverse change in landscape, vegetation, cultural, visual, shadow or noise impacts compared to the endorsed development plan(s) and:… (inter alia) b) The turbine location is altered by no more than 100 metres. (Condition 4; emphasis added). PH Comment: Since modern turbine spacing is normally 3 to 5 rotor diameters (optimised using computer models of terrain and anemometry data) the micro-siting limit of 100m needlessly constrains the use of inter-spaces. Some developers have resorted to ‘packing’ application plans with turbines to overcome this artificial limit, resulting in a layout that is not feasible to build in practice. There is a better way! 6 Tests can be applied by the responsible authority in deciding if further third party participation is necessary in order to implement a permitted use at the secondary consent stage. (See, for example: Westpoint Corporation Pty Ltd v Moreland City Council (VCAT 1049, 2005). This case established that it is not the scale of change that is relevant; rather it is whether the changes have impacts of consequence not contemplated in the permit.) 7 Policy and Planning Guidelines for development of wind energy facilities in Victoria (SEAV, May 2003) 8 Consents to commence construction or to commence operations are generically called ‘secondary consents’, however this submission recommends formal recognition of the Construction Consent for WIND ENERGY FACILITIES.

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In this context the design process for the development can and should be seen to work from ‘the general’ to ‘the particular’ over the first two approval stages. This will enable more flexibility to be provided at the Planning Permit stage and provide increased certainty at the stage of Construction Consent prior to the development actually commencing.

At the Planning Permit stage, sufficient certainty is provided by the focus of approval being on a defined development envelope rather than on any specific array or layout of turbines.

The impact assessments for the priority issues (visual and landscape, noise, vegetation and cultural heritage) can and should be investigated with reference to the development envelope and the envelope modified where necessary to implement desired outcomes. For example, at Cape Nelson South wind farm, two cones of visual protection were used to contain the development envelope either side of specified view-lines from a public lookout, thus maintaining the valued views.

The Construction Consent can then approve the detailed plans of the wind farm and the completed environmental management plans, supported by technical documents demonstrating compliance with objectives and substantive performance criteria. Provided the turbines are located within the approved development envelope, there should be no need to repeat the assessments and justifications that were made for purposes of approving the initial development envelope. (The exceptional circumstance is already covered by the Ministers’ generic requirement to be satisfied before construction may commence.)

The recommended approvals process prior to construction should therefore require:

For purposes of the Planning Permit application:  A ‘Development envelope’ for turbine placement; and site access corridors from the surrounding road network; and  An ‘Indicative and feasible layout’, provisionally optimised to demonstrate and assess offsite impacts, but not to be used to limit refinements to layout within the development envelope9.

For purposes of the Construction Consent:  A ‘Final layout’ for endorsement. This must respond to requirements of permit conditions for onsite and offsite impact management and mitigation purposes (performance criteria);  ‘Management plans’ for endorsement; and  Demonstrate ‘compliance’ with other conditions.  On-site values requiring avoidance, minimisation of impact and mitigation (such as Native vegetation and Aboriginal cultural heritage) need relate only to the final footprint. As a consequence these matters are also best considered for approval concurrent with the Construction Consent.

9 All normal performance criteria still apply under other conditions; (for example) noise, shadow flicker, vegetation and cultural heritage.

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Supplementary Management Plans Aboriginal Heritage legislation (DPCD) The Aboriginal Heritage Act 2006 (AHA) and Aboriginal Heritage Regulations 2007 (AHR) introduced new requirements and standards for assessment, reporting and mapping that demonstrate avoidance of harm to Aboriginal cultural heritage. Stringent requirements and high standards for the preparation of a Cultural Heritage Management Plan (CHMP) presuppose that detailed design has already been completed by the proponent in order for the CHMP to be assessed and approved.10 For the purposes of this Inquiry, a problem arises because the AHA intervenes in the ‘normal’ approvals process for wind energy facilities (as discussed above) by preventing the Minister for Planning from granting a permit where a mandatory CHMP is required. Under AHA s52 a decision maker must not grant a statutory authorisation for the activity unless a cultural heritage management plan is approved.11 A proponent relies on the initial Planning permit to commit the considerable funds needed to undertake detailed design. Contrary to this the standards and process in the AHA and AHR effectively assume that the detailed design is in hand before the CHMP can be approved, but blocks the Minister from giving the very approval that is needed to facilitate detailed design.12 This has a magnified impact on the whole project. In the absence of a permit with conditions, none of the many other detailed design and management plans for the project can be progressed. This ‘road block’ is causing flow-on consequences that will hold up Construction Consent for up to three, possibly four years. This process does not meet the objectives of the Planning and Environment Act 1987 (PEA s4(1)(a)) as it is neither fair, nor orderly, and is inconsistent with other policies of government to support renewable energy projects, including wind energy facilities.

A suggested approach Perhaps an easy option for removing this impediment to efficient process, without losing the intent and primacy implicit in the Aboriginal Heritage Act and Regulations is to:  Amend the PEA 1987 to formally recognise the Construction Consent stage of planning permits for specified classes of projects; and  Seek to amend the AHA 2006 (s52) constraint on statutory authorisation of Cultural Heritage Management Plans to relate to the Construction Consent stage for specified classes of projects.13  (N.B. In the AHA this should only require a change to the definition of ‘statutory authorisation’ at s50. No change appears to be needed to s52 itself.)

10 One needs to refer to the Act, Regulations, Approved Form and Guidelines to prepare a compliant CHMP. 11 Statutory authorisation includes (inter alia) a permit under the Planning and Environment Act 1987 to use or develop land for all or part of an activity. (AHA s50) 12 The example is given of one project for which Ministerial approval has been delayed for 15 months (and counting) due to the difficulty imposed by the new ACH legislation. 13 Minor adjustments to the CHMP process will be needed to enable AAV and the RAP to be submitters to Minister’s Panel if they choose. Known ACH ‘show stoppers’ or ‘no go’ sites should be drawn to Panel’s attention before Responsible Authority’s decision. Permit conditions can be used to fine-tune site-specific content and mitigation measures (without cutting across the AHA and AHR requirements). Subsequent detailed design with imperatives to avoid harm culminates in the CHMP prior to Construction Consent.

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This action would enable the initial planning permit to be issued for the use and development of land, in turn facilitating the detailed design and bringing the assessment of the CHMP into a parallel process with all the other regulated objectives and management plans needed for a well-designed wind energy facility to be approved for construction.

Native Vegetation The potential impacts of wind farm development on native vegetation are subject to assessment, protection and enhancement obligations set out in Victoria’s Native Vegetation Management – A Framework for Action (DNRE 2002). Losses must be avoided; or minimised and offset to achieve a ‘net gain’.

Removal of native vegetation (and in some cases any vegetation) is subject to permit requirements in Planning Schemes. Planning permit conditions (for WEF) typically require the approval of a Native Vegetation Management Plan (NVMP) prior to construction. Pacific Hydro supports the requirements to avoid, minimise and offset native vegetation losses; however there are some problems with implementation in the case of wind farms.

One such problem arises when DSE (as the referral authority) seeks to implement the Native Vegetation Management Framework (NVMF) by requiring an Offset Management Plan (OMP) to be approved before construction may commence.

While an OMP is a component of a NVMP it is often:  unrealistic for the OMP to be completed before construction for the following reasons:  loss assessments cannot be finalised until the detailed (iterative) design process is completed for purposes of obtaining construction approval;  losses may need to be amended following construction, as the actual losses may differ from the conservatively predicted losses;  negotiations on essential components of the OMP, particularly for site security14 and vegetation management, are sensitive processes that cannot be forced with third parties (frequently private landholders) to fit a time- frame for construction commencement;  DSE facilitation of vegetation offsets (BushBroker program) cannot achieve the ‘OMP condition’ outcome as specified above within the timeframe; and  the NVMF’s own guidelines allow a period of 12 months following removals before implementation of offsets must commence, except where vegetation to be removed is of very high conservation significance.

While the current condition requiring approval of a NVMP prior to construction is appropriate, the DSE expectation that this must include an approved OMP prior to construction is often unreasonable. It is recommended:  That the NVMP must include a commitment for preparation and approval of an OMP; should report progress on investigating candidate sites15; and that

14 Experience demonstrates that the difficulty in securing tenure to protect the vegetation offset in perpetuity is a major stumbling block for implementation of the NVMF. Furthermore the dearth of suitable options means the seller of offsets can unreasonably exploit a buyer. These issues need careful review by DSE. 15 It is not unreasonable to have initiated a Search Request through ‘BushBroker’ to identify candidate offset sites based on predicted losses after lodging the development approval submission. However BushBroker will not initiate the database search unless fully detailed assessments, included listed species are finalised.

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 Timeframes for the approval of OMP must be consistent with the NVMF’s timeframes for implementation (these vary based on the significance of the native vegetation being impacted).

Aviation safety and lighting Assessments of the risk that wind energy facilities may pose to aviation safety have not been resolved. These issues have traditionally been a matter for the Civil Aviation Safety Authority (CASA) however the Authority’s early attempts to impose a blanket rule for lighting requirements have resulted in excessive and unnecessary amenity impacts being proposed on nearby communities.

From 2006 and until September 2008 CASA had required all wind farms, with turbine tip heights exceeding 110m above ground level to be lit. This was implemented under CASA Advisory Circular AC 139-18(0) Obstacle Marking and Lighting of Wind Farms (July 2007).16

In September 2008 CASA withdrew Advisory Circular (AC 139-18) and announced that CASA would undertake a safety study into the risk posed by wind farms and develop a new set of guidelines. This process “will include appropriate consultation with the aviation industry and other stakeholders”. (The CASA Briefing, October 2008)

No further information has been forthcoming on the status of the study or consultations with the Wind Farm Industry.

While this impediment to investment is not within the power of Victoria to resolve, it is particularly in Victoria’s interest as Victoria is the most ‘investment-ready’ jurisdiction for wind farms under the expanded RET, with the largest pipeline of development projects of any State. It is certainly within Victoria’s ability to influence or at least to encourage that progress be made in a manner that considers:  relaxing the height limit to 150m as is currently done in other countries;  moving to a risk-based approach to aviation lighting on a per project basis, which would enable much lower community impact at many sites instead of the current ‘blanket rule’ approach which results in excessive lighting;  recommending that CASA take into account community and amenity impacts in setting lighting guidelines, as is now done in Europe.

16 CASA Regulations in relation to obstacles only apply at an aerodrome and in the vicinity of an aerodrome. An object is an obstacle if it penetrates an obstacle limitation surface (OLS) within a distance of 15km of the aerodrome. The ‘outer horizontal surface’ (4km to 15km from the aerodrome) is set at a height of 150m above local ground level. Notification obligations (CASR 139) apply within and outside the OLS if the object extends to a height of 110m or more above local ground level. CASA may determine that the object is or will be a hazardous object because of its location, height or lack of marking or lighting (CASR 139.370). CASA is required to publish and give notice of its determination to specified parties; however there is no power under the Regulations to direct the implementation of mitigation measures, including lighting. CASA has stopped short of making any formal determinations that wind farm developments between 110m and 150m in height are hazardous objects, opting instead to bluff decision-makers to require lighting by threatening to inform court proceedings (in the event of an incident) that the decision-maker ignored its advice.

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Likely future drivers for RE investment in Victoria (Term of Reference (d)) Renewable Energy Target Renewable energy investment in Australia in the short to medium term will principally be driven by the Federal Renewable Energy Target (RET). This important piece of legislation will establish a market for renewable energy in Australia that will stimulate approximately $25 billion in investment in the coming decade and create tens of thousands of jobs.

Recent analysis undertaken by Ernst and Young indicated that Victoria is well placed to attract a large proportion of that investment, due to its strong network infrastructure and commitment to renewable energy development via the Victorian Renewable Energy Target. However Ernst and Young’s renewable energy attractiveness index also identified that Victoria could lose this advantage due to its onerous planning requirements. Pacific Hydro therefore considers this Approvals Process review timely.

Carbon Pollution Reduction Scheme In the longer term, the Carbon Pollution Reduction Scheme (CPRS) will also play an important role in stimulating investment in clean energy technologies. By introducing a price on carbon, the CPRS will provide the wholesale energy price uplift required to assist renewable energy become competitive with incumbent thermal technologies in the longer term. Pacific Hydro believes that this will be essential to the sustainable development of a robust renewable energy sector in Australia.

Other minor drivers It is likely that there will be other minor drivers for renewable energy development in Victoria which are specific to the state. These things may include competitive tender processes to supply specific projects with low emissions energy (eg. the Victorian desalination plant) or discrete federally funded projects such as the recently announced Solar Flagships program. However these drivers will still remain dependent on the financial uplift generated by the RET in the short- term.

Comments on other reviews and inquiries (Term of Reference (e)) Environment Protection and Heritage Council Report Following the EPHC Report on Impediments to Environmentally and Socially Responsible Wind Farm Development (November 2008) which examined 18 issues and suggested actions on each issue, it was proposed that National Wind Farm Development Guidelines be prepared.

The EPHC has engaged a consultant to develop National Wind Farm Guidelines covering all phases of wind farm development. The guidelines will initially address the technical components of the guidelines for the following five issues: shadow flicker; noise, (including prediction and post-construction monitoring of noise); impacts on landscapes;

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impacts on birds and bats; and electromagnetic interference. No further progress has been announced at the time of writing.

Victorian Competition & Efficiency Commission Pacific Hydro submitted to the recent Victorian Competition and Efficiency Commission (VCEC) draft Report into Victorian Environmental Regulation (March 2009) “A Sustainable Future for Victoria: Getting Environmental Regulation Right”.

Matters from the VCEC submission relevant to this (ENRC) Inquiry include the overly complex planning system for wind farm approvals. In our experience, and affirmed by a recent Ernst & Young study17, Victoria appears to have the most complex planning regime for wind development of any State. Pacific Hydro considers that while the Ministerial appointed Planning Panel decision-making system generally works well, there are aspects of process and rules that can be improved.

In the VCEC submission Pacific Hydro put forward the following recommendations to rectify this problem:  Introduce statutory ‘clocks’ for wind farm approvals under the Planning and Environment Act 1987  Industry should be consulted when wind industry Regulations and Guidelines are reviewed  Suggestions to Improve State Regulations  Cultural heritage should be dealt with as a secondary consent and not a primary approval  Native vegetation regulations are complex and unwieldy

Australian Energy Market Commission Review The Australian Energy Market Commission (AEMC) is currently undertaking a Review of Energy Markets in light of Climate Change Policies, noting that the expanded RET will stimulate investment in wind generation capacity and that this is likely to be clustered in certain geographic areas, remote from consumers and the existing transmission network.

A key outcome of the review to date has been to recognise impediments to renewable energy projects created by a lack of access to transmission infrastructure, and a lack of a mechanism to fund the large-scale construction of new infrastructure which creates fair market conditions for generators in remote areas. With this in mind, the AEMC has put forward a range of options for risk sharing arrangements to fun new infrastructure investment.

The Victorian Government should use their role on the Ministerial Council of Energy to influence this process to ensure an investment model is put forward under the review which ensures timely provision of new infrastructure in Victoria, facilitating greatest possible renewable energy development in Victoria.

17 20-20 Vision: Investment Challenges and Opportunities Arising from Australia’s 20% Renewable Energy Target, Ernst & Young, 13 November 2008.

Pacific Hydro Pty Ltd Page 14 ENRC Inquiry into Approvals Processes in Victoria 26 June 2009

Recommendations

Planning recommendations The submission identifies examples of the improvements needed, in particular for Wind Energy Facility project approvals. For the Planning system 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).  Provide statutory recognition of the secondary consent for complex projects such as wind energy facilities (‘Construction Consent’);  Rely on Minister’s satisfaction for approving final plans for purposes of Construction Consent. (These should demonstrate minimised impact and compliance with amenity performance criteria.)

Recommendations relating to other legislation 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.

Pacific Hydro Pty Ltd Page 15