by Kate Healey, Transmission Advocate, RE-Alliance
There’s been much talk of the role Renewable Energy Zones will play in Australia’s energy future. But before we can plan and build this critical infrastructure, there is a critical need to work with regional landowners to gain land access and ensure that the critical licence to operate is achieved.
Renewable Energy Zones (REZs) will be the power stations of the future. Distributed over a region, solar, wind, pumped hydro and battery projects will collectively become the equivalent of conventional power plants, a reliable source of power that will feed into the National Electricity Market (NEM).
There is keen interest from investors and renewable energy developers to develop new projects in REZs. Recently, the NSW Government opened EOIs for renewable investors wanting to join the New England Renewable Energy Zone, set to host 8GW in total when complete.
They received a massive 34GW of project proposals from over 80 proponents. In light of the IPCC’s recent report, the urgent need for the successful roll out of the REZs has never been clearer. So with State Governments and renewable energy proponents onside, what is causing delay?
Three barriers to overcome
To carry the power to our homes, schools and workplaces, we need to build clean energy transmission lines that will connect the REZs to the existing grid.
In its 2020 Integrated System Plan (ISP), the Australian Energy Market Operator (AEMO) identified 18 transmission projects worth billions of dollars to “plug in” REZs and transition our grid. So how can we expedite the roll out of this crucial new infrastructure?
There are three hurdles we must overcome.
The first hurdle is the regulatory arrangements for transmission lines. The Regulatory Investment Test for Transmission (RIT-T) is a cost benefit analysis which only includes energy market costs and benefits.
It does not include the social or environmental costs borne by local communities. An ongoing problem is the failure of governments to agree to include climate change within the National Electricity Objective which governs the RIT-T.
The RIT-T process takes several years to approve a new project and slows down the pace of the urgent transmission roll out. Frustrated with the length of the process, the NSW and Victorian governments have passed legislation that will allow them to develop their own regulatory investment test in place of the RIT-T.
If federal regulators want to retain their role in grid approval, they will need to hurry to outdo the states in developing a system fit for the task ahead. The second hurdle is cost. Many of the ISP’s 18 projects will cost upwards of a billion dollars, in some cases several billion dollars.
Current arrangements see the cost of new transmission lines recovered from all energy consumers through our energy bills. Another option, proposed by Craig Memery of the Public Interest Advocacy Centre (PIAC), is that renewable energy developers who benefit from new transmission lines should shoulder a portion of the cost.
Government funding can and should also play a role. State and Federal governments, as well as the Clean Energy Finance Corporation, have all recently committed hundreds of millions to support the planning and delivery of transmission projects.
The third hurdle is social licence. It’s a tall order for farmers and landholders to accept large transmission towers being proposed on their properties. Landholders have little negotiating power in determining route-selection processes.
Existing easement payments for landholders are one-off, unlike the annual payments received by wind turbine hosts, which can often be in the tens of thousands of dollars annually, and can be a meaningful droughtproofing mechanism for farmers living through increasingly unpredictable seasons.
Community consultation and engagement
The impacts of the energy transition should not, and do not, need to be a heavy burden for regional communities. If companies and governments prioritise best-practice community engagement, collaboration, and benefit sharing, regional communities hosting REZs and transmission lines can become beneficiaries.
There are current opportunities for communities to say how the rollout could be made fairer for them. NSW and Victoria are designing their access schemes and their replacement regulatory investment tests now.
The AEMC has opened consultation on its Transmission Planning and Investment Review to identify issues with the existing regulatory frameworks in relation to the timely and efficient delivery of major transmission projects.
I recently authored a report, Building Trust for Transmission: Earning the social licence needed to plug in Australia’s Renewable Energy Zones, which recommends expanding landholder compensation and community benefits as follows:
• Earlier landholder and stakeholder communication and consultation during regulatory processes
• Social and environmental impacts are included in transmission line cost benefit processes
• Increased landholder compensation
• Appropriate neighbour compensation
• Community benefit sharing, which may include neighbourhood improvement schemes to mitigate environmental and visual impacts and funding for local community groups
These could be funded in a range of ways, including through an expansion of the RIT-T to include social and environmental costs.
RE-Alliance will continue to advocate that the transmission industry use best-practice local engagement and for regulatory changes allowing community benefit sharing to ensure our energy transition is both fast and just for impacted communities.
Kate Healey is RE-Alliance’s Transmission Advocate and has previously worked at Energy Networks Australia and the Australian and New South Wales Governments on energy and climate policy.
RE-Alliance is an independent not-for-profit working to deliver a renewable energy transformation in Australia filled with sustainable, long-term benefits for regional communities