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LEGISLATIVE COUNCIL

SELECT COMMITTEE ON WIND FARM DEVELOPMENTS IN SOUTH AUSTRALIA

Torrens Room, Parliament House, Adelaide

Monday 20 August 2012 at 11:20am

BY AUTHORITY OF THE LEGISLATIVE COUNCIL

SELECT COMMITTEE ON WIND FARM DEVELOPMENTS IN SOUTH AUSTRALIA Page 12

MEMBERS:

Hon. D.W. Ridgway MLC (Chairperson) Hon. R.L. Brokenshire MLC

Hon. M.C. Parnell MLC

WITNESSES:

CAMPBELL GEMMELL, Chief Executive, and PETER DOLAN, Director, Science and

Assessment, both of Environment Protection Authority, GPO Box 2607, Adelaide 5001, called and

examined:

42 The CHAIRPERSON: Welcome to the meeting, and thank you for your patience. Unfortunately, we have two members away this week. We are not a quorum until we have three members present. The Legislative Council has given authority for this committee to hold public meetings. A transcript of your evidence today will be forwarded to you for your examination for any clerical corrections. Should you wish at any time to present confidential evidence to the committee, please indicate and the committee will consider your request. Parliamentary privilege is accorded to all evidence presented to a select committee. However, witnesses should be aware that privilege does not extend to statements made outside of this meeting. All persons, including members of the media, are reminded that the same rules apply as in the reporting of parliament. Clearly you have a presentation to make, so over to you.

Dr GEMMELL: Thank you very much. I thought it may be helpful to do a quick overview and then hand over to Peter to get into a little more detail. Just to scene set, then, I hope this is not death by PowerPoint. It is really just to give you a little bit of initial context. This slightly busy slide is probably, from my point of view, the most important starting point to give a bit of scene setting. I think the environmental dimensions of wind farms are worth considering. I know the committee has a number of different areas that it is looking at and you have quite a wide remit. The EPA's specific role is really very narrowly defined, and I will end this slide on that basis. I will cover quickly the top elements.

Clearly, energy policy context is very fundamentally important to where wind farms fit in. The move towards renewables is clearly a significant part of reducing carbon intensity and reducing CO2 emissions. In some parts of the world, not only onshore wind but, increasingly, offshore wind, as well as geothermal, solar and other marine renewables, have been developing significantly, and there is potential for most of those to be applied within the South Australian context.

Secondly, spatiel planning issues: clearly, where wind farms are placed is pretty fundamental, and the issue of proximity to human habitation and other economic activity is equally important, as is the separation of individual pylons, the one from the other. So, it's not just the location of the farm, it's also the layout of the farm. In terms of environment and natural heritage impacts more broadly, some of this, and some of the other things I'm talking about, are beyond the direct aegis of the EPA, but I felt it might be helpful to cover them nonetheless.

Often one of the biggest issues is visual amenity; some people love wind farms, some people hate wind farms. They always have an impact, but sometimes people are content with that impact. I have to say that in certain parts of Scotland, from which I come, the choice between a coal installation, a nuclear installation or a wind farm has led some people to interesting conclusions that have tended to favour wind farms.

43 The Hon. R.L. BROKENSHIRE: Whereabouts did you say you come from?

Dr GEMMELL: Scotland. Some of the issues around environmental impact have included bird kill, and also bats have been killed in a number of particular locations, so mortality of flying livestock is relevant. Soil and surface effects are reasonably well documented. In some cases again, in heathland and upland areas of Europe the destruction temporarily or permanently of high-carbon soils has been an example of concern—effectively stripping a surface area before installing

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a wind farm. Some interesting carbon balance calculations have been done looking at the impacts that these have had, but there are also impacts once a farm is in place. There are vortices that come out from individual turbines and the interference that you get from groups of turbines can actually have impacts on the ground in terms of scouring of vegetation, for example, downwind of a site.

There is also documentation around light flicker, particularly at low sun angles, where there is an impact both on humans and on livestock, for example. There is some, mostly anecdotal, evidence of impact on cattle and the time at which they present for milking, for example, on the basis of light flicker.

44 The CHAIRPERSON: That's delayed or—

Dr GEMMELL: Delayed, and confused in certain cases, where a herd would tend to come in for milking at a fairly uniform, regular time they were scattered over a longer period, but these are—

45 The Hon. R.L. BROKENSHIRE: On that point, does the EPA have any documented information on that particular impact on dairying?

Dr GEMMELL: We don't, although we have had anecdotal evidence presented to us, but we don't have scientific evidence that would stand up at this point, but we have had individual representations made to us on that subject.

46 The Hon. R.L. BROKENSHIRE: Is there any documented evidence anywhere available?

Dr GEMMELL: There's a little both in Scotland and in Denmark.

47 The Hon. R.L. BROKENSHIRE: Could I ask, Chair, that Dr Gemmell try to source that for us?

Dr GEMMELL: Yes, I'm happy to do so. The main focus of attention tends to be around noise (and that's the next bullet point), both in the audible set of frequencies and volumes and ultrasound, at very high levels, and infrasound, which is below the 20-decibel level. Also, effects around vibration, in fact some wind farms have had seismological equipment installed around them because it's what are called Love waves and over surface waves that are the ones that are in evidence, rather than the non-air based P or S waves that go through the—

48 The CHAIRPERSON: Has the seismic equipment been able to record a measurable amount of vibration?

Dr GEMMELL: Again, I am not aware of any evidence presented within South Australia, but there is evidence in the US, Canada and in parts of Europe that has been taken using seismographic equipment.

49 The CHAIRPERSON: If possible, just a reference to point us to where we could find that information would be useful.

Mr DOLAN: We have done some work on vibration, particularly in close proximity to transformers on wind farms rather than wind farms themselves. We have looked into that and found nothing here, but it obviously depends on soil type and a variety of other things.

50 The CHAIRPERSON: I did attend a meeting at Burra a few weeks ago where a development was refused, but some of the people giving evidence that day spoke about what was like a pressure wave; it was not noise, but the best way I can describe it is a pressure wave. I am sure that's not the technical term for it, but there was something, an awareness that there was something happening in the atmosphere.

Dr GEMMELL: Perhaps I can touch on that in the next dash point there because there are interesting dimensions to what is producing the noise: the turbines themselves; the machine, effectively the dynamo unit that is at the top of the pylon; wind moving in and around the pylon itself. With the blades, technology has advanced in terms of the blades presenting orthogonal to the direction of the rotation, or parallel to it.

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There has also been experimentation in the development of tipping the blades in order that they can behave differently and, depending on the direction of the wind, actually moving them in that sort of aspect as well. That is partly to capture greater energy transfer from the rotational movement, which is the normal way of making the dynamo move. Sometimes it has actually been done rather like aircraft to feather the amount of thrust that this provided because in very high wind environments, for example, it can actually damage the individual blades. These movements can actually add to the suite of noises that are produced.

Also, as I have said, the wind turbine/landscape interaction is the next component of that. If you have a perfectly flat landscape you can imagine a single turbine with a footprint of noise effectively coming down to ground; if you have a number of different pylons you get different wind interaction and you get what are called interference effects and areas where the impacts are greatly enhanced and areas where, in fact, the effects are completely wiped out—basic physics. But the issue of individual versus multiple interactions is looked at in a number of jurisdictions quite deeply to come up with the overall planning view of the viability and appropriateness of a particular farm.

I think context is also very important. What kind of natural vegetation is there? How far is it away from a population? How big is that population, how scattered is it? There is also a very interesting range of pieces of evidence. Again, the Canadians have come up with probably greater clarity in this area—Geoff Leventhall 2006—looking at human sensitivity and how the acoustic evidence is picked up. There is quite a lot of variability there; for example, some people can detect sound or noise at 20 down to around 16 hertz, but most people can't. So individual people have an individual level of sensitivity.

Now again, this takes us into health territory which, although an area of my interest, goes beyond the technical competence that we are here to represent, but I thought it was worth just mentioning it. It is particularly evident that people who have experienced disrupted sleep are concerned; sensitivity at night is, frankly, enhanced for most things, but for some people who have this greater sensitivity to noise it is enhanced. As Peter said, around switch and transformer facilities there is also an enhancement because different frequencies tend to be demonstrated there in addition to the frequencies of the wind farm itself. That can produce downstream further interference effects that some people are sensitive to—but most are not.

The diurnal variation, the day to night variation, is also a common dimension, and some rules worldwide have been changed from what is tolerable and permitted during the day and what is allowed at night.

51 The CHAIRPERSON: You say they've been changed. Is there a lesser tolerance during the night? Certainly for sleep disturbance you would assume that people would prefer to have less noise.

Dr GEMMELL: Yes, but of course in most situations there is also less other background noise, so people's sensitivity would be even more enhanced. The tendency is to have a tighter limit at night, but not actually in all jurisdictions. Strangely, some jurisdictions, including in the UK, have gone the other way, allowing a slightly higher level at night. So there is no single wisdom there.

Just very quickly, the last three dimensions. During high winds in certain cases worldwide, there have been some safety concerns. Actually you are trying to turn the turbine off but, of course, it's still got rotational movement applied to it, and that has had some burnout effects in some dynamos. There are very few cases where there has been any significant hazard represented towards humans, but it is a dimension.

Materials use: there is a concern about some of the materials that are used in dynamos that are very rare materials. The Chinese have a particular source of neodymium, but it's a rare earth, a rare metal, and some people are concerned about that. Then, finally, housing construction. I have observed that, in general, the level of thermal insulation in South Australian houses isn't all that it might be. Certainly coming from colder climates where it is necessary in winter, I think it also has benefits in summer, but it would have an additional effect of acoustic buffering. There is scope for a significant acoustic enhancement, including double and triple

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glazing, which again is not standard in this part of the world but all of which would abate the kind of impacts and therefore ameliorate the sensitivities that individuals would have.

That was really just to paint the broader canvas, but I will just end on the noise point. Peter will clarify even further, but the scope we have is very limited. I think like other inputs from the EPA, it is best achieved by a combination of early engagement to look at where farms should be located before they are built and then looking at the kind of guidance that should be applied. But generally speaking, the WHO rules, which sit around the 35 to 40 decibel level of the acoustic spectrum, seem entirely appropriate.

The key point, I think, is that, whilst there is evidence often from interested parties of concern and problems, most of the population most of the time is not negatively impacted in other than qualitative terms, i.e., some people like and some people don't like. I thought that would be a reasonable overview. I will quickly hand over to Peter for the detail overall. I hope that was helpful.

Mr DOLAN: Thanks, Campbell. As Campbell mentioned, the EPA's role in the regulation of wind farms is actually relatively limited in the process. Wind farms aren't covered by schedule 1 of the Environment Protection Act, which is the schedule which lists whether something needs a licence. So a wind farm doesn't require a licence to operate in South Australia.

The largest portion of these four things that we have been involved with is really the development assessment stage. Wind farms are referred to the EPA under schedule 9A of the development regulations. We have statutory power to give advice; we don't have statutory direction, so we give advice to a planning authority. Our focus in assessing wind farms through this process at the moment is audio noise, so audible noise frequencies based on our wind farm guidelines from 2009, and we mentioned those.

We are also involved in the more routine aspects of regulation in the development of wind farms, so construction impacts, noise of trucks and those sorts of things that may in certain circumstances affect local communities who are involved in that general sort of regulation.

We undertake post-construction noise monitoring against our guidelines. So far in South Australia with the wind farms that have been built, we have only had one occasion where we have found non-compliance post-construction, and that was a reasonably well-known case in Hallett 2, where they had an issue of tones coming from I think the generators on the wind towers. They had a mechanical issue at night, and I believe that has now been rectified. That was an issue of certain tones that occurred 7 per cent of the time and, strangely, only at night.

This actually illustrates one of the points that Campbell was making about the complexity of noise here. We think that one of the reasons these tones were only audible at night was that the other background frequencies that may have been in a similar tone disappeared at night, but we are unsure. There is also a climatic change at night, of course, in terms of cooler temperatures in certain circumstances. In that particular area there was cloud cover, which meant that on some nights the noise dissipated and on other nights it was channelled to where people could hear it. That's the only example we have had where we have actually had non-compliance against our guidelines post-construction.

52 The Hon. R.L. BROKENSHIRE: On that point, the guidelines tie in with WHO. Were your concerns on noise and health, and was it decibels or what? What was the concern?

Mr DOLAN: The guidelines are about noise. In the audible frequencies, we are guided by health expertise from the Department of Health and Ageing, and they use the National Health and Medical Research Council guidance on wind farms.

The current position is that there are issues with audible noise. In fact, they have started an inquiry into the possible impacts of subaudible noise or noise below 20 Hertz that some people refer to as infrasound. Our guidelines are about audible noise frequencies. The current standard is 35 decibels in the “A” weighting scale in rural living zones and 40 in any other zone, including built-up areas, townships and so forth.

World Health Organisation standards largely say that you need to be in the order of 30 to 35 decibels at night to enable peaceful sleep, and so a lot of the standards are about that.

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Wind farms are regulated. They have to demonstrate they can achieve 35 or 40, depending on the zone, at all times, not just at night.

53 The Hon. R.L. BROKENSHIRE: When you did your work as an EPA you discovered that it was above 35 to 40. Why would it be 40 in a built-up area and 35 in a rural area?

Mr DOLAN: The guidelines are consistent with the environmental noise policy which is based on zoning largely. If you assume zoning is a reflection of the community's acceptance of what activity occurs in an area, the acceptance is that people living in a rural living zone are used to a lower level of background noise and so they would expect a lower noise impact from something being introduced and that's why it's 35. Whereas, if you live in a township or any other place which is more built up, you are expecting higher levels of noise.

54 The Hon. R.L. BROKENSHIRE: I live on a farm so I know what you are saying. Is it on that basis rather than a specific health related basis that it is 40 in a built-up area and 35 in a rural area?

Mr DOLAN: Yes, it's more about expectation of background noise and so forth, whereas the World Health Organisation standards really talk about quite low levels of noise, 30 or 35, for sleeping at night and we have used that for rural living areas. It's largely about differences in background noise.

55 The CHAIRPERSON: Earlier evidence that Dr Gemmell gave is that some people could hear at a lower level. Does the EPA have any evidence, if they can hear it, what effect it has on them? Is it just sleep disturbance or are there other things?

Mr DOLAN: We don't have any evidence about that at the moment. The National Health and Medical Research Council is currently investigating their position on what we call infrasound, that's noise below 20 Hertz. As Campbell said, there is evidence that some people can sense or be affected by noise from 16 to 20 Hertz. Most people aren't, so most people don't detect that. We are relying on the health experts to actually give us the advice about whether this is a real issue. Our view is that, if they come back to us and say yes, we will amend our guidance and change our rules to make sure we cover those lower frequencies. At the moment we don't.

56 The CHAIRPERSON: Are there any guidelines around the world for lower frequency, that is, the infrasound level of noise? Clearly it is an issue that is probably at the basis of a whole range of concerns about wind farms. Are there any guidelines elsewhere in the world?

Mr DOLAN: I'm not aware of any.

Dr GEMMELL: I suppose my response would be that the United Kingdom Health Protection Agency (HPA) in 2010 and 2011 did look at this area, and the difficulty they had was getting a statistically representative and significant population to sample. The difficulty has been just getting the numbers involved. It does appear that—and I think the line they used was an overwhelming minority—a very small number of people were affected—that is, could detect—but in terms of physiological disruption there was no evidence that they were able to find. That's my understanding. There are certainly no guidelines that specifically look to address this area. I think, as Peter said, the general WHO 40 dB figure across the audible range is considered the best measure in general.

57 The Hon. M. PARNELL: Do you have more to say, Mr Dolan, on the development assessment process because I was going to ask about that?

Mr DOLAN: Yes, the next slide. We always have an interest in commenting on development policy and our preference is to be involved with the process as early as possible. Although there is no statutory role for us in commenting on development plan amendments, the Department of Planning, Transport and Infrastructure will send draft DPAs to us for comment, and during the public consultation process we see them as well to make comment. The reason we comment at that level is simply because we would rather fix issues with the planning process than on an individual case by case DA process really.

We're involved in consulting on these. The development regulations 2008 also specify what gets referred to us and, in this case, as I said before, it's schedule 9A. They are

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referred to us, but we don't have a statutory power of direction; it's advice only under the Development Act.

Just to give you an idea of the sort of volumes, this slide shows the last five years of referrals under schedule 9A to the EPA. You will see it's a relatively small portion of our business in terms of the number of referrals we get. In the last five years, we've had just over 2,000 referrals under development regulations. To give you an idea, in the entire planning system in 2011-12 there were about 31,000 or 32,000 development applications assessed in the planning system; of those, we got just under 400 because of the levels of complexity.

You will notice a significant difference here. In the 59 applications last financial year, and the reason there is a little `1' next to it, the oddity there is that it was actually seven, which is the reason for the number in brackets. The proponents, for their own reasons, submitted those proposals in large numbers of DAs. They broke up their development, so in one case 42 development applications were submitted for one wind farm proposal.

58 The CHAIRPERSON: Why was that, Mr Dolan? It was 42 different allotments or—

Mr DOLAN: I can't speak too much about their motives, but my understanding is that they decided to divide up the number of wind turbines between multiple development applications presumably to make it harder to object to them, but that's pure speculation by me; it's not the EPA's position. It's speculation but, from the EPA point of view, we assessed them all individually and we insisted on assessing the modelling as a whole, rather than on individual small numbers of turbines. Effectively, there were seven.

You will see that there has been largely no difference in the number of development applications for wind farms over the last five years. It's up and down around the half a dozen mark, I guess.

59 The Hon. M. PARNELL: You say that these individual applications for wind farms are now referred to you under schedule 9A of the development regulations, and you have the ability to give advice. We know that from previous occasions when the EPA has appeared before parliamentary committees, the question has been posed: how often is your advice accepted and how often is it rejected? Are you able to fill us in on those applications that have been referred to you? Has the EPA'S advice been wholly or in part accepted or rejected.

Mr DOLAN: To date, our advice has been accepted in every case in terms of wind farms in a formal sense. We have had a couple of cases where we have had to go back to a proponent and the planning authority to ask questions, and proposals have been varied early in the process where we have said, 'We think what you're proposing won't work,' and we have had applications withdrawn and then resubmitted. However, in the final sense from a statutory point of view, yes, our advice has been accepted in every case.

60 The Hon. M. PARNELL: You also say in terms of the EPA's role that you do have the post-construction monitoring. In other words, these facilities are going to go for years and years, and so, as the pollution watchdog, you have to keep a track on how much noise they are producing. It would seem to me that that task would be a lot easier if you had a more formal relationship with these wind farms. You said that you are not obliged to give them a licence because they are not on that list of activities in schedule 1 of the Environment Protection Act, where you give out licences.

You have clearly gone to a fair bit of effort, in that you have produced guidelines and you have updated them recently. My question (and if it's too political you don't have to answer it) is this: is the EPA doing any work at present in terms of making a case to government for your role to be more formalised, given that we're going to be seeing probably more rather than fewer of these types of facilities? In other words, is the EPA making the case for wind farms to be a license-able activity so that you can more directly control them?

Dr GEMMELL: No would be the short answer. To expand slightly, worldwide it's pretty unusual for an environmental protection regulator to be involved in energy regulation. I suppose there is an edge where I think it's relevant for us to be involved. I think the current arrangements are perfectly satisfactory, but the challenge, were we to take or be considered for such a role, is the number of elements within the system. For example, I was involved in the

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regulation of Europe's largest wind farm site at Whitelee in the centre of Scotland. Regulating 140 separate entities in one site which is one of several hundred sites would take up a great deal of officer time by comparison with the environmental impact of that particular activity. It's a proportionality and risk-based issue.

For a risk-based regulator dealing with environmental pollution, this would not be a priority area for effort. Therefore, the current arrangements are satisfactory from our point of view. Of course, we serve at the will of ministers and parliament, and were there to be a view to do that differently we would obviously respond to that. But there is nothing about the status quo that causes me particular concern, given the profile of impacts that this is involved in.

61 The Hon. M. PARNELL: If you are not making that case—and perhaps that will be a conversation I will have with you later—I do not think the fact that it is an energy producer is relevant. For example, the coal-fired power stations that you guys are intimately involved in regulating—in fact, the only reason that the Playford B coal-fired power station can operate is that you have given them exemptions, because they are just not able to cope with modern pollution standards.

My question, though, is that you have these wind farm guidelines, and the science is evolving and information is coming out. Under the heading of 'Annoying characteristics' (that is 4.7 in the guidelines) there is a little box that refers to infrasound, and we have talked about that already in terms of the very low frequency. Effectively, what the policy says is that that is not a problem any longer with modern wind farms because they are built differently to the old ones. This document is a couple of years old now; is that still the EPA's position, or did you say earlier that you were doing more work on the possible impacts of infrasound?

Mr DOLAN: The National Health and Medical Research Council is currently reviewing its position on infrasound and health, and our contact in that process is the Department for Health and Ageing. We intend to review our guidance should they come up with something that we need to address in our guidance. At the moment, the view of the NHMRC is that there is no health impact from wind farms, from infrasound, but they are currently reviewing that position. Should they find that there is, then we will review our guidelines to make sure that we cover that in the assessment process.

62 The Hon. M. PARNELL: The guidelines is an informal document; the more formal document is your Environment Protection (Noise) Policy from 2007, and that specifically excludes sub-audible noise. The minister could change that overnight just by putting a notice in the Gazette, but it seems to me that the process would be that if the NHMRC comes up with something different then you are saying you would be changing your guidelines to reflect that. I just suggest—for whatever it's worth, in terms of advice from me—that you might also want to change your noise policy guidelines, because it specifically exempts that below 20 hertz noise, as I understand it.

Mr DOLAN: You are quite right. The guidelines are basically attached to the noise policy, and we would have to change the noise policy if we decided to address infrasound in the guidelines. That is true.

Dr GEMMELL: I would like to just supplement that. It is an area where, because it is still evolving, we would be absolutely open to looking at this further. It is an emerging area of science. I will just go back to the point I made in my introductory comments about context. Children playing on swings can be exposed to around a 100-decibel noise rating and the frequency can be around half a hertz. That is also infrasound. Someone who travels on the tram or on the train, and particularly those people travelling on aircraft, can be sitting for several hours in something where the infrasound levels are actually very substantial.

So I think we need to look at the data on a broader front to try to get some context for this. The exposed population, both from an environmental and I would argue health point of view—although I would caveat that again that we are not health specialists—is directly relevant to any policy consideration we would make for the future. New evidence continues to come out, and clearly WHO and NHMRC, and the UK HPA, have been looking at this on pretty much an annual basis for the last few years. But individual turbines are now roughly 30 per cent less noisy than they were 10 years ago, so that's the basis on which that particular statement is made.

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However, I think the bottom line issue still remains probably how close people are to a facility and then how well laid out the facility is. It is not intrinsically the noise-based parameters of the facility.

63 The CHAIRPERSON: Mr Dolan, you talked about the Hallett 2 wind farm as being one where there was an issue with noise, and that appears to be the only wind farm that has been subject to an audit to fix its noise problem. Have there been any other wind farms where you have had a complaint lodged and have actually gone out and measured and dismissed it?

Mr DOLAN: There would be about half a dozen where we have had people raise issues about wind farms and where we have measured and not found a problem. That is about audible noise. We have received, I think, about half a dozen calls from the public. We have received a lot of information from interested parties about wind farm noise and infrasound and a lot of other issues but, in terms of formal complaint, we actually get a fairly low number of formal complaints from the general public about wind farms. That's possibly a feature of how many people live in close proximity and also a feature we find with complainants about their interest in complaining. There is a difference between metropolitan Adelaide and regions about the willingness to complain to somebody. People will put up with things at different levels and so forth, but it would be about half a dozen where we have gone out and monitored and, to date, we have found nothing or have not found the levels.

One of the challenges with this form of noise is its complexity, the background noise. There are some technical challenges in monitoring this sort of noise. Anyone who has tried to take a home video with a little microphone on the video camera will know that wind and a microphone is a problem, and it shouldn't surprise anybody that when you build a wind farm where it is windy, there will actually be technical challenges in monitoring background and separating and deciding that the noise came from the wind farm as opposed to any other source.

64 The Hon. R.L. BROKENSHIRE: Mr Gemmell or Mr Dolan, with what you have already briefed the committee on—and you talked about policy but not having specific legislative requirement to comment on planning policy—was the EPA contacted by the minister, the Premier or the department to comment on the interim DPA that came out in the latter part of last year?

Mr DOLAN: Yes, and I will finish on this slide for my presentation. The ministerial wind farm DPA came out for public consultation in October last year. The EPA made comment in that process. We have a couple of issues with the DPA that we have responded on. One is really an issue of proximity. We have some concerns—I don't yet know the outcome of whether our advice has been taken up in this case. I think the minister hasn't yet announced his—the final DPA hasn't come out, so we are not sure whether or not our advice has been taken in this particular case.

Our concerns were twofold. One was that we wanted to make sure that encroachment on wind farm proposals was restricted. The DPA sets a one kilometre distance, so that works for wind farms coming into an area. There is another question about people building houses within the one kilometre, so we raised the issue about how you restrict extra people coming in.

The second one was actually more about the one kilometre. We don't have a view that a particular buffer is useful in wind farms. It might have other planning benefits but, from a noise point of view, we would rather look at the acoustic modelling and monitoring and see what happens, because with wind farms, like a number of noise sources, the noise can be heard a long way away, depending on topography and so forth, and a kilometre doesn't guarantee anything in particular. You will still need to look at the modelling to make sure that people further afield aren't affected. So the EPA is used to make sure that you avoid that. If you are outside this distance you are fine. We would rather assess every case on its merits.

65 The CHAIRPERSON: So on a noise basis rather than on statutory distance?

Mr DOLAN: Yes, from our own point of view. Statutory distance has other values, and I have to say that the majority of cases where you may have an issue is: the closer obviously, the greater the chance that you are going to have an issue, but we don't think a particular distance means that much.

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66 The CHAIRPERSON: And that's the 35 and 40 decibels that we were talking about.

Mr DOLAN: That's right.

67 The CHAIRPERSON: That's the World Health Organisation sort of standards. I assume that other states—Victoria and New South Wales—have that same noise level as a base.

Mr DOLAN: It is largely the same. Ours are actually slightly tougher than most jurisdictions. We are one of the few that differentiate between rural living and other zones. There are others who I think use 40 decibels regardless of zone, so ours are actually slightly tougher for rural living zones, but they are largely around that area. There is not a lot of variation.

68 The Hon. R.L. BROKENSHIRE: Just on that first dot point, the EPA commented on the DPA once the community consultation was occurring.

Mr DOLAN: Yes.

69 The Hon. R.L. BROKENSHIRE: Was there a formal request by the Premier, the minister responsible or the department for you to actually make comment before the Premier came into the parliament and made a ministerial statement, because that ministerial statement said that there wouldn't be an interim DPA, and then after that there was community consultation. I am just interested to know whether due process occurred before the Premier made the statement.

Mr DOLAN: I don't recall a request from there for comment. We certainly met with the then renewable energy commissioner to discuss various options to do with wind farms more informally previous to the DPA coming out for consultation. We touched, for instance, on the issue of whether or not wind farms should be licensed under the Environment Protection Act. We talked about a variety of options. It's a practical reason for not licensing wind farms because really a licence is about having a legal instrument to place conditions on an operator. One of the questions was: what sort of conditions would you place on an operator of a wind farm? Yes, you could ask them to monitor things, but if there is nothing for them to do on a wind farm to change the outcome, there's a question mark over whether a licence is of practical value.

We talked through those options and the decision was made in that area in RenewablesSA, I think, to proceed with the DPA, but we weren't involved in that specifically.

70 The Hon. M. PARNELL: On that point, I am looking at a document that was prepared in December 2010 under the name of RenewablesSA prepared by URPS Norman Waterhouse Lawyers. The point is they talked to you.

Mr DOLAN: They may well have done, I just don't recall the detail of it.

71 The Hon. M. PARNELL: The rezoning, as I understand it, was largely based on the outcomes of that report.

Mr DOLAN: You're right, Mark. In preparing those sorts of documents we had a number of people come to talk to us about our views about wind farms, but in terms of specifics about the DPA, no.

72 The Hon. M. PARNELL: To follow on from Mr Brokenshire's question, I don't recall whether I saw the EPA submission on the list of public submissions that was published on the website when the DPA went through. If it is not publicly available on that website, are you able to provide us with a copy of the submission that you gave the planning minister or the Development Policy Advisory Committee?

Dr GEMMELL: Can I check what we gave and when we gave it? As you probably know, I only arrived in SA at the end of January, so this was prior to my arrival, but I can certainly check what the arrangements were, and, if we did, I can see what can be provided.

73 The Hon. R.L. BROKENSHIRE: If there is any documentation between the Premier's office and the minister's office or the department prior to the interim report coming out, I would appreciate that being provided, too.

Dr GEMMELL: Okay.

74 The CHAIRPERSON: Do you have any further points that you wish to make?

C. GEMMELL P. DOLAN


Mr DOLAN: I'm basically finished.

75 The CHAIRPERSON: Thank you very much, and sorry for the earlier delay.

THE WITNESSES WITHDREW


WITNESSES:

PAUL HEITHERSAY, Deputy Chief Executive, VINCE DUFFY, Executive Director, and

CATHERINE WAY, Industry Development Manager, RenewablesSA, all of Department for

Manufacturing, Innovation, Trade, Resources and Energy, The Conservatory, 131-139 Grenfell

Street, Adelaide 5000, called and examined:

76 The CHAIRPERSON: Thank you for coming. For the benefit of Hansard, Dr Heithersay, can you introduce yourself and your two colleagues?

Dr HEITHERSAY: I am the deputy chief executive in the Department for Manufacturing, Innovation, Trade, Resources and Energy. On my left is Mr Vince Duffy from the energy markets part of DMITRE and on my right is Catherine Way from RenewablesSA also in DMITRE.

77 The CHAIRPERSON: Do you have an opening statement that you wish to make?

Dr HEITHERSAY: I do. The South Australian government is committed to reducing greenhouse gas emissions and providing a sustainable future for all South Australians. This commitment is demonstrated in the incorporation of renewable energy targets in South Australia's Strategic Plan. The original target sought to support development of renewable energy so that it comprised 20 per cent of the state's electricity production by 2014. As this target was exceeded during 2010-11, producing 22 per cent of the state's total energy production from renewable energy, the target was amended and the state will now aim for 33 per cent of the state's electricity production to be from renewable energy sources by 2020.

I think it's very significant that South Australia has established itself as the nation's leader in wind energy investment, having attracted 48 per cent of the nation's installed capacity. Indeed, South Australia has an international reputation and, if it were a nation state, would be second only to Denmark in its amount of wind energy penetration. This leadership was recognised extensively when we were in China with the Premier just recently.

Our success in attracting wind farm investment is not solely attributable to our world-class wind resource. We have also moved quickly and decisively to tailor our regulatory frameworks to provide investment certainty that has resulted in 15 operational wind farms with a capacity of over 1,200 megawatts. As a state, we have a reputation for a fair and expeditious planning system. The state has been a significant beneficiary from wind generators and, according to the Clean Energy Council, South Australia has attracted $3 billion in capital investment, which has translated into 842 direct jobs and 2,526 total jobs.

An SKM study into the economic impact of the five Hallett wind farms developed by AGL in the Mid North of the state estimates a 3.3 per cent increase in gross regional product during the construction of the wind farms and 1.4 per cent increase during operation. A recent Garrad Hassan report, commissioned by the Clean Energy Council, has shown that it is estimated that with the construction of a 50-megawatt wind farm $50 million will be provided to South Australia's gross state product and 2.6 per cent to the region's gross regional product.

Wind farm project development generates employment in the regional areas, especially during the construction and maintenance phases of the project. The Garrad Hassan report estimates that, for a 50-megawatt wind farm, 48 FTE direct construction positions are created and a further 4.63 FTEs during operation. In addition to direct employment generated by the construction and operation of a wind farm, there are flow-on effects to the wider community.

Local retail and services benefit from the increased economic activity in the locality of the wind farm, and it is estimated that for every direct construction and maintenance job created two additional indirect jobs are created. Additionally, community benefits are created by a number of wind farm developers through community benefit funds. The amount of funding has ranged from approximately $100 to $1,000 per megawatt of installed wind farm capacity. Funds have been provided by developers for sustainability or community development projects. Some wind farm

P. HEITHERSAY V. DUFFY

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owners also contribute to local communities through direct sponsorship of projects and events, such as football clubs and community festivals.

In terms of overall support, the Clean Energy Council has commissioned QDOS to undertake wind energy community research in Victoria, New South Wales and South Australia. The research was undertaken predominantly in regional areas close to wind farms. For South Australia, the community around the Waterloo wind farm was polled, and it was found in this research that 77 per cent of the people in regional areas close to wind farms supported wind farm developments.

The state's existing transmission network has a capacity to enable up to approximately 2,300 megawatts of wind generation in South Australia before generation exceeds regional demand and interconnector export capacity. As the state currently has installed capacity of 1,203 megawatts, the network can accept another 1,100 megawatts. A process is currently underway to investigate opportunities for augmenting the Heywood interconnector which, if that proceeds, will unlock additional opportunities for wind-generated power.

The carbon price was introduced on 1 July this year. Due to our changing generation base and increasing contribution by wind generators, individual consumers are less impacted by the carbon price in South Australia than in other states. The National Centre for Social and Economic Modelling assessed the carbon price impact on household expenditure for consumers in each state. For South Australian consumers, the modelling found the least impact on household expenditure compared with all other states in Australia. The impact on household expenditure, which takes into account food, health, transport, electricity, etc., was less than $6.60 a week for South Australians, compared with $9.52 for Victorians and $8.95 for New South Wales.

I realise that there are some policy issues that have come up in relation to wind farms, and I am going to flag a few here and then defer to my colleagues for more detail. In relation to the price impact of wind farms, investment in large-scale renewable energy has primarily been driven by the commonwealth renewable energy target. This is a market mechanism which all states and territories contribute to, no matter how much renewable energy is installed in each state. The contribution is determined by the amount of electricity consumed in each state or territory, so even though South Australia has 48 per cent of the nation's installed wind capacity, South Australians are paying an amount for a renewable energy target which would be the same whether we had 4 per cent of the nation's wind power or 48 per cent.

In 2012 approximately 16.7 million large generation certificates must be created and surrendered Australia-wide for the renewable energy target. South Australia's liability in relation to these certificates, based on the forecast electricity consumption of 13,000 gigawatt hours, is likely to be around 1.2 million certificates, which equates to a cost of approximately $42.3 million. This liability exists whether or not large-scale renewable energy generators are located in South Australia.

All consumers contribute to the state liability under the commonwealth's renewable energy target through their electricity bills. In determining the standing contract price path after December 2010, ESCOSA allowed AGL a total average revenue of $245.78 per megawatt hour with $3.66 per megawatt hour attributable to the large-scale renewable energy target. Based on this, it is fair to say that less than 2 per cent of the price paid by an average household on a standing contract can be attributed to wind power.

In relation to noise, I think you have heard a reasonable discussion from the EPA, and we defer to them on all issues related to noise. In relation to health, again, our colleagues at the Department of Health are the experts in that area, so I guess we defer to them. As mentioned by the EPA, World Health Organisation studies are the main basis for guidelines around that area. The EPA is the regulator for noise for wind turbines and has developed guidelines that are based on the WHO 1999 guidelines for community noise, as they mentioned, and these guidelines are supported by SA Health. The EPA also discussed the role of the National Health and Medical Research Council in terms of its research into the health effects of wind farms, and I defer to the EPA's conversation about that.

In relation to planning and the ministerial development plan amendment, we again defer to our colleagues in DPTI on that. They have stated that the Development Plan Advisory


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Committee finalised their advice to the minister of planning on 24 July. This advice is in regard to the outcomes of consultation on the DPA and may recommend that alterations be made to the DPA. We understand that DPTI is now finalising its advice to the minister regarding these matters.

With that, I have finished my statement, and I direct details around the energy market to Vince Duffy on my left and details around wind farm issues to Catherine on my right.

78 The CHAIRPERSON: Thank you, Dr Heithersay. The committee secretary just reminded me that I did not read the standard preamble to you, so I will do that now for the record.

Welcome to the meeting. The Legislative Council has given authority to this committee to hold public meetings. A transcript of your evidence will be forwarded to you for examination for any clerical corrections. Should you wish to present confidential evidence to the committee please indicate, and the committee will consider your request.

Parliamentary privilege is accorded to all evidence presented to a select committee; however, witnesses should be aware that privilege does not extend to statements made outside this committee. All persons, including members of the media, are reminded that the same rules apply as in the reporting of parliament. My apologies for not reading that at the start.

79 The Hon. M. PARNELL: A document that I referred to before when we were hearing from the Environment Protection Authority was this report that was produced back in December 2010 under the name of RenewablesSA. It was a consultant's report entitled 'Investigative land use planning and development system study: final report', URPS, Norman Waterhouse Lawyers and Donna Ferretti and Associates being the primary authors.

The single take-home message from this document of 90 or so pages is that the main problem with the planning system is third parties—like residents having the right to challenge and appeal. The number one recommendation out of this report is: get rid of third-party appeals. So, my question is: as of the date of this report, December 2010, how many wind farms had been defeated by appeals in South Australia?

Ms WAY: How many have been defeated by appeals is a long answer, I guess. There is still one in the court system, the AGL court case up at Hallett 5, I think it is, or Hallett 3. That one is still in the courts three years down the track. It went to the ERD Court and the ERD Court upheld the council decision. It was then appealed in the Supreme Court and now it has been deferred back to the ERD Court. So that's still in progress, and they are going through a series of directions hearings at the moment.

The Allendale court case, which was again around visual amenity down in the South-East with ACCIONA, did find in favour of the appellants and did not uphold the council decision. That wind farm project was then appealed by the respondents, ACCIONA Energy, in the Supreme Court, and they subsequently removed that appeal in the Supreme Court. There have been three other appeals one to do with wind-monitoring masts. That one found in favour of the developer, the wind-monitoring mast. There was another one about a wind farm development that they settled through the mediation process, I understand, and the other one was settled as well before it went to court. That's my knowledge of the five.

80 The Hon. M. PARNELL: In a nutshell, as of the date of this report, there had not been a successful appeal against a wind farm. You have explained that there were some that were in process that may well have started before December 2010, but I don't think there had been a single successful appeal against a wind farm by the time the government effectively abolished third-party appeals for the bulk of wind farms.

I just note that at this time that I think there had been 13 or 14 approved wind farms built, a similar number approved and ready to go and yet in one of the appealed cases to which you have referred, ultimately the wind farm wasn't impeded; it was successful, and there is still only one in train. So, is it still the view of RenewablesSA or DMITRE that third-party appeals was the single biggest problem with wind energy given the fact that it had had very little impact in fact on the ground?

Ms WAY: I guess the trigger for the ministerial development plan amendments was to do with the two court cases: the AGL case in Hallett where there was a decision around


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visual amenity that went one way and then the ACCIONA case down in the South-East with a decision around visual amenity that went another way. So the development plans—even though the state policy around renewable energy was the same—were written in a way that, in the South-East case, the judgement focused on the zone requirements and, in the case in the north, the judgement focused on the renewable energy requirements. So those judgements gave sufficient uncertainty that spawned the Ministerial DPA.

81 The Hon. R.L. BROKENSHIRE: Just on that, sufficient uncertainty on what: your department's policy or the government's policy, because the East Allendale case, which I think you have almost confirmed now was part of the reason why this interim DPA came in, cost that farmer hundreds of thousands of dollars. He did everything properly and democratically according to our Westminster system, and then, within a very short time of that, the court made a decision. We had a Premier in the parliament making a ministerial statement that actually favoured—in my opinion, at least as one committee member—huge opportunities for wind farm construction companies that we haven't seen in democratic planning processes before. So are you telling me—and I would like to know—that the department made recommendations to the Premier or was it the other way: that, as a result of that court case, they would make it easier for wind farms to be constructed?

Ms WAY: The discrepancy was in the development plans. When a council assesses a wind development, they look at the council development plans, and the council development plans were written differently in the South-East case than they were in the case in the north of the state. The DPA was to look at all the council development plans around the state and make sure that they were written in a more similar way so that a wind farm could be assessed the same in the north as it is in the south, obviously taking account of local circumstances.

82 The Hon. R.L. BROKENSHIRE: Those local circumstances, in the north around Hallett as an example or further north, there is less intensification of agriculture when it comes to animal husbandry than there is in the South-East at Allendale where it is quite intensive particularly in relation to dairy cattle, which is the case in point. Were variations put in to accommodate that or not?

Ms WAY: I guess each development plan is written specific to its environment and there are different zones depending on what activities are in those zones. All the DPA did was in the less heavily populated areas of the state, in those zones where wind farms are envisaged, they were made a different category of development, and that's where the third party appeal rights were removed in those less populated areas of the state. As long as the development plans are zoned reflecting the activity in those zones, then it should pick up that.

83 The Hon. R.L. BROKENSHIRE: On the third party rights which traditionally have always been there with those sorts of developments, are you aware of any other states in Australia that have removed them?

Ms WAY: I know that New South Wales has no third party appeal rights for wind farms. I'm not sure about Victoria.

84 The CHAIRPERSON: Dr Heithersay, you said we have about 1,200 megawatts of operating capacity. What is the capacity that has been approved but is waiting construction? I have heard it is something similar to that figure; is that accurate?

Mr DUFFY: I haven't got the list of approved DAs on me.

85 The CHAIRPERSON: I don't need the actual sites, but I am wondering about the actual capacity.

Mr DUFFY: There is a substantial amount that is available.

86 The CHAIRPERSON: Dr Heithersay, you said in your opening statement that the current network could cope with 2,300 megawatts of renewable energy and that we have effectively a capacity for another 1,100 megawatts and then we would have to look at augmentation to the system and an interconnector.

Dr HEITHERSAY: That's correct.


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87 The CHAIRPERSON: With the construction of that extra infrastructure, my understanding of the national electricity market is that South Australian consumers effectively have to pay for anything internally in South Australia that exports power to other states. Is that correct?

Dr HEITHERSAY: I refer to Mr Duffy on that one.

Mr DUFFY: That would be in the first instance. Yes, ElectraNet would build—if it was to pass the regulatory investment test, so if it was just delivering market benefit which is additional to delivering energy to customers, there is a market benefit test that has to be undertaken by ElectraNet. If it was to produce sufficient net market benefit so that it was effectively in the customer's interest to build—one example would be lower power prices could offset the capital investment—then that cost would initially be borne by ElectraNet and then that would be transferred through to customers.

However, a rule change is being considered at the moment about charging for the use of energy for our network which is exported interstate. At the moment that's in abeyance. That model is in transition. A rule is being considered which may assist if we invest significantly in transmission, the cost of that could be partially paid by other customers interstate as the exported energy goes over to Victoria and New South Wales.

88 The CHAIRPERSON: Currently the situation is that South Australian consumers would pay for that infrastructure.

Mr DUFFY: If there was a net market benefit under the test that has to be undertaken by the provider.

89 The CHAIRPERSON: That net market benefit is to provider cheaper electricity to the South Australian consumer? Can you explain the net market benefit?

Mr DUFFY: The net market benefit works to assess the different costs and benefits. It's just like a normal cost-benefit analysis. What it tends to be is that the benefits that can be calculated tend to be about the lower cost production of energy. If you're producing lower cost energy for customers, that would be considered a benefit to offset the capital costs that would be up-front in undertaking the transmission. There are a couple of RIT-Ts being undertaken at the moment. As Dr Heithersay talked about, there's the Heywood upgrade.

ElectraNet, in conjunction with the Australian Energy Market Operator, is currently doing a regulatory investment test for upgrading the Heywood interconnector. They are looking at all ranges of options, from do nothing, through to an incremental upgrade to a very large upgrade. ElectraNet has also just commenced an upgrade proposal RIT-T for Eyre Peninsula. If we have a critical load on Eyre Peninsula, that may require an upgrade of the network, so they are going through that modelling exercise now to compare different options that are available. The rules require them to undertake the option that is the least cost to consumers.

90 The CHAIRPERSON: I guess that I'm trying to understand, Mr Duffy, is that if we have 48 per cent of the nation's wind generation capacity here, clearly we don't use 48 per cent of the nation's renewable energy here, so when it's generating the vast majority has to be exported. What cost in construction, transmission lines and interconnectors is borne by South Australian consumers, who actually really get no benefit because their energy is exported to New South Wales, Victoria or further?

Mr DUFFY: Actually, it turns out that so far we haven't had to bear any cost because there has been no need for additional augmentation of the transmission network. When the MRET first came in early on, a lot of proponents looked out at the far West Coast, where we have some fantastic wind resources. The industry department at the time did a lot of work to coordinate with them to see whether they could get the upgrade of the network to export the energy, but then everyone moved back to the grid.

The basis of connecting to the grid is that a proponent will pay for all their own connection costs to the grid and any upgrades required to export while the capacity on the network can support them. The next stage is if you reach the physical capacity, there might be an augmentation, but the business will have to go through the detailed regulatory investment test process to justify that it's in the consumers' interests.


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So far, because we have such an extensive network and such good wind resource, we have been able to connect all this wind underneath the grid without any need to augment the grid. At this stage, it hasn't cost South Australian consumers any more network investment because the proponents pay for it. If you're looking forward over the longer term, there may be a case that you might do some augmentation, but that would be done in a transparent process that goes through a full consultation to make sure that the customers in general benefit from that upgrade—such as the Heywood augmentation that's being looked at at the moment.

91 The CHAIRPERSON: Do you have the figure of how many—

Mr DUFFY: I have two pieces of paper given to me, and one says that the Australian Energy Market Operator's 2012 energy fact sheets have also listed 2,200 to 2,600 megawatts of wind projects in South Australia as under development. If all these were to proceed, it is estimated that this would represent a further $5.5 billion of additional wind farm investment. So, it's up to 2,200 to 2,600 megawatts of additional wind farm.

92 The CHAIRPERSON: Over and above the 1,200 we have operating now?

Mr DUFFY: Yes. There's substantial capacity to build. That's one of South Australia's advantages: we have a fantastic wind resource.

93 The CHAIRPERSON: I guess my question, perhaps directed to Dr Heithersay or Ms Way is this. We had the ministerial DPA, which standardised development plans across the state, and we have 1,200 megawatts operating and over 2,000 in the system. Is it not cracking a walnut with a sledgehammer? Did you make submissions to the Premier or the minister for planning in relation to the statewide DPA?

Ms WAY: I am not quite sure what the question is.

94 The Hon. M. PARNELL: The EPA said that it had made a submission to DPC but also they could—

95 The CHAIRPERSON: On the interim DPA.

96 The Hon. M. PARNELL: —direct submissions outside that process to government.

Ms WAY: I see what you mean. I guess we were working very closely with the planning department on the DPA and the development of that, so we did not actually put in a submission in the process. We were part of developing the process with the department of planning.

97 The Hon. R.L. BROKENSHIRE: With the question before that, I would like to know this, one way or another. As a member of parliament, I saw an alarm bell go off after a court case that, within a short period of time, had a premier in our parliament making a ministerial statement about an interim DPA that, in my opinion, gave huge advantage to wind farm proponents to the disadvantage of the democratic processes of this state.

Who triggered that alarm bell off? Did that come through DMITRE and your section saying, 'Look, we've got a problem as result of this court case,' or was it the then premier's office asking you for an opinion? Someone within government must have actually stimulated the debate, raised the concern and, as result of that, we now have a select committee. Can you highlight for the committee what the role of DMITRE was in all of this?

Ms WAY: At that time DMITRE did not exist, but—

98 The Hon. R.L. BROKENSHIRE: The previous agency.

Ms WAY: —apart from that, RenewablesSA was in the Department of the Premier and Cabinet and yes, that advice was in the news and we were asked to give advice to the premier. That announcement about the court case in Allendale was in the news and we were asked to give advice to the Premier.

99 The Hon. R.L. BROKENSHIRE: So just to get it really clear, this was premier Rann at the time?

Ms WAY: Yes.


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100 The Hon. R.L. BROKENSHIRE: There was a court case regarding the proponent's application for Allendale East, and premier Rann's office contacted RenewablesSA seeking advice on what could be done as a result of the outcome of the court case?

Ms WAY: Yes.

101 The Hon. R.L. BROKENSHIRE: And your recommendation then was to make it easier through an interim DPA for the proponents of wind farms? What was the recommendation?

Ms WAY: The recommendation was to work with the department for planning to work out whether or if anything needed to happen.

102 The Hon. R.L. BROKENSHIRE: So premier Rann, who was publicly on the record as having a very strong interest in wind farms as part of a renewable energy policy, was it his office driving these requests to RenewablesSA?

Ms WAY: We worked quite closely with his office through the Commissioner for Renewable Energy, so I think I have answered. We were asked for advice and we worked with the department for planning and also gave advice to the premier on this issue.

103 The Hon. R.L. BROKENSHIRE: Was there any special urgency in the work that RenewablesSA did with respect to time lines and so on, with that work going back to the premier's office at the time, or was it just work as a matter of course?

Ms WAY: I cannot recall the urgency of it, but what I can state is that, due to the threat of appeals, many wind farm developers were choosing to use the section 49 Crown development route, which also has no third party appeal rights. Wind farm developers were choosing to use that path instead of going through the council pathway. When the DPA was announced we removed that access to that Crown development pathway, which has no third party appeal rights, and said 'No, we believe that council is the best place to make these decisions because they are out in the local area and they understand the local issues.

However, in doing that we envisaged that wind farms were going to be part of the rural landscape, so in certain zones—not all of them—wind farms will then be Category 2 developments and in other zones they are still Category 3. For instance, in rural living zones they are still Category 3, within two kilometres of a township they are Category 3. So it was in those areas that wind farms were envisaged. The planning system works that way: there are three categories of development and certain categories are chosen for what types of development are envisaged.

104 The Hon. R.L. BROKENSHIRE: Just on that, I request, through the chair, that all documentation between the then RenewablesSA agency and the then premier Rann's office, that is not part of the technicality that would be excluded as cabinet submission, be provided to this committee.

105 The CHAIRPERSON: Can you take that on notice? Thank you.

106 The Hon. M. PARNELL: Can I just pursue this issue a bit further. Ms Way, you have explained the process quite well, but it is probably also fair to say that it was always realised that when you took away third-party rights all you really had left in the planning system was this thing called Category 2, which meant that the only people who would be told about a development application were the immediate neighbours or people who might for example be just across the road but still within 60 metres. So it was a very limited category of people who would be told about wind farms whereas, clearly, the impact, whether it is visual or noise, extends beyond that. The community information paper that accompanied the DPA includes the following line:

RenewablesSA (Department of Premier and Cabinet) is exploring, through legislative amendment, the creation of a wind farm notification regime to enable broader consultation with those directly affected by wind farm developments.

What I think this committee would appreciate is: how is that project going? Do we have a new Category 2B or 2C or whatever that we can expect soon and what advice have you given to Planning SA about the proper scope of public notification of wind farms?


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Ms WAY: That is, I guess, awaiting the outcome of the DPA, the finalisation of the DPA. I guess the DPA was around visual amenity and it was around third-party appeal rights. A number of other issues have been raised, and we are awaiting where the minister wants to go—because it is ultimately his decision—with those issues.

107 The Hon. M. PARNELL: I think I need to go a bit further than that. This is just a statement, that you guys were going to be working on coming up with rules so that more people would be consulted. I think Dr Heithersay in his introductory statement said—correct me if I am wrong—that the Development Policy Advisory Committee finalised its report on 24 July. Do you have copy of that report?

Ms WAY: Actually I should probably add something to that. That hasn't hit the minister's desk yet. That's sitting with the department for planning, and they are going to now write their own advice and then they will attach DPAC's advice to that and then send it to the minister. That hasn't occurred yet.

108 The Hon. M. PARNELL: The vast bulk of submissions to that development plan amendment process, including mine, which was in favour of renewable energy but critical of the public consultation regime, said, 'We don't like the new regime because it doesn't allow people to be notified.' We have been told that RenewablesSA is working on a new notification regime. Surely you must have put something to the minister or to DPAC because it says here that you're going to do that, you are going to come up with legislative amendment. So, is your answer that you are waiting for the minister to finally gazette a final version of the DPA which will entrench Category 2 before you come back with advice that Category 2 is no good?

Ms WAY: We don't know what it is going to do because he has got a series of advice going to him that we don't know the content of. So, we don't know whether it will entrench Category 2 or not. We don't know.

109 The Hon. M. PARNELL: But DPAC might come up with the advice to say, 'Minister, we don't think it's good enough to just consult the immediate neighbours. We think more people need to be consulted.' So, DPAC might recommend—

Ms WAY: They may well do.

110 The Hon. M. PARNELL: —a broader category of notification. It just seems odd to me that, having said in this community information form that RenewablesSA is doing that work, you are in fact waiting to see what the Development Policy Advisory Committee is up to. I don't quite understand the process there.

Ms WAY: That's the process that we are following at the moment. I can tell you that the councils, I believe, are advertising further about their development applications at the moment, if they are Category 2, and they are allowing representation from people who are not adjacent and they are allowing submissions from people who are not adjacent, but it is not in the development plans.

111 The Hon. M. PARNELL: So you are saying, for example, that the recent case with—

Ms WAY: In Goyder

112 The Hon. M. PARNELL: Yes, in Goyder—that they went belong what they were legally required to—

Ms WAY: That's right, they did.

113 The Hon. M. PARNELL: —and they allowed people from outside to make representations even though they didn't have to.

Ms WAY: That's correct.

114 The Hon. M. PARNELL: In other words, they are de facto doing something that everyone recognises should become part of the formal process. Is that what you are saying?

Ms WAY: I am not saying that, but that is what occurred in this case, yes.


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115 The Hon. R.L. BROKENSHIRE: Dr Heithersay, in your submission you quoted a figure of 2 per cent, that there was only an additional 2 per cent cost to taxpayers as a result of the rural energy component of power. If that is the case, and with your responsibilities for energy on behalf of the government, why do we have the highest power costs arguably in the world? If we have all this renewable energy pouring into South Australia—leading the nation—I would have thought as a lay person (and I think most South Australians would) that this would start to see a reduction in our power costs.

Dr HEITHERSAY: There's not a simple answer to that question, as I'm sure you're aware. I will refer to Mr Duffy to explain how it works.

Mr DUFFY: I think there are two parts. As we said, the renewable energy target is a relatively small component of the overall retail cost of energy to customers and that's just a fact. The actual share that South Australia pays is based upon the renewable energy percentage as determined by the Clean Energy Regulator of the commonwealth program. It is a relatively small component, as we said.

The cost drivers are wide and variable across the whole package, but largely a lot of the recent increases in energy prices have been about investment in networks at both the distribution and transmission level where the capital programs have been quite significant over the last few years as the assets that were built in the baby boomer 1950s and 1960s, early 1970s and need to be replaced as they come to the end of their economic life. That's a large driver of the current increases over the last few years, as well as the wholesale energy.

I suppose that's the area that has been talked about a bit, where the increase in renewable energy into the South Australian energy market has seen the pool price be suppressed somewhat as supply comes on and off. It shows South Australia has had some quite low pool prices over the last couple of years.

I think it is important to recognise that, in determining the cost drivers for the retailers to serve energy to customers, it's largely driven around the capacity required to meet those very hot days in summer which only occur on a few days. A large proportion of South Australia's energy assets, as well as their generation capacity, doesn't get utilised very often, so you have a lot of capacity waiting just to meet those requirements on those hot days and that cost has to be recovered from all customers over the whole year, whether or not you use it.

I suppose the peak demand driver is the other major driver of energy costs, and even though the pool prices fluctuate with supply and demand in real time, the cost drivers for retailers are generally around that capacity. I note that ESCOSA, the regulator, has seen some improvements in liquidity in the contracting market, and so they currently have an investigation into whether that liquidity provides some further evidence to see whether they have the right number for the wholesale energy cost which encompasses that capacity component in the wholesale energy cost. That review is being undertaken by the regulator at the moment. I think to look wholly at the wholesale pool price and then compare that to the retail price that that can't be done easily because the drivers are different.

116 The Hon. R.L. BROKENSHIRE: Just on that, are you telling the committee (or am I putting words in your mouth) that, even though the chair got an answer from you on our potential additional renewable energy through wind farms, we are still not going to see that having an impact on significant or even reasonable reductions to the cost of power to South Australians?

Mr DUFFY: The way I like to think about it is: what is the counter factual we would have if we had no wind farms in South Australia? The assets that we would be required to have in place would be the same as if we had the amount of wind farms that we have now or even expanded because you still need to have that conventional generation available to meet the summer demand and you still need to have the network assets in place to transport the energy across time.

Hopefully, the declining costs into the forward contracting market, through having more capacity available and a generally lower pool price, could lead to further reductions in the average forward contract market. I think it still distorts the view away from that it's driven by capacity rather than the raw wholesale spot price that you get in the pool.


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117 The Hon. R.L. BROKENSHIRE: In summary, we couldn't get excited about seeing a hold, or a reduction even in a Utopia dream, on power price into this state by virtue of wind farm infrastructure increases.

Mr DUFFY: I wouldn't have thought that that would be a major driver in any price reduction going forward.

118 The Hon. R.L. BROKENSHIRE: I'm reading some stuff here from the UK where 100 Conservative MPs in the Cameron government have just signed a letter to the Prime Minister asking him to reduce the tariff incentives on wind farms in the UK. They argue that two-thirds of British constituents are not getting any gain whatsoever from wind farms.

Here, I hear that the government is really focused on this wind farm development, and that's the policy. I am told that there are potentially billions of dollars of commonwealth subsidies, mainly to stimulate the wind farm market. Without holding the committee too long (and I'm happy for this to be on notice), would you be able to advise the committee how much subsidisation is occurring to stimulate wind farm development? My colleagues may already have all this knowledge, but I would like to see what is the bottom line with this.

Mr DUFFY: The way that the mandatory renewable energy target works is that the regulator has set forward an amount of additional renewable energy that needs to be met. The commonwealth has set a target of 41,000 gigawatt hours of renewable energy by 2020, and that runs on until 2030. It ramps up over time from the current amount, and I think we quoted a number of what 2012's target was.

What happens then is that each proponent goes out and develops their project and goes to a project backer with their forward view of the REC price, the Renewable Energy Certificates created from these. Each megawatt hour of generation creates a REC, and they can be traded between parties outside government. You can either sell them direct or acquit them. The price has been trading at about $35 a Renewable Energy Certificate. That's a sort of additional subsidy per megawatt hour of generation that they get and it has been trading around that.

It's volatile: it goes up and down depending on particular outlooks of what prices are going to do. There have been some lower prices for a while because of the impact of the solar PV. There has been an oversupply of small-scale renewable certificates, so that's suppressed the prices. From talking to proponents, my understanding is that the ramp-up in the renewable energy target will come in about 2015 as that oversupply of small-scale certificates is used up by the retailers. Some of these projects that are coming through the system now are about getting in place in sufficient time to have creation of RECs in 2015. That's the sort of time scale. They are expecting some forward upward pressure in the REC prices.

Because it's a trading market, it's very difficult to say what the exact prices is. It's about how you view the forward market for X, and so a lot of the proponents go to a party, sign a long-term power purchase agreement with a retailer—AGL, Origin, TRU, or any of the other retailers—to help meet their obligation. They will pay the contract price and keep the RECs to acquit their liability. Because it's commercially done through other parties, all you get to see is the trading price that's generally published on those carbon pricing websites, and you can see the average prices that are trading.

119 The Hon. R.L. BROKENSHIRE: But it would be billions of dollars of subsidy, one way or another?

Mr DUFFY: Across Australia, yes. The advantage that South Australia gets is that obligation; as I think Dr Heithersay said, you pay that whether you have one wind farm or zero wind farms. You pay your percentage based upon consumption through your retail bill. So, having more wind farms and getting more investment, and having those jobs locally and in regional areas, is an advantage we get by getting a greater proportion of Australia's share, because we have the resources and the network and the capacity to do it. Regional communities get the benefit of the additional jobs and pay their proportion of the renewable energy certificates, which they pay whether they have the jobs or not.


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So I think the investment part of it is a bonus for South Australia because it just comes here; otherwise it would have to be in New South Wales, Victoria, or Queensland through other projects. We get an advantage through having the investment and paying our share of the costs, which is the same as everyone else is paying.

120 The Hon. R.L. BROKENSHIRE: With those trading certificates, can you only trade in them once you have actually built the infrastructure or can you do it once you have applications for building them?

Mr DUFFY: You can sign your purchase agreement with a retailer but then you have to provide the RECs to the retailer to meet your obligations. So you sign your PPA and get your project finance in place and then you build your project, but you only get the RECs as you generate them.

121 The CHAIRPERSON: The government had a policy of using renewable energy, and I think with the desalination plant in the early days there was a commitment to use all green energy or renewable energy. My understanding is that that is no longer the case for the desalination plant. Can you clarify whether that is or isn't? Can you also—and maybe this is Ms Way's area for comment—advise what percentage of state government energy use is coming from renewable sources?

Ms WAY: Regarding the second part of the question, we have a commitment to have 50 per cent of the state government's energy use coming from renewable energy by 2014.

Mr DUFFY: It is currently 20 per cent.

122 The CHAIRPERSON: As of 2012?

Ms WAY: This is the government's own usage of power.

123 The CHAIRPERSON: I understand that. The policy is that we have 20 per cent actual figures to date; 20 percent of the state's energy comes from renewable resources as of August 2012, and by some time in 2014 it will be at 50 percent?

Ms WAY: That is our strategic plan target, yes.

124 The CHAIRPERSON: Do you expect to meet that?

Mr DUFFY: Yes; my understanding is that the Department of Treasury and Finance, which does the energy procurement on behalf of government, has factored those strategic plan targets into its purchasing contracts with the retailers who supply the government. I do not have the details of the contacts, but my understanding is that they have factored that in already and that the contracts will do that.

On the desal one, I do not have the actual detail but my understanding was—and it was announced at that time—that SA Water entered into a contract with a major retailer to be 100 per cent renewable, and that contract was a long-term contract. That was my understanding.

125 The CHAIRPERSON: I recall that, Mr Duffy, but I have since heard some commentary that that may not be the case now. Perhaps it is not your area to pursue that.

126 The Hon. M. PARNELL: One of the things about hearings like this is that we are focusing on a lot of fine detail and we can lose sight of the bigger picture. Dr Heithersay may have mentioned this in the introduction and I might have missed it, but—and you could either tell us now or take it on notice—let's say that we didn't have 20 percent of our power coming from renewables, let's say that we were producing electricity 100 per cent using fossil fuels, coal or gas, what level of greenhouse gases have we avoided by having 20 percent of our state being powered by renewable energy? What would be the amount of greenhouse gases avoided by 2014 if we get to 50 percent? I think we have to make sure that those figures are on the record as well.

Mr DUFFY: That's for government energy purchases you are talking about?

127 The Hon. M. PARNELL: No, for the whole state.


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Mr DUFFY: The 50 per cent that Catherine was talking about was government energy purchases being 50 per cent green power by 2014, not that the state would be 50 per cent—

128 The Hon. M. PARNELL: The State Strategic Plan for renewable energy is—

Mr DUFFY: It's a 33 per cent target by 2020.

129 The Hon. M. PARNELL: By 2020; okay. That's the figure I meant to give, the 33 per cent by 2020—

Ms WAY: I have a figure for your question about how much we have reduced. National greenhouse accounts show that CO2 emissions in South Australian reduced from 11,063 gigagrams in 2005 to 9,731 gigagrams in 2010.

130 The Hon. M. PARNELL: I am not sure if that 2,000 gigagrams is the difference. I guess what I am inviting you to put on the record is that the result of increasing amounts of renewable energy in the South Australian energy mix is that we are reducing our carbon footprint. If there are any other figures that you can provide that will show the amount of greenhouse gases we have avoided and how much we expect to avoid if we can meet that 33 per cent target by the year 2020, that will be useful information for the committee to have.

Dr HEITHERSAY: We'll take that on notice.

131 The CHAIRPERSON: A further question on that same theme: what is the actual cost difference between fossil fuel and power from Port Augusta versus a renewable source?

Mr DUFFY: This is just off the top of my head. I think the background numbers were a sort of conventional energy as in the long-run marginal cost. So, comparing both capital and operating costs it is in the $50 to $60 range, but that was pre-carbon pricing, so I think that would have gone up a little bit. Then the wind farm would probably be in the $100 to $120 a megawatt hour as the sort of broad range. That's what that REC difference provides, but each individual wind site is highly dependent on each individual wind site with actual cost because it is the wind regime on the site. So, if you look across South Australia, you have a range of wind farm capacity factors ranging from 35 per cent up to more than 40 per cent—30 per cent to 40 per cent. So, it depends on how much energy you produce to what your average cost is, but it is sort of in that range.

132 The CHAIRPERSON: You may not have this information, Mr Duffy, but the cost to the state government by purchasing an extra 30 per cent of its energy from a renewable source by 2014. You said that Treasury and Finance have already factored in those figures. I just wonder what—and you may not have it; you may have to take it on notice—the extra cost to the state is for that commitment.

Mr DUFFY: Treasury and Finance manage those contracts, so I don't have any details about what the cost is across government.

Ms WAY: You may be interested—the Bureau of Resources and Energy Economics, which is funded by the commonwealth, has recently put out a report that compares 40 different technologies of energy generation. It compares it for New South Wales, and it shows the cost for various years of each technology, for the cost of delivery of energy. It shows in 2012, with the carbon price, that wind is actually one of the cheapest forms of energy—I think it is the fifth cheapest. And by 2020 we have continued deployment, because with emerging technologies the more they are deployed, the cheaper they become. This same report says that it will be cheaper than the cost of coal-fired generation by 2020.

133 The CHAIRPERSON: Any further questions?

134 The Hon. R.L. BROKENSHIRE: Only one. Dr Heithersay, in your opening remarks I think you said that 77 per cent of all the people around a wind farm development were not opposed to wind farm developments. Do you have any more detailed documentation that we could look at? Also, who did that consultancy work and whereabouts was it done?

Dr HEITHERSAY: I think we might have it here with us.

135 The Hon. R.L. BROKENSHIRE: You could table that.


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Ms WAY: This is the study. We can table that if you like.

136 The Hon. R.L. BROKENSHIRE: Was it commissioned by your department?

Ms WAY: The Clean Energy Council commissioned it.

137 The CHAIRPERSON: There being no further questions, thank you very much for your attendance today. A copy will be forwarded to you for corrections.

Dr HEITHERSAY: Thank you, chair.

THE WITNESSES WITHDREW

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