To minimise risk on projects, timing is a critical factor that needs to be better co-ordinated, both by:
- Governments, through more streamlined and better co-ordinated statutory planning and environmental approval processes
- Project applicants, by taking proactive responsibility in the preparation of the application and the dissemination of information through a co-ordinated stakeholder engagement strategy.
The context for development
Australia is uniquely positioned in the global market, thanks to its opportunity to entice investors to harness renewable energy in the natural environment in a manner that will deliver on the Federal Government’s Renewable Energy Target and its Clean Energy Future Plan.
Despite Federal Government clean energy initiatives such as the Clean Energy Finance Corporation and the Australian Renewable Energy Agency, the development approvals process for Australian clean energy projects continues to be cumbersome and time-costly for most project applicants.Article continues below…
Australia’s current market conditions are costing developers significant amounts of money in holding costs, and in some cases are stopping the sustainable development of renewable energy projects. These local conditions are forcing financiers and global investors to take their business to other markets such as China, the United States, Germany, Italy and India, as outlined in the Global Status Report on Renewables 2012 by the Renewable Energy Policy Network for the 21st Century.
Globally, new investment in renewables rose 17 per cent to a record $US257 billion in 2011. This increase has taken place at a time when the cost of renewable power equipment fell rapidly and there was substantive uncertainty over economic growth and policy priorities in developed countries.
One of the highlights of 2011 was the strong performance of solar power, which surpassed wind power, the biggest single sector investment in recent years. If Australia wants to share in this investment, it needs to position itself in the global market in a manner that attracts investors. Australia’s natural environment makes it attractive to renewable energy investors, but Australian governments must streamline processes to ensure quick and easy certainty around development approval.
Co-ordination amongst tiers of government
Despite the Federal Government’s policy and legislative reforms for clean energy, there has been considerable criticism of Australia’s commitment to sustainable development, given the lack of co-ordination across the tiers of government in the statutory development approval processes required for each major renewable energy project.
Have Australian policymakers over the years been more concerned with broader visionary statements and the carbon pricing scheme, rather than the method of approvals required before renewable energy projects can be delivered? Are our current statutory processes bogging us down in the assessment of projects, rather than their delivery to the market?
At the 33rd meeting of the Council of Australian Governments (COAG) in Canberra on 25 July 2012, the Prime Minister, Premiers, Chief Ministers and the President of the Australian Local Government Association discussed future competition and regulatory reform, and construction industry costs and productivity.
At the request of the Victorian Regional Cities Business and Industry Forum, current challenges and opportunities for growth in Victoria’s regional cities and the importance of building partnerships to support economic growth were thrown into the limelight. Among various matters noted at the forum, it was agreed by all that statutory planning and environmental approval processes can, at times, delay or obstruct major projects. It was also agreed that government action to reduce ‘red tape’ and facilitate productivity could assist this issue.
Recognising that prosperity is a shared responsibility, delegates emphasised the importance of regional co-operation between the various tiers of government, business and regional leaders. COAG agreed to establish an independent review panel to conduct a broad-ranging investigation into cost, competitiveness and productivity challenges in the commercial, civil and large-scale residential construction industry.
COAG also reiterated its commitment to reducing duplication and double-handling of environmental assessment and approval processes while maintaining high environmental standards that are risk- and outcomes-based. In line with the timing agreed at the COAG meeting, consultations are underway and negotiations for bilateral agreements are about to commence.
As the end of 2012 draws near, industry and the development sector eagerly await a resulting discussion paper and its recommended actions, which is being prepared ahead of the next COAG meeting in late 2012.
Tailoring the process to suit project needs
While the proposed COAG reforms in streamlining development approvals for major projects are important in addressing the need for sustainable development in a co-ordinated manner, it will be some time until a final report is delivered and the recommendations actioned.
The industry may speculate over whether the work to develop best-practice approaches in order to lift regulatory performance, and policy initiatives to meet the red tape challenge, will better facilitate development of major projects across the country. However, approvals for renewable energy projects are critical and are required immediately. Governments and industry sectors must act now to facilitate the development of projects, and in turn, reduce emissions and achieve renewable energy targets.
Often, major projects can take approximately two years to obtain relevant planning and environmental approval in Victoria. By the time the community is consulted, planning permits are granted and the relevant environmental approvals are obtained through the environment effects statement process.
Personal experience with the Mildura Solar Concentrator Power Station, which was approved in Victoria a few years ago through a process that saw the project fast-tracked through the system, has demonstrated that this all depends on the approach of the project applicant. This $420 million project will see 270,000 megawatt hours generated per year, enough for 45,000 homes, resulting in a reduction of greenhouse gas emissions by approximately 400,000 tonnes per year. Before the formal application for the solar energy project was lodged with the relevant department, the community had been consulted, key stakeholders informed and significant environmental assessment done.
Until current statutory processes are streamlined, proponents will need to work their way through the statutory planning and environmental system. Proponents should strategise for the planning and environment approvals process in an integrated manner that elevates these projects to a status of ‘state significance’ and includes co-ordinated consultation across key stakeholders, community groups and decision-makers prior to the formal commencement of the statutory application process. This includes discussions with the relevant authorities to ensure timely connection to the grid.
Governments at both state and federal levels need to implement a more co-ordinated approach to major clean energy projects that will see a more streamlined statutory approvals system installed. However, if project proponents and investors play their cards right, there is no reason why they cannot minimise risk and proposals to get the green light quickly, even without streamlined development approvals processes.