Cth Bills to Establish Regulatory Framework for Offshore Electricity

Thursday 30 September 2021 @ 12.33 p.m. | Legal Research

On 2 September 2021, the Offshore Electricity Infrastructure Bill 2021 (Cth) (‘Principal Bill’) and the Offshore Electricity Infrastructure (Regulatory Levies) Bill 2021 (Cth) (‘Levies Bill’) were introduced to the House of Representatives by Minister for Energy and Emissions Reduction Angus Taylor ('the Minister'). Both Bills are part of a package which includes the Draft Offshore Electricity Infrastructure (Consequential Amendments) Bill 2021 (Cth), which is yet to be introduced to Parliament.

Both the Principal Bill and the Levies Bill were referred to the Senate Environment and Communications Legislation Committee ('the Committee') following their introduction. The Committee is due to publish its reports on 14 October 2021.

Purpose of the Bills

In his second reading speech, the Minister commented that the aim of the Principal Bill was to:

“facilitate and regulate the development of offshore electricity infrastructure in Commonwealth waters, including transmission infrastructure and generation.”

According to the Principal Bill's explanatory memorandum:

"The establishment of an offshore electricity industry in Australia supports the
Australian Government’s objective to deliver a reliable, secure and
affordable energy system by:

  • facilitating the growth of new sources of energy supply;
  • delivering reliability and improved grid security; and
  • ensuring the energy sector is well regulated.

The development of the offshore electricity industry offers additional benefits in Australia’s national interest, including the creation of new jobs, regional development, and significant investment in Australia’s coastal economies."

In particular, the Minister stated that the Principal Bill will support the development of the Marinus Link, the proposed 1,500 megawatt (MW) transmission line between Tasmania and Victoria, the 'Star of the South', a proposed offshore wind farm off the coast of Gippsland, Victoria, and 'Sun Cable', a solar power plant. 

According to its explanatory memorandum, the Levies Bill:

"allows levies to be imposed on regulated entities, to recover costs associated with regulating their offshore electricity activities that are not provided for by fees under the Main Bill.”

Declaration and Licensing Regime

To support its purpose, the Principal Bill proposes an extensive declaration and licensing regime. The regime will prohibit unauthorised offshore renewable energy infrastructure and offshore electricity transmission infrastructure in the Commonwealth offshore area without a licence.

The Principal Bill covers:

  • which areas can be be covered by licenses;
  • types of licences and the licensing process;
  • protections of offshore electricity infrastructure in the Commonwealth offshore area;
  • the designated statutory authorities responsible for the administration and regulation of the regime; 
  • compliance and enforcement requirements; and
  • worker safety protections;

What is a ‘declared area’?

If passed, the Principal Bill will provide the Minister with the power to declare a specified area within the Commonwealth offshore area as suitable for offshore infrastructure activities.

The Principal Bill's explanatory memorandum states:

“The Commonwealth offshore area is defined as the waters beyond three nautical miles, to the outer edge of Australia’s Exclusive Economic Zone."

In determining whether to make a declaration, the Minister must be satisfied that the area is suitable for offshore renewable energy infrastructure and will be subject to certain mandatory considerations including:

  • the potential impacts of the development of the infrastructure on other marine users and interests, 
  • any submissions the Minister receives, 
  • any advice received from the consultation process, and 
  • Australia’s international obligations relating to the specified area.

The Principal Bill also outlines certain procedural requirements including requiring that the Minister consult the Defence Minister and give proper notice when a declaration is made. Furthermore, the Principal Bill explains the variation and revocation processes for these declarations.

What are the types of licenses?

According to the explanatory memorandum, the Principal Bill proposes four types of licences:

  1. "A feasibility licence authorises the licence holder to assess the feasibility of an offshore infrastructure project and apply for a commercial licence for the project.
  2. A commercial licence authorises the licence holder to carry out an offshore infrastructure project for the purpose of exploiting renewable energy resources. A commercial licence can only be granted to the holder of a feasibility licence.
  3. A research and demonstration licence authorises research into, or demonstration of, offshore renewable energy infrastructure or offshore electricity transmission infrastructure.
  4. A transmission and infrastructure licence authorises the licence holder to store, transmit or convey electricity (which may or may not be from renewable sources) or a renewable energy product. Unlike the other kinds of licence, transmission and infrastructure licence can cover one or more areas outside a declared area."

Furthermore, the explanatory memorandum explains that applications for a licence would be submitted to the Offshore Infrastructure Registrar and "must demonstrate they satisfy prescribed suitability and merit criteria in order to be granted a licence” which varies according to the type of licence.

The Principal Bill also requires that regulations are made relating to:

  • applications for licences;
  • the offering and granting of licences; 
  • transfers of licences; 
  • changes in control of licence holders; 
  • management plans; 
  • any other matters that the Principal Bill provides for the licensing scheme to deal with.

What are ‘safety zones’ and ‘protection zones’?

The proposed simplified outline of Division 1 of Part 3 of the Principal Bill pertains to the protection of infrastructure and states:

"Under Division 3, the Regulator may determine safety zones around certain infrastructure in the Commonwealth offshore area. A safety zone is an area around the infrastructure that must not be entered by vessels, or by particular kinds of vessel.

Under Division 4, the Regulator may determine protection zones in the Commonwealth offshore area. Certain activities posing a risk to safety or a risk of damage to infrastructure may be restricted or prohibited in a protection zone."

The Principal Bill also outlines several offences regarding interference or entry into safety zones or protections zones.

Who will administer and regulate the regime?

The Principal Bill proposes to establish the Offshore Infrastructure Registrar as the authority responsible for maintaining the Register of Offshore Infrastructure Licences among other administrative functions.

The Principal Bill also seeks to designate the National Offshore Petroleum Safety and Environmental Management Authority as the Offshore Infrastructure Regulator. The Regulator’s functions would include the management and operation of offshore infrastructure, and monitoring, investigating and enforcing compliance in the Commonwealth offshore area.

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Offshore Electricity Infrastructure Bill 2021 (Cth) and additional explanatory materials as available from TimeBase's LawOne Service

Offshore Electricity Infrastructure (Regulatory Levies) Bill 2021 (Cth) and additional explanatory materials as available from TimeBase's LawOne Service

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