ENVIRONMENT AND NATURAL RESOURCES COMMITTEE

Inquiry into the Approvals Process for Projects in

FEBRUARY 2010

Ordered to be printed

Victorian Government Printer 2010

Parliamentary Paper No. 281 Session 2006–10

Inquiry into the Approvals Process for Renewable Energy Projects in Victoria

Parliament of Victoria Environment and Natural Resources Committee Inquiry into the Approvals Process for Renewable Energy Projects in Victoria

ISBN 978-0-9807561-0-4

The Committee would like to thank: • Mr Fei Li for allowing his photo of a wind turbine at Wonthaggi, Victoria – to be reproduced on the front cover • Solar Sytems Pty Ltd for allowing a photo of the trial solar project at Bridgewater, Victoria – to be reproduced on the front cover • for allowing photos of wind farms to be reproduced throughout the report

This report is printed on 100% recycled paper.

Table of contents

Table of figures ...... vii Committee members ...... ix Terms of reference...... xi Chair’s foreword ...... xiii Executive summary ...... xv Recommendations...... xxiii Glossary ...... xxxi Acronyms and abbreviations...... xxxv Chapter 1: Introduction...... 1 Background to the inquiry...... 1 Scope of the inquiry...... 2 Inquiry process ...... 2 Issues raised during the inquiry...... 3 Inquiry report ...... 4 Chapter 2: Victoria’s renewable energy resources...... 5 Introduction...... 5 Types of renewable ...... 8 Wind ...... 8 Bioenergy ...... 11 ...... 15 Geothermal...... 17 Solar...... 20 Marine – wave and tidal...... 23 Current forecast sources of renewable energy...... 27 Chapter 3: Policy and regulatory framework for renewable energy projects in Victoria... 29 Introduction...... 29 International legal framework...... 29 United Nations Framework Convention on Climate Change ...... 30 Kyoto Protocol...... 30 A post-Kyoto framework ...... 30 National policy framework for renewable energy...... 31 Carbon Pollution Reduction Scheme...... 32 Renewable Energy Targets...... 33

– i – Inquiry into the Approvals Process for Renewable Energy Projects in Victoria

Mandatory Renewable Energy Target...... 33 Expanded Renewable Energy Target...... 34 Commonwealth renewable energy projects...... 38 Victorian policy and funding framework for renewable energy...... 40 Victorian climate change policy ...... 40 Victorian Renewable Energy Initiatives ...... 43 The Victorian Energy Technology Innovation Strategy...... 43 GreenPower ...... 43 Solar feed-in tariff ...... 44 Key planning approval and environmental assessment processes ...... 45 Overview...... 45 First stage: pre-application consultation ...... 49 Second stage: primary consent phase ...... 50 Environment Protection and Biodiversity Conservation Act process ...... 50 The Environment Effects Statement process...... 52 Planning permit process ...... 54 Third stage: secondary consent phase...... 56 Fourth stage: monitoring, enforcement and decommissioning ...... 58 Ongoing reviews of key planning and environmental approvals...... 58 Geothermal energy approvals ...... 60 Other renewable energy project planning approval processes...... 61 Regulation of the Victorian energy sector...... 62 Introduction to the National Electricity Market ...... 63 The Victorian energy sector...... 65 Existing electricity infrastructure in Victoria ...... 65 Participants in Victoria’s electricity system ...... 65 Victorian energy policy...... 66 Victoria’s privatised energy sector...... 68 Connections to the transmission network: Victoria’s plan and procure model...... 69 Connecting to Victoria’s distribution network ...... 70 Recent reviews and developments in energy policy...... 71 Review of energy market frameworks in light of climate change policies ...... 71 Review into current electricity distribution network planning...... 72 Development of Commonwealth White Paper on Energy...... 73 Chapter 4: Other jurisdictions...... 75 Introduction...... 75 South Australia ...... 75

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Background ...... 75 Wind ...... 76 Geothermal...... 78 Wave ...... 78 Solar...... 79 Policy settings for renewable energy in South Australia...... 79 Planning processes for renewable energy in South Australia ...... 80 Transmission system...... 86 Issues of significance for Victoria ...... 88 New South Wales...... 92 Background ...... 92 Planning approvals process ...... 95 Recent reforms...... 96 Issues of significance for Victoria ...... 97 Other Australian jurisdictions...... 100 Chapter 5: The planning approvals process ...... 103 Key findings...... 103 Introduction...... 104 Timeliness of decision making...... 105 Demarcation of projects – 30 megawatts ...... 116 Coordination between decision making authorities ...... 119 Policy and planning guidelines ...... 122 Planning panels...... 125 Monitoring and enforcement...... 129 Cumulative impact ...... 131 Chapter 6: Community consultation and the social impacts of wind farms...... 133 Key findings...... 133 Introduction...... 134 Community attitudes towards wind farms...... 135 Community consultation ...... 138 Case Study: Community consultation for the Challicum Hills ...... 144 Community concerns regarding wind farm developments...... 145 Substantive concerns of the community...... 145 Greenhouse gas reductions and efficiency ...... 146 Property values ...... 146 Noise and health impacts ...... 147 Fire ...... 148

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Livestock...... 148 Procedural concerns of the community ...... 149 Proponents and wind farm consultations...... 149 Consultation process ...... 149 Concerns of proponents ...... 150 Local councils and the wind farm consultation process ...... 152 Chapter 7: Aboriginal cultural heritage ...... 155 Key findings ...... 155 Introduction...... 157 Overview of the Aboriginal Heritage Act and related legislation ...... 158 Cultural Heritage Management Plans...... 159 Registered Aboriginal Party...... 161 Significance of sites...... 163 Cultural heritage management plans...... 164 Cultural heritage management plans as a condition of planning approval ...... 164 Relatively small geographical ‘footprint’ of wind farm developments...... 165 Lack of fit between wind farm design practices and CHMP requirements...... 165 Flexibility of CHMPs ...... 166 Proposals for reforming the current CHMP process ...... 168 Time frames...... 172 Chapter 8: The environmental assessment process...... 173 Key findings ...... 173 Introduction...... 174 Environment Effects Statements...... 175 Key issues ...... 178 Complexity of the EES process ...... 178 Discretionary nature of the EES process...... 179 Statutory time frames...... 180 Scope and level of assessment...... 181 Inquiry by the Victorian Competition and Efficiency Commission ...... 181 Victorian Government’s response to the VCEC recommendations ...... 182 Native vegetation, flora and fauna ...... 184 The Native Vegetation Management Framework ...... 184 The process of determining whether native vegetation clearing is permitted ...... 186 Determining offsets...... 187 The BushBroker scheme ...... 192 Flora and fauna ...... 192

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Key issues...... 193 Conflict between policy objectives...... 194 Complexity of the Native Vegetation Management Framework...... 195 Interaction between the native vegetation and planning permit processes ...... 197 Staging of assessments and approvals...... 198 Complexity of the offset process ...... 199 Adequacy of environmental assessments ...... 204 Clearer guidance on how to undertake assessments...... 207 Mechanisms to regulate the work of environmental consultants ...... 208 Environment Protection and Biodiversity Conservation Act 1999 (Cth)...... 210 Chapter 9: Connecting to the transmission and distribution network...... 213 Key findings...... 213 Introduction...... 215 Energy sector participants ...... 217 Energy sector: obstacles to investment in renewable generation...... 218 Victorian energy infrastructure...... 219 Energy market policy and regulation ...... 220 Other challenges facing the electricity sector ...... 223 Strategic planning and investing in a more environmentally sustainable grid...... 224 Grid infrastructure: transmission and distribution networks...... 224 The capacity of Victoria’s grid infrastructure...... 225 Investing in grid infrastructure ...... 226 Strategic planning for additional grid infrastructure ...... 229 The Australian Energy Market Commission proposal for renewable energy hubs ...... 231 Connecting renewable generation to the grid...... 233 Network service providers: transmission and distribution...... 234 Facilitating the connection process ...... 237 Connecting distributed energy generation to the grid...... 241 The future of the transmission and distribution network: smart grids ...... 247 Chapter 10: Emerging renewable energy technologies ...... 253 Key findings...... 253 Introduction...... 254 Key issues ...... 254 Geothermal energy...... 256 Tender versus over-the-counter permits ...... 257 Administration of the approvals process...... 260 Funding ...... 261

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Marine energy...... 262 Regulatory context...... 262 Marine energy approvals: unique tenure issues ...... 264 Solar energy ...... 265 Bioenergy...... 266 Alternative waste technology policies...... 267 Strategic planning for bioenergy...... 269 Forest waste...... 272 Valuing bioenergy...... 274 Appendix 1: List of submissions...... 277 Appendix 2: List of public hearings ...... 279 Appendix 3: List of site inspections and briefings ...... 285 Minority report ...... 287 Extract from the minutes of proceedings...... 289

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Table of figures

Figure 2.1 Renewable energy – installed capacity of operating projects in Victoria (as at 22 October 2009)...... 5 Figure 2.2 Generated renewable energy in Victoria, 2008...... 6 Table 2.3 Top five renewable stations by generation in Victoria in 2008 ...... 7 Figure 2.4 Renewable energy generators in Victoria ...... 8 Figure 2.5 Average yearly wind speed (metres per second at 65 metres above ground) ...... 9 Figure 2.6 Approval status of wind farms in Victoria ...... 10 Figure 2.7 The status of wind farm projects in the Barwon South West Region (as at 8 September 2009) ...... 11 Figure 2.8 Biomass generators in Victoria ...... 13 Figure 2.9 The location of hydro generators in Victoria...... 15 Table 2.10 Hydro generators in Victoria: capacity and year commissioned...... 16 Figure 2.11 Types of geothermal systems ...... 18 Figure 2.12 Average yearly global solar exposure in Victoria (megajoules per square metre)..21 Figure 2.13 Yearly average wave power potential in Victoria (kilowatts per metre) ...... 23 Figure 2.14 Potential tidal power in Victoria (watts per metre) ...... 26 Figure 2.15 Forecast of sources of renewable energy generation (GWh) in Victoria, under the national expanded Renewable Energy Target scheme...... 27 Table 2.16 Status of renewable energy projects in Victoria by technology ...... 28 Figure 3.1 The assessment process flowchart...... 48 Figure 3.2 The planning approval process...... 55 Figure 3.3 Transport of electricity...... 62 Figure 3.4 Table comparing state ownership of the transmission system...... 68 Figure 3.5 Process of connecting to the transmission network ...... 70 Table 4.1 South Australian wind farms ...... 77 Figure 4.2 Wind generator locations in South Australia ...... 77 Table 4.3 Geothermal project processes: attracting grants...... 91 Figure 4.4 Renewable energy precincts in New South Wales...... 93 Figure 5.1 (a) Approved wind farms with the Minister for Planning as the Responsible Authority ...... 107 Figure 5.1 (b) Time between first panel hearing and report submitted ...... 108 Figure 5.1 (c) Time between panel report submitted and approval or permit issued...... 108

– vii – Inquiry into the Approvals Process for Renewable Energy Projects in Victoria

Figure 5.2 (a) Approved wind farms with the Minister for Planning as the Responsible Authority ...... 109 Figure 5.2 (b) Period of time elapsed between date application received and date of approval or permit issued with the Minister for Planning as the responsible authority...... 110 Figure 5.3 (a) Approved wind farms with the Council as the Responsible Authority ...... 111 Figure 5.3 (b) Period of time elapsed between date application received and the date of approval or permit issued with a Council as the Responsible Authority...... 112 Figure 5.4 Proposed assessment process for state significant development...... 114 Figure 6.1 People’s perception and response to wind farms in Victoria’s landscape...... 137 Table 6.2 The level of stakeholder participation recommended for various stages of the wind farm development process ...... 141 Figure 6.3 Stakeholder participation methodology by project stage...... 142 Figure 7.1 Cultural Heritage Management Plan Process...... 161 Table 8.1 Environment Effects Statement referrals for renewable energy projects since July 2006...... 177 Figure 8.2 The process of determining whether native vegetation clearing is permitted...... 186 Table 8.3 Native vegetation offset arrangements in various Australian jurisdictions...... 189 Table 8.4: The New South Wales BioBanking scheme...... 202 Figure 9.1 Victorian electricity and gas transmission networks...... 220 Figure 9.2 Physical electricity flows from generators to consumers...... 225 Figure 10.1 Map of 2006 Geothermal Acreage Release...... 258 Figure 10.2 Map of 2008 Geothermal Acreage Release...... 259

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Committee members

This inquiry was conducted during the term of the 56th Parliament.

The Members of the Environment and Natural Resources Committee are:

• Hon John Pandazopoulos, MP (Chair); • Mr Craig Ingram, MP (Deputy Chair); • Ms Joanne Duncan, MP; • Mrs Christine Fyffe, MP; • Ms Tammy Lobato, MP; • Mrs Donna Petrovich, MLC; • Mr Matthew Viney, MLC; and • Mr Peter Walsh, MP.

Staff

For this inquiry, the Committee was supported by a secretariat comprising:

Executive Officer: Dr Caroline Williams

Research Officers: Mr Derek Benjamin (until September 2009)

Ms Tess Burton (July 2009 to February 2010)

Mr Tom Holden (December 2009 to February 2010)

Office Manager: Ms Karen Taylor

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Terms of reference

That under section 33 of the Parliamentary Committees Act 2003, the following matters be referred to the joint investigatory committees specified:

To the Environment and Natural Resources Committee; for inquiry consideration and report no later than 31 December 2009 on opportunities to reduce red tape associated with the approvals process for renewable energy projects in Victoria; in particular the committee is asked to consider: a. the major obstacles facing investors in large-scale renewable energy projects in Victoria, including environmental, planning and other regulations; b. how Victoria compares to other Australian jurisdictions with regard to relevant approvals for renewable energy projects – in particular, wind farms as they are the most common form; c. opportunities to reduce risk and delays for investors, whether that be through streamlining regulatory processes, appeals processes or other costs/risks; d. the likely future drivers of renewable energy in Victoria, particularly in the context of the carbon pollution reduction scheme and the expanded federal renewable energy target; e. other reviews and inquiries covering similar issues; this would include the Australian Energy Market Commission's review of energy market frameworks in light of climate change policies and the Environment Protection and H