The South Australian Government has progressed its plan to develop a green hydrogen industry in South Australia, by releasing an issues paper (“Issues Paper”) in respect of the scope and content of the proposed Hydrogen and Renewable Energy Act (“Proposed Act”).
The Proposed Act is currently in its preliminary stages as a Bill has not yet been drafted. However, the Department for Energy and Mining is seeking feedback from stakeholders and the community regarding a proposed licensing and regulatory framework for hydrogen projects, as well as stand-alone renewable energy projects (that are not necessarily associated with hydrogen production).
According to the Issues Paper, the key purpose of the Proposed Act is to provide a ‘one window to government’ licensing framework, which will offer a central service point for industry. As such, the Department for Energy and Mining will be the first port of call and will assist proponents in navigating the various licensing and approval processes under the legislation. Currently, the Department for Energy and Mining does not have a regulatory role in respect of wind farms, solar farms and other renewable energy generation projects.
The Issues Paper states that the Proposed Act will regulate large-scale hydrogen and renewable energy projects in South Australia. However, small-scale developments that do not meet the threshold required for regulation under the Proposed Act will continue to be regulated under the existing regulatory arrangements. The key threshold for large-scale and small-scale developments is not yet specified.
The Government’s proposal is that all hydrogen projects and all renewable energy projects that meet the threshold will require one or more licences under the Proposed Act. This will apply in addition to all existing requirements for development authorisation as well as licensing under the Electricity Act 1996. It will also apply whether the project is on Crown-owned land or freehold land.
The Government is yet to define the criteria for assessment and the terms and conditions that should apply to a licence. However, they have mapped out the different types of licences available under the Proposed Act, which include:
- Renewable Energy Feasibility Licence (REFL);
- Renewable Energy Infrastructure Licence (REIL);
- Hydrogen Generation Licence (HGL);
- Associated Activity Licence (AAL); and
- Research and Demonstration Licence (pre-feasibility).
The Issues Paper is silent on whether and how the licensing requirement will apply to existing renewable energy facilities or facilities that have development authorisation but have not yet been constructed.
What are the key issues discussed in the Issues Paper?
The key issues discussed in the paper include:
- The objects of the Proposed Act.
- The definition of ‘renewable energy’.
- The determination of ‘renewable energy priority areas’ (“REPA”) that will be proclaimed in respect of government-owned land where clusters of large-scale renewable energy projects can be developed using economies of scale.
- Which energy projects should be covered by the Proposed Act.
- Which renewable energy activities or resources should not be covered by the Proposed Act.
- Whether the proposed definition of ‘prescribed commercial purpose’ for hydrogen projects effectively ensures that the Proposed Act only applies to hydrogen generated for commercial purposes, to avoid the need to license hydrogen generated at a domestic level.
- How licensing over freehold land will be dealt with under the Proposed Act (as it is currently suggested that the proponent who applies for a licence over freehold land will still be required to acquire an interest in the land either by purchasing the land or through an access agreement with the freehold landowner).
The Issues Paper acknowledges that for projects on Crown-owned land, there will likely need to be a Native Title agreement in the form of an Indigenous Land Use Agreement between the Native Title party, the government and the project company. The Government would like to know whether there are Native Title groups that are interested in learning more about investigating a potential REPA on their land.
Additionally, the Issues Paper highlights the Government’s intention to work closely with Aboriginal people throughout the development of the Proposed Act. The Government also intends to develop mechanisms to facilitate the involvement of Aboriginal people throughout the implementation of the regulatory framework. The Issues Paper does not detail the extent and context of this proposed involvement.
The Government is proposing that licence fees be set at levels that provide for cost recovery for the regulatory effort involved in administering licences. The Issues Paper does not address what administrative effort is anticipated, and given that the licences will be required in addition to a development approval and a licence under the Electricity Act 1996 (which already deal with land use and interface issues, and technical matters relating to electricity supply and grid connection respectively), it is unclear what matters will be regulated under the proposed licensing scheme. The Government has sought submissions regarding any concerns with the proposed cost recovery for government services using licence fees.
It is also proposed that an annual rent be payable to the Crown for renewable generation licences over Crown-owned land. The Government is seeking feedback on this proposal. The Issues Paper proposes the same general provisions for exploration and production licences under the Mining Act 1971 and Petroleum and Geothermal Energy Act 2000 will apply to licences issued under the Proposed Act. The Government is seeking feedback on this proposal and submissions regarding whether there are any other general provisions that should be included. This is a matter that should be given careful consideration, since the licences will apply in addition to the conditions of development authorisations and also in addition to the commercial arrangements between the project proponent and the landowner, and there is consequently significant risk for inconsistent obligations to be applied under the overlapping regimes.
Provide your input
If you would like to discuss how the proposed regime may affect your projects in South Australia, or would like assistance in preparing your submission, please contact our team: