What is the real cost of Ted Baillieu’s wind energy policy?
In late August, the Baillieu government implemented new planning rules which place large sections of Victoria off-limits to wind farm developments through the creation of No Go zones, and set in place a 2 kilometre ‘right of veto’, whereby a single household can block any turbines within 2 kilometres of their home.
Planning Minister Matthew Guy said he did not believe the two kilometre set-back policy would stop developers investing in wind energy Victoria.
Premier Ted Baillieu has also rejected suggestions the changes would harm the wind farm industry.
However, the facts of the matter suggest otherwise. Already we have seen a number of projects abandoned and a number of others – including four potential community owned projects – put at grave risk.
The Clean Energy Council estimates that the laws will eventually drive $3.6 billion of investment away from Victoria.
The following is a summary of the real costs of this ill considered policy that are apparent since the new planning regime was put in place: in terms of jobs, investment, and regional development.
We will update this summary as new information comes to hand. Correct as at March 16, 2012.
the victims of Ted Baillieu’s wind energy policy – summary
Since late August 2011, the Baillieu government policy has cost Victoria the following in terms of:
Lost or stalled investment
up to $556 million [+]
Lost or stalled employment
around 480 direct jobs in
more than 39 on-going jobs
in management of wind projects, and
1,034 associated indirect
TOTAL = 1,553 jobs
[+] this figure is based on the maximum expected cost of each project.
[*] Please see the section below ‘A note on lost/ stalled employment figures used’ for details on how we estimated the indirect employment likely to be impacted.
See below for full breakdown of the projects which have been included in these figures.
positive developments since the policy was enacted
FoE's initial estimate of lost and stalled investment under this policy was up to $955 million and up to 580 direct jobs in construction, 57 on-going jobs, and 1,274 indirect jobs.
In November 2011, Planning Minister Matthew Guy announced that he would grant an extension to the planning permits for Union Fenosa's projects at Hawkesdale and Ryan Corner, about 10 kilometres north of Port Fairy.
Early construction works on the $477 million wind farms is now expected to begin by March 2012. This announcement has reduced the possible lost and stalled investment as a result of these laws from $955 million to $525 million.
other impacts on industry
- Devon North - planning permit rejected
In February 2012, Synergy Wind’s wind farm that had been proposed for Devon North, near Yarram in South Gippsland, had an extension of its planning approval rejected by the Wellington Shire Council. This is the first wind farm to fall due to the requirement to renew or extend planning approvals of projects that had been granted by the previous government. When being re-considered, the new guidelines are used.
The Council said that the basis of its decision was around issues of land tenure and because the project did not meet new Victorian Government guidelines for a 2 km buffer around the turbines.
- Pacific Hydro - no new projects
Pacific Hydro, one of the largest wind developers in the state, has said it is committed to building its projects which have planning approval. However, “under the new guidelines, Pacific Hydro does not envisage pursuing any new project developments in Victoria”. The lost investment and employment that could potentially flow from this announcement is not included in the figures cited above.
In November 2011, global wind farm developer Windlab announced that the government’s planning laws had "gone too far" and the company was moving all staff to its Canberra head office.
- WestWind considering it's options
WestWind, which is based in Gisborne, has also announced that all non approved proposals are on hold in Victoria.
- Salt Creek - permit extension rejected
Moyne Shire has rejected the application for a permit extension for the Salt Creek Wind Energy Facility in western Victoria. NewEn have indicated they will appeal this decision in VCAT. This project is worth $60 million. As of early 2012, this project is now proceeding.
below: Challicum Hills wind farm.
details on the policy impacts on specific projects
FTE means full time equivalent
Project summaries (full details below)
Yarram (Devon North).
Permit not extended under new policy
cost: between $26 and 31 million
employment: 50 construction, 2 ongoing
Developer announced project abandoned)
cost: Roughly $15 million
employment: 20 FTE during construction and 2.5 FTE during operation
WestWind Energy Victorian projects.
cost: Approx $7m in development costs on hold.
Approx $1.4b in capital expenditure
employment: 7 staff currently based in Gisborne
Projects in ‘NO GO’ zones (effectively banned in current form):
Estimates based on Hepburn wind example
Macedon community wind farm.
cost: Up to $12 million
employment: Min of 20 in construction, 4 ongoing (*1)
Castlemaine community wind farm (Mt Alexander Community Wind)
cost: Up to $18 million
employment: Min of 20 in construction, 4 ongoing (*1)
Surf coast community project.
cost: Roughly $24 million
employment: Min of 20 in construction, 4 ongoing (*2)
Westgate community project.
cost: Up to $6 million
cost: $130-$150 million
employment: Up to 250 in construction, up to 8 permanent
cost: Around $300 million
employment: More than 100 in construction phase (in conjunction with Ben More project), 15 – 20 ongoing
Taken collectively, these projects have cost Victoria around 480 direct jobs in construction, more than 39 on-going jobs in management of wind projects, and 1,034 associated indirect jobs.
TOTAL = 1,553 jobs
This constitutes a loss of $556 million because the projects have been abandoned or ruled out by the new policy guidelines.
DETAILS ON THE PROJECTS AFFECTED BY THE VICTORIAN GOVERNMENT POLICY
Devon North, near Yarram
Synergy Wind’s wind farm that was proposed for Devon North, near Yarram in South Gippsland, had an extension of its planning approval rejected by the Wellington Shire Council in February 2012. This is the first wind farm to fall due to the requirement to renew or extend planning approvals under the new laws.
The Yarram project, with 7 turbines/14MW would be to the order of:
· providing the equivilant energy used by 6,700 households
· $26-31 million in investment
· Up to 50 construction jobs and about 2 ongoing jobs
Please note that this figure is an estimate based on a pro rata comparison with the Sidonia project rather than coming from the proponent.
Pykes Hill – project abandoned because of new rules
“A toughening of Victoria’s wind farm policies has claimed its first victim with Future Energy pulling out of its Pykes Hill project in Moorabool”.
“After spending more than three years developing the project, Future Energy said in light of the Government’s changes, it was terminating the development”.
Source: Melton Leader.
Location: 5km north-east of Ballan
Stats: 6MW (3 turbine) project
Proponent: Future Energy
Benefits expected from Pykes Hill:
This information comes from the proponent. “Expert assessments indicate that the site is very suitable for a small wind farm because it has:
· Good setbacks from urban residences, tourist attractions and major roadways meant minimal impacts;
· Terrain primarily used for grazing and cropping, therefore minimal impact on flora or fauna;
· Proximity to the electrical grid meant little additional power infrastructure needed”
Equivalent power consumption 3,300 households
Annual greenhouse gas abatement 18,000 tonnes CO2
Equivalent number of cars off the road 4,100
Equivalent number of trees planted 26,850
“During construction, we will maximise Australian and local input into the project wherever possible, using local contractors in the construction of roads, fences, and other site works. Some of the turbine components such as the towers can also be sourced from within Australia, ensuring that as much of the investment as possible remains in the country”.
WestWind – no new projects in Victoria
The following comes from the Macedon Ranges Leader.
“Gisborne-based WestWind estimates it has lost at least $200,000 on wind investigations in Central Victoria following the State Government’s stance on wind farm projects.
WestWind’s seven employees will remain in Gisborne, but chief executive Tobias Geiger said justifying a presence in Central Victoria would be harder in the long term with planning restrictions “more stringent than rubbish tips”.
“We had been invited into regional Victoria by the previous government, but we are now governed by the strictest laws in the world on building wind farms,” he said.
Mr Geiger said wind monitoring in South Gisborne had stopped and no new investigations would go ahead in the Macedon Ranges.
He said WestWind was considering moving interstate”.
Ben More wind farm
From the proponent: “We are currently investigating the possibility to develop a wind farm in the Amphitheatre area in central Victoria. The proposed Ben More Wind Farm would be installed on a site stretching several kilometres along the Ben More range between the towns of Amphitheatre and Lexton.
The wind farm will include up to 60 wind turbines installed over the site as well as electrical infrastructure to enable it to be connected into the national energy grid. It is estimated that the project would require investment of more than $250 million and will bring jobs and economic benefits to the area during the construction phase of the project and over its operating life.
Initial studies suggest that the site is well suited for the development of a wind farm. Wind speeds across the range are ideal for harnessing this renewable energy source. Current estimates suggest that the wind farm would produce enough clean energy to provide power to approximately 80,000 Victorian homes”.
At present, the project is under threat because of the 2 kilometre right of veto, and the company, RATCH Australia (formerly the Transfield Services Infrastructure Fund) is “reviewing the ongoing feasibility of the project”.
Projects that have been ruled out because of creation of No Go zones
Community wind projects
At present there are four community owned wind farm projects currently in the planning phase in Victoria. These are all in declared ‘no go’ zones. They are:
Details on this project available here.
The intention was to build a wind farm about 7 kilometres south of Woodend in a pine forest. Three 2.1 MW turbines situated in this location were intended to supply equivalent power to that consumed by 3,300 households (the combined population of Woodend, Macedon, Mount Macedon and Newham).
According to the proponents:
“The benefits of a community-owned wind park include:
· retention of income from energy sales within the shire
· a potential source of income for local residents and local sustainability projects
· a local source of energy, providing energy security for the region
· immediate access to clean energy as electricity generated would be fed to local homes via the grid
· avoidance of transmission losses (up to 30%) from energy currently supplied from the Latrobe Valley.
· enhancing the reputation of the Shire as a progressive and active community on climate change
· further inspiration to community groups elsewhere seeking to secure their clean energy future.
(Mt Alexander Sustainability Group).
The plan is to build up to 3 x 2 MW turbines. According to the proponent, this “would power over 3,000 local homes and reduce our Shire’s annual greenhouse emissions by 18,000 tonnes. This is also equivalent to reducing emissions from electricity generation in the shire by 15% or taking over 4,000 cars off the road”.
“The Westgate project has grown out of concerned residents in the west in order to take the lead on climate change by building Australia’s first urban wind farm”.
It intends to raise $12 million for two turbines through generating support from between 6,000 and 12,000 households, primarily in the inner and western suburbs of Melbourne.
Indicative production for two x 1.5 MegaWatt – 2.5 MegaWatt turbines at the Westgate Bridge:
Energy production p.a. 8,100 – 9,000 megawatt hours
Equivalent number of households 990 - 1,100 homes
Greenhouse gas abatement 9,900 – 11,000 tonnes eCO2
Equivalent number of cars off the road 2,470 - 2750 cars
· Surf Coast
The concept of creating a community windfarm as a direct step to mitigate against climate change was the catalyst for the Surf Coast Energy Group forming. At the time 2 sites were identified. Up to 6 turbines were identified as possible at site one.
An alternative site was identified that could have supported two turbines. Both sites have houses within a 2km radius and sit in the declared Bellarine No Go zone.
A note on the community wind projects
All these projects are at different stages of development.
All have been made impossible to build in their current configuration under the new guidelines because of the creation of No Go zones and/or the 2 km right of veto.
Macedon and Castlemaine, which are the most advanced, are intended to be on a similar scale as the functioning Hepburn wind project near Daylesford.
The community groups behind these projects have both already indicated they intend to continue to develop these proposals.
The Hepburn project is worth $13.5m (and more than $7m of the project was spent on Australian content, and more than half of the Australian content was spent in regional Victoria. For instance, towers were produced in Portland, and local civil contractors and concrete contractors were employed, etc). We have used the Hepburn figures in determining likely employment and greenhouse benefits of the Macedon and Castlemaine projects.
Sidonia project – located in Macedon McHarg No Go zone
Source: Macedon Ranges Leader.
“Hydro Tasmania spokesman Pat Garnham said the company was still assessing the implications of the (government wind policy) announcement, which put an end to its plans for 34 wind turbines in Sidonia.
“The project was progressing well and progress had been made in preparing a development application for the project,” Mr Garnham said.
“Up to 250 jobs would have been associated with construction of this site and potentially up to eight permanent jobs during the operational life of the wind farm.”
The proposed site of the Sidonia Hills Wind Farm is located about 10 km north east of Kyneton in Victoria and 80km north of Melbourne.
Features of the proposed wind farm:
· Will include up to 34 wind turbines across the site
· Has 68 megawatts of installed capacity planned
· Will produce enough electricity to supply 33 000 households - more than twice the number of households in the Macedon Ranges Shire
· Has a total investment in the order of $130-$150 million
The information used above comes from the proponent.
Baynton wind farm – located in a No Go zone
The proposed Baynton Wind Farm had been planned for a site stretching south west of the town of Tooborac in what is now the declared Macedon/ McHarg Ranges No Go zone.
According to the proponent,
“the project will bring jobs and economic benefits to the area during the construction phase of the project and over its operating life. It is estimated that the project would require investment of more than $300 million. The wind farm will include up to 70 wind turbines installed over the site as well as electrical infrastructure to enable it to be connected into the national energy grid”.
Following the government announcement, it was reported that
“RATCH Australia (formerly the Transfield Services Infrastructure Fund) chief executive Steve Loxton said he was disappointed with the Government’s announcement”.
“We are particularly concerned at the lack of clarity on the rationale excluding the Macedon and McHarg ranges as an area for wind farms,” Mr Loxton said.
The company has invested more than $1 million over the course of its investigation into sites at Baynton and at Ben More.
According to the proponent, the 2 wind farm projects it had been progressing for several years (Baynton and Ben More) were “expected to have around 50 to 70 wind turbines at each site, giving a capacity of up to 300MW. This would supply the annual power needs of more than 75,000 Victorian homes. The projects were estimated to cost more than half a billion dollars and would have provided for more than 100 jobs during the 2 year construction period and 10 to 15 ongoing full time jobs during the 20+ year operational period at each site”.
a note on lost/ stalled employment figures used.
Jobs created in the construction phase of a wind project are relatively short term, often lasting between 18 months and 2 years, before individual workers would go on to build the next wind farm. Given that some workers could be expected to work sequentially on multiple projects, and this is in general a highly skilled workforce, we have made the assumption that the 580 positions we have identified as being lost or stalled represent jobs rather than 580 individuals.
In terms of the methodology used to develop a figure for indirect employment likely to be impacted, we have used a Clean Energy Council (CEC) briefing paper, which shows that for wind projects already developed in Australia, there is generally a correlation between the direct employment created and the flow-on effect indirect jobs of a factor of 1:3. Source: There’s power in wind: national snapshot, July 2011. Using the 1:3 formula would give a total of 1,401 indirect lost or stalled jobs.
However, given the sequential nature of wind farm development (a number of projects underway at one time, with some workers moving between jobs), and after receiving advice from industry sources, we have decided to use a 1:2 direct:indirect job ratio instead of the real world 1:3 ratio which has been the actual experience with wind projects already built in Australia. The result of this decision is that our lost/ stalled employment figures for flow-on employment are potentially conservative.
Summary and Recommendations
· Right of veto over projects – a double standard
In creating a right of veto for houses within 2 kilometres of a turbine, the state government has set a remarkable planning precedent.
The planning minister has claimed that the new policy does not stop projects occurring within 2 kilometres of houses – it just requires the developer to get the consent of residents. However, what is obvious is that the actual impact of this will almost certainly mean that turbines and clusters of turbines will be stopped from proceeding.
Consent is a common element of the planning process. It is generally implied that, as an affected neighbour, if you don’t object to a development application that you consent to the project proceeding. What the government has introduced is entirely new – it requires written consent from people within 2 kilometre radius for a project to proceed.
It is difficult imagining that if such a right of veto was applied to any other form of development that any developer could get 100% written support for a project. Even a project which was clearly of public benefit, for example a train line to a new suburb, would always have at least a few detractors. The Hepburn wind farm has around 50 residents, including hosts, within 2 kilometres of the turbines and so would be most unlikely to be approved if it were being proposed in 2011, despite a high level of local support. In contrast, there are around 2,000 people in Anglesea who live within 2 kilometres of a proposed expansion of a coal mine open cut who have no ability to rule out this project.
This new system – of requiring 100% written consent for a development – is simply not workable if the government does in fact want any further development of the wind industry. The statements by the Premier and Planning Minister do not match the realities of what can be expected to happen under such a planning regime.
This requirement can only been seen as being a double standard given that the same onerous requirements are not applied to other major projects in the state.
The government has not supplied information about the scientific basis for making 2 kilometres the cut off point for a right of veto, making it look like a decision taken on political grounds rather than good planning criteria.
· No go zones arbitrary
Equally, the No Go zones are very arbitrary in nature. While they are intended to protect ‘iconic’ landscapes, their creation does raise a series of questions about what criteria is used to define ‘iconic’. For instance, much of the Bellarine Peninsula is heavily modified agricultural landscapes. Equally, the Macedon McHarg exclusion zone extends well away from these ranges and into farming country towards Castlemaine.
As with the 2 kilometre right of veto, the arbitrary nature of these zones seems to be based on politics rather than good planning principles.
Accordingly, these two measures cannot be supported by people concerned about fairness and transparency in the planning process.
· No transition package for workers
When government intervention leads to a significant wind back in the operations of an industry or sector it is standard practise for the government to provide some level of support for workers in that industry. This might include re training, or help in employment transition. This has been the case for several decades as access to native forests has been reduced as national parks are created. Much of the recent debate around a carbon price focused on what level of support will go to companies and workers currently involved in the fossil fuel sector.
In this instance, the state government has intervened in a way which can be expected to adversely impact on the people who are currently employed in the sector and yet it has effectively abandoned these workers by claiming there will be no impact.
It is not acceptable that a government can act to effectively halt further employment opportunities in a sector which has been experiencing substantial growth, without at least assessing the likely social impacts of this action.
We welcome the fact that since the policy was enacted, the Planning Minister, Matthew Guy, has approved an extension of the planning permits for the Ryan Corner and Hawkesdale projects in western Victoria. These projects are well advanced, and the proponent is ready to commence construction. This will avoid potential permanent loss of up to $430 million in investment and several hundred direct and indirect employment opportunities in western Victoria.
· The government should release the advice it used to determine the boundaries of its ‘no go’ zones
· The government must commit to an immediate review of the economic impacts of its declared No Go zones
· The government should commit to negotiating with the community based wind energy projects outlined in this report, with a view to amending the No Go zones in the short term, to allow these projects to continue to the next stage of development
· The government must either revoke the 2km exclusion zone clause or apply a similar clause of other major energy developments in the state
· Given the substantial likely economic impacts of its wind energy policy until the right of veto clause is revoked or amended and the No Go zones removed or amended, the government must investigate retraining/funding options for places where the wind industry currently provides employment, such as is the case of Portland with Keppel Prince.
This document was compiled by Friends of the Earth (Melbourne) Inc. September 2011, updated November 2011, Feb 2012.