Windfarm Report

Brian Tee MLC, Shadow Minister for Planning, Sustainable GrowthMajor Projects and Infrastructure

March 2013

Blown AwayThe job cost of the Ballieu government’s wind-farm policy

In 2011, the Baillieu Government made significant changes to the planning rules for wind farms, banning development in some of Victoria’s high wind resource areas and giving those living within 2km of a proposed wind farm veto over developments. This policy change has made it extremely difficult to develop wind farms in Victoria, with wind power investment in Victoria stalled since 2011.

While the Baillieu Government’s reforms were targeted at new wind farms, they have had a major impact on those who already had permission to develop wind farms, prohibiting the extension of permits and making it harder for developers to make small changes to their planning approvals to incorporate state of the art technology and improve efficiency. This can have a significant impact on the economic viability of some existing wind farm projects and will ultimately lead to high renewable energy prices.

Victoria has 23 wind farms approved or in pre-construction phase, which would add 3413 MW of capacity to the grid.

This report has analysed how many jobs would not be created if these projects did not go ahead:

Local Rest of VIC

Total jobs created through the construction of 3413 MW wind farms

10955 23447

Total jobs created through the operation of 3413 MW wind farms

853 443

Even in the few areas where wind-farm developments are still possible, the Baillieu Government’s changes have created a hostile investment climate in Victoria. Developers report that inflexibility in the planning system and a lack of enthusiasm from the State government has made Victoria a far less attractive place to commence new wind farm developments.

There are seven new proposals for wind farms in Victoria. However, these are undermined by the Baillieu Government’s wind farm policy. This report has analysed how many jobs these new projects would create:

Local Rest of VIC

Total jobs created through the construction of seven new wind farms

7209 15430

Total jobs created through the operation of seven wind farms

561 291

In total, the Baillieu Government’s wind farm policy has jeopardised 59,189 jobs across the state.

Blown Away: The job cost of the Ballieu government’s wind-farm policy 1

Executive Summary

Wind farms have the capacity to make a significant contribution to Victoria’s energy mix while driving job creation and investment in rural communities with no cost to State government whatsoever. However, the Baillieu Government’s decision to place major planning obstacles in the path of wind farm developments has caused major problems in the industry – making it very difficult to gain approval for new farms or to make amendments to existing applications to better incorporate state of the art technology.

Victoria has a strong history of supporting wind farms. Many wind companies have located their head-quarters in Melbourne, and when the Federal Government rolled back its renewable energy target in 2006, Victoria responded by being the first state jurisdiction to develop its own mandatory renewable energy requirement.

This report will examine some of the implications for jobs of the Baillieu Government’s wind farm policies.

What sort of jobs do wind farms create?Wind farms are complex projects, requiring construction, project management and ongoing maintenance. To date, $4.25 billion has been spent in Australia developing wind farms. Australian companies have manufactured the towers that support wind farm generators and bales, provided civil and electrical engineering services, and delivered site works such as local transport and employee support services such as accommodation and food. Key roles in the construction of wind farms often provided by regionally based companies include:

• high voltage electricians • mechanical engineers• transport operators• crane operators and riggers• competent machine operators• general labourers such as carpenters and welders• road workers• quarries, and • concrete businesses.

The construction phase for projects is typically two years and farms can operate for up to 25 years.

Wind farms create jobs and economic development in three ways:

• direct employment • production induced employment resulting from the need to replace

materials that are used in constructing wind farms such as the steal used to produce wind farm towers, and

• consumption induced employment resulting from workers on wind farms spending their wages on goods and services.

Work undertaken by engineering firm Sinclair Knight Merz provides a basis for estimating how many jobs are created per MW of wind farm construction. These are separated into local and state-wide jobs. Blown Away: The job cost of the Ballieu government’s wind-farm policy 2

Blown Away

Table 1 – annual jobs required per 50MW of constructionLocal Rest of VIC

Direct employment 48 99Production and consumption induced employment

112 244

Total employment 160 343

Table 2 – ongoing operational jobs required per 50MW (annual)Local Rest of VIC

Direct employment 4 3Production and consumption induced employment

8 4


What impact do wind farms have on economic development in local communities? Wind farms are typically built in small rural communities, many of which have been adversely affected by long droughts and broader decline in rural areas. Unemployment in these areas is higher than Victoria’s overall unemployment rate. Wind farms provide an opportunity to significantly increase employment in regional areas, and provide on-going highly skilled work.

Region Unemployment rate

Barwon-Western 6.3%Central Highlands - Wimmera 6.4%Loddon-Mallee 6.2%Victoria 6.1%

Source: ABS, 2013

To ensure that the benefits of construction stay in the local community, wind farm developers employ local contractors and local materials throughout projects, and also provide a range of apprenticeships and training opportunities. Beyond employment, the local benefits from wind farms are realised in two ways:

1. spending in a regional area by workers on wind farmsEg. A SKM study of the Oaklands Hill wind farm documented significant increases in accommodation, food services and general retail and manufacturing across the region as a result of the development.

2. direct investment in communitiesLand is leased by companies from farmers for wind turbines and associated infrastructure. Lease payments are in the order of $7000 to $15,000 per year, per wind turbine. This results in a significant non-rainfall dependent income for farmers. These payments can be re-invested back into farms and regional areas.


Jobs for local areas & beyond

The generous municipal rates arrangement implemented under the previous government require developers to pay for $40,000 per wind farm, plus $900 per MW installed (adjusted to CPI from September 2005) to local councils. This results in significant funds going directly from wind energy companies to regional local governments.

Wind farm developers also invest some profits from wind farms directly back into the local community. For example, the developer of the Macarathur Wind farm has committed $100,000 to providing community support. This has been used to fund projects at the local CFA, schools, Mens’ Shed, Hawkesdale swimming pool, local sports club and other community organisations.

Barriers to applicationsThere has been only one new application for a permit to build wind farms in Victoria since the changes to the planning scheme were enacted by the Baillieu Government in 2011 (Cherry Tree - Infigen Energy). While the issues influencing whether to build a wind farm in the first place are uniform across Australia, the decision of where a project should be built is directly influenced by planning rules. The Baillieu Government’s approach has made it effectively impossible to gain planning approval in Victoria. This has meant that while developers are continuing to develop wind farms in South Australia and Tasmania, developments in Victoria have ground to a halt.

The key pressures squeezing the permitting of wind farm proposals in Victoria are: • Highly restrictive planning regulations that remove areas of excellent

wind resources from development and provide a veto power for all residents living within 2km of a proposed wind-farm, and

• The inability to alter approved wind-farm planning applications to reflect best practice in wind energy.

The key pressures limiting the construction of wind farms in Victoria are:• Uncertainty in the Renewable Energy Target (RET) market, which has

depressed prices for RET certificates1. This has since been largely alleviated as a result of the Climate Change authority’s draft report but is recovering slowly

• Cost of grid connection

These issues have combined to create a very difficult environment to develop wind farms in Victoria. The Victorian government has effectively sent a message to wind farm developers that they are not welcome in Victoria, which has pushed wind farm developments into other States with less restrictive planning regulations. Developers report that they do not feel that the Government wants to engage with them on projects, and that there is little interest in overcoming challenges in wind farm projects.


Difficult times for Victoria’s wind industry

1 The Renewable Energy Target (RET) requires that 20 per cent of Australia’s electricity be produced from renewable energy sources by 2020. To achieve this, the Government requires Australian electricity retailers and large wholesale purchasers of electricity to surrender renewable energy certificates (RECs), which are generated by renewable energy projects. Electricity retailers and wholesale buyers can choose to either generate the electricity from renewable energy sources themselves, or purchase the RECs from others that have done so.

Gaining approval for wind farms can take several years. The approvals process for each wind farm is a multi-million dollar process in itself, requiring modelling of wind resources, environmental surveys and a range of planning approvals. By the time developers receive approval for their project there has often been significant improvements in technology to make wind turbines more efficient. For example, the capacity of turbines has increased from an average of .5MW to 2MW in the past ten years. These can subtly change the specifications of a project from the initial application.

Under the Baillieu Government planning code, wind farm developers are often unable to make amendments to their planning application, as this will require applications to be reassessed under the new planning regulations. There is also a time limit placed on permits. If a proposal requires amendments or an extension of its expiry date, it is required to be reassessed under the Baillieu government’s planning rules.

As outlined, these rules may effectively rule out many of the currently approved projects or make them less viable than projects in other states. There are currently 23 projects creating 3413 MW of clean energy slated for development in Victoria which have received approval from the Government but have yet to be built. While some developers have undertaken preliminary work to retain their planning permit, five projects have been cancelled after their permits expired.

The projects that are currently at risk due to the inflexibility of the planning system could directly create 3276 jobs in regional areas and 6758 jobs across the state. The flow on effects from these projects would create another 7679 jobs in local economies and 16689 jobs across the state.

Table 3 – annual jobs created by constructing 3413 MW - currently at risk in Victoria

Local Rest of VICDirect employment 3276 6758Production and consumption induced employment

7679 16689


Table 4 – permanent jobs created through ongoing operation of 3413 MW – currently at risk in Victoria


546 273



Approved or stalled?

The Ballieu Government reforms have made new projects significantly more difficult to undertake in Victoria. Should new projects be approved they will be smaller and less efficient. The inflexibility of the planning process and the hostile attitude of the responsible minister have combined with broader pressures to make it significantly more difficult to build a wind farm in Victoria.

There are seven new projects creating 2246 MW of clean energy which have been mooted for development in Victoria, however none of these have yet to be initiated. During the construction phase these projects would create over 2156 regional jobs and 4447 jobs across Victoria. Once in operatin, these projects would create 202 on-going regional jobs and 112 jobs in the rest of Victoria.

Table 5 – jobs created by constructing the 2246 MW of mooted wind farms


5053 10983


Table 6 – jobs created by ongoing operation of 2246 MW of mooted wind farms


359 179


Adding it all up The wind industry faces an extremely difficult environment for the development of wind farms in Victoria. The inability to alter permits may push approved projects beyond their financial limits, while the unattractive and inflexible investment environment in Victoria has put several new projects at serious risk of not being initiated.

This has the potential to cost the state over 16,637 direct construction jobs and 791 direct ongoing operational jobs. The flow on impacts in terms of indirect and induced employment could cost over 41,761 jobs across the state. Thus, in total the Baillieu Government wind policies could cost Victoria over 59,100 jobs.


Putting out the no entry sign

The list of projects used in this report was sourced from the Department of Primary Industries website and through material on wind farm developers’ websites. These were then analysed using reports from the Clean Energy Council and SKM engineering.

Project Company Location Total (MW)

Lal Lal West Wind Energy Ballarat 131Berrimal Acciona Energy Charlton 24Crowlands Pacific Hydro Ararat 141Berrybank Union Fenosa Mortlake 247Mortlake Acciona Energy Mortlake 76Ararat RES Ararat 248Winchelsea International Power Geelong 28Yaloak South Pacific Hydro Ballarat 29Stockyard Hill Origin Energy Ballarat 471Moorabool West Wind Energy Ballarat 300Portland wind farm (Stage 4)

Pacific Hydro Portland 54

Mount Gellibrand Acciona Energy Colac 189Bald Hills Mitsui & Co Aust. Melbourne 104Salt Creek/Woorndoo

NewEn Australia Ballarat 30

Hawkesdale Union Fenosa Port Fairy 62Ryan Corner Union Fenosa Port Fairy 136Woolsthorpe Wind Farm Develmt Woolsthorpe 40Penshurst RES Hamilton 758Drysdale Wind Farm Develmt Purnim 30Newfield Acciona Energy Port

Campbell15

Dundonnell NewEn Australia Mortlake 250Cherry Tree Infigen Energy Seymour 50TOTAL 3413


Appendix 1 – methodology and project list

Project Location Total (MW)

Dundas Tablelands 20km N of Coleraine 1000Ben More 50 km NW of Ballarat 130Murra Warra 40km N of Horsham 200Darlington 5 km E of Mortlake 345Tarrone 25 km N of Port Fairy 60Barunah Park 50km S of Ballarat 250Willatook b/w Hawkesdale and Orford 261TOTAL 2246


Appendix 2 – Mooted projects

Authorised by Brian Tee128 Ayr Street, Doncaster VIC 3108

Windfarm Report

Documents

Transcript of Windfarm Report