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10 May 2024
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Energy, the Environment and Water webpage
Re: Consultation on the draft Offshore Electricity Infrastructure Amendment
Regulations 2024
Flotation Energy Pty Ltd (ACN 637 047 039) (Flotation Energy) is pleased to provide feedback to the
Department of Climate Change, Energy, the Environment and Water (DCCEEW) in response to the draft
Offshore Electricity Amendment Regulations 2024 (the draft regulations) and the Consultation Paper -
Regulations Under the Electricity Infrastructure Act 2021 (the consultation paper). We welcome these regulations to enable and support Australia’s emerging offshore wind industry. We look forward to the finalisation of these regulations and associated guidance documents to guide licence holders once they have received an OEI licence.
1 Summary
Flotation Energy encourages DCCEEW to consider the following submissions as it finalises the regulations and prepares guidance documents.
• Flotation Energy supports the Minister being allowed to offer a smaller feasibility licence area than was
applied for. We consider this option is currently available to the Minister, without amendments to the
regulations. However, we support any amendments that would make this option more explicit.
• We stress the urgency for the regulations to be finalised as soon as possible, to enable the offshore
wind industry in Gippsland to advance quickly and meet government targets.
• We provide several recommendations and observations on the proposed regulations for Management
Plans, related to;
o the need to allow flexibility for structures to be retained on decommissioning,
o the complexity of the Management Plan incorporating so many components (i.e. Stakeholder
Engagement Strategy, Financial Security etc), and
o suggestions regarding resubmission triggers and Management Plan summaries.
• We recommend the wording of the draft regulations be amended to allow the design notification
scheme to be an iterative, rather than once-off process.
• We note the need for detailed guidance on the calculation of financial security, recommend that there
be a single financial security to cover state/territory and Commonwealth jurisdictions and advocate for
greater flexibility with timing requirements.
• We urge DCCEEW to ensure that consultation requirements are well defined and restricted to
stakeholders with a clear interest in the project.
• We note concern with impact of the assessment timeframes on project delivery times.
• We recommend that DCCEEW considers the draft regulations in light of the need to reduce duplication
with other processes, particularly environmental assessments and approvals, such as the EES/EIS.
Further detail and rationale is provided below in the Submissions section.
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2 Submissions on the draft regulations and consultation paper
2.1 Amendment to allow the Minister to offer a smaller feasibility licence area than was applied
for
Flotation Energy strongly supports the proposal to ensure the regulations explicitly allow the Minister to offer a feasibility licence applicant a smaller area than was applied for (refer page 35 of the consultation paper).
However, Flotation Energy believes that the existing Offshore Electricity Infrastructure Act 2021 (OEI Act) and
Offshore Electricity Infrastructure Regulations 2022 (OEI Regulations) as currently in force (and unamended), already allow the Minister to do this. We consider the OEI Act and OEI Regulations currently provide the
Minister with broad discretion to decide to offer a feasibility licence on the terms he sees fit (including for a smaller area than applied for), subject to specific requirements of the Act and Regulations. We note that if applied, this would have allowed the Minister to offer a feasibility licence to Flotation Energy’s Seadragon
Offshore Wind project. Seadragon’s overlap with other projects that have been awarded or are intended to be awarded feasibility licences is negligible. The Registrar determined that the Seadragon application met the merit criteria and would have been eligible for the grant of a feasibility licence if not for the overlap with one or more other applications. The offer of a smaller area, removing the minimal overlapping areas, is one that
Flotation Energy supports.
2.2 Timing of the finalisation of the regulations
The consultation paper states that the proposed regulations are expected to be finalised in mid to late 2024 and that this will allow all OEI licence holders to progress work within their licence areas by 2024. We stress the urgency of the regulations being finalised as soon as possible to enable critical feasibility studies to take place, including geophysical, geotechnical, floating lidar and metocean studies. These studies will be subject to the requirements of the regulations (i.e. including an approved Management Plan, financial security and consultation with stakeholders) and will take considerable time to prepare. Noting the 90-day Management
Plan assessment timeframe, subsequent contracting requirements with survey providers and potential for seasonal survey windows to be determined, it is not realistic to assume that a mid-late 2024 finalisation of regulations would enable licence-holders to progress these works this year. Given that the feasibility licence period is up to seven years, timing is particularly tight for proponents awarded licences in the Gippsland declared area, adding to the urgency for the regulations to be expedited.
2.3 Management Plans
There may be instances where the retention of certain structures, equipment and property at decommissioning will result in better environmental and social outcomes than if they were removed. The proposed Section 85
(2) requires that if the licence holder and Regulator have made any arrangements for any relevant structures, equipment and property to remain in the licence area, that the Management Plan must set out details of the arrangements. This implies that arrangements with the Regulator for the retention of licence infrastructure must be made ahead of the submission of Management Plans, though the mechanisms for achieving this are not outlined in the proposed regulations. We recommend that the proposed regulations are revised to better describe how proponents can engage with the Regulator to plan for or allow the flexibility for the retention of some licence infrastructure as part of their design for decommissioning. This will facilitate best practice and may achieve better environmental and social outcomes. Infrastructure Australia and the Infrastructure
Sustainability Council support the consideration of ongoing legacy and obtaining maximum social and environmental value from infrastructure developments. For example, there may be cases where retained infrastructure provides a positive legacy of new reef habitat for marine species. Furthermore, we suggest that the wording of proposed Section 85 (3) is amended to allow for the plan to describe how remediation will occur where relevant structures, equipment and property are retained.
We consider that the requirement for one Management Plan including (inter alia) stakeholder engagement strategy and consultation, a design notification scheme, and financial security aspects is cumbersome and unwieldy, especially when the timeframes for assessment and approval of Management Plans are considered.
The likely need for Management Plan revision as projects evolve may be significantly complicated where a prior revision is still under assessment by the Regulator. We recommend that these other aspects be able to be revised independently of the Management Plan, where the changes are not significant.
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Flotation Energy notes that one trigger for revision of a Management Plan, as stated in proposed Section 53
(2) (d) is when “the licence holder identifies a new or significantly increased hazard, impact or risk”. We recommend the wording be changed to include only new and significant risks, since a blanket resubmission trigger for new risks does not distinguish based on the relative nature and scale of those risks. In concert, the assessment fees need to be commensurate with the actual work required to assess changes made to plans, and not for assessment of a plan in its entirety for every revision.
The need to write and publish Management Plan summaries requires additional careful consideration and must balance the need for public understanding of the project and transparency (and therefore the content/length of the summary as well as the use of technical language/jargon). As per the draft regulations, the list of content requirements in proposed Section 71 is significant, especially without additional guidance on which parts of those sections of the Management Plan need to be published in the Management Plan summary. It is submitted that with so many required inclusions, the “summaries” will be long documents that may not meet the intent of publishing information for a general audience. Consequently, we consider it may be more appropriate to publish management plans in full (with necessary redactions).
2.4 Design Notification Scheme
Flotation Energy considers that the design notification scheme could be considered regulatory overreach, when benchmarked against the existing content requirements for an Offshore Project Proposal or design validation within a Safety Case under the Offshore Petroleum and Greenhouse Gas Storage (Resource
Management and Administration) Regulations 2011. Whilst we appreciate the opportunity for Regulator feedback on design, we note that approval of Management Plans could be unduly delayed if the Regulator is not satisfied with proponents’ responses to that feedback. We consider that proponents, whilst valuing
Regulator feedback, will be capable of making technology decisions that comply with the obligations for
Management Plans, including all safety and environmental aspects.
The current wording of the draft regulations suggests that there is to be only one opportunity for the design to be reviewed by the Regulator. We recommend that the wording of the regulations is amended to allow for an iterative process. It is our understanding from the online consultation session held 2 May 2024, that this is
DCCEEW’s intention. Iterative feedback from the OEI Regulator as well as environmental regulators can assist to ensure alignment between the design related outcomes of the environmental impact assessment process and the OEI regulations requirements. Without this early and ongoing feedback, there may be conflicts between elements of the design needed to meet requirements under environmental approvals (e.g. for the
Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) and the Victorian Environment
Effects Act 1978 (EE Act) and the OEI Regulations. We consider that the Regulator’s review should occur concurrently with the environmental assessment process (i.e. the combined Environmental Effects Statement and Environmental Impact Statement (EES/EIS) in Victoria). By the time the Management Plan is submitted, significant design refinements are unlikely to be possible, as most significant design elements and contracts will be locked in. It must also be recognised that design alternatives and associated impacts are expected to rigorously assessed through the environmental assessment and associated approvals process. It is critical the
OEI Regulations do not duplicate and potentially allow inconsistencies with design assessments and solutions effectively approved under environmental and planning processes.
It is stated in the proposed Section 93 (1) (a) (ii) that a design notification must be published on the Regulator’s website. Whilst we agree with the final design notification that accompanies the Management Plan application being published online, we consider it is inappropriate for draft designs, submitted for early feedback, to be published online. Early designs seeking early feedback in an iterative process, are likely to contain confidential information that the licence holder will not want published until they are finalised. Furthermore, as design details are subject to change, publication of early considered alternatives may cause unnecessary confusion to members of the public.
As noted in 2.3 of our submission above, we consider there may be some instances where the retention of structures, equipment and property at decommissioning will result in better environmental and social outcomes. We suggest that proposed Section 93 (2) be amended to allow for the description of licence infrastructure to be retained to be included in the design notification.
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2.5 Financial Security
The proposed Section 87 (3) states that the calculation method must identify and qualify costs, expense and liabilities arising from the decommissioning and removal of structures, equipment, property and “things” from the licence area and remediation of any affected areas. We note that for commercial offshore wind projects this will require complex assessment and as such, we consider detailed guidance on the calculation of financial security must be developed by DCCEEW to ensure consistency between commercial projects. Further guidance will also help avoid delays once financial security calculations are submitted by licence holders.
As the regulations will apply only to Commonwealth waters, the states/territories may require separate financial security for the parts of the project within state/ territory jurisdiction. This has the potential to create unnecessary complexity and duplication for licence holders. Furthermore, we suggest that there could be scenarios where components originating within Commonwealth waters end up becoming a liability for states/territories. For example, offshore components from decommissioned end-of-life turbines and ancillary infrastructure could end up being stockpiled onshore whilst awaiting recycling and may create waste disposal and management issues for states/territories, as other stockpiled materials currently do. We note that transport, disposal and/or recycling costs are not included in the listed considerations to be included in the calculations. To resolve these issues we suggest that a single financial security should cover both
Commonwealth and state/territory jurisdictions.
The proposed timing requirements for the provision of financial security need to be sufficiently flexible so as not to make projects commercially unviable. There is very real concern across the offshore sector that this requirement as currently drafted will be potentially fatal to many or even most Australian projects. The financial security requirements proposed by the draft regulations will add significantly to the cost of projects and by extension the cost of energy available to the Australian economy and individual consumers. We appreciate that the requirement to provide financial security at different times is recognised in proposed Section 98 of the regulations and described further on pages 18 and 19 of the consultation paper. However, we suggest there be flexibility to stage financial security further beyond construction, so that the full amount is not required to be posted in the construction stage but can be provided progressively throughout the life of the project (i.e – a ratcheting bond or similar). This would reflect that the decommissioning risks to the taxpayer increase through the life of the project and as the time to decommissioning approaches.
In the initial stages of a project, it is likely that proponents will prefer to rely on guarantees from a parent company, which is currently not allowable under the draft regulations.
2.6 Consultation
Significant consultation is required prior to the Management Plan being submitted. Consultation is also a key requirement for the EES/EIS at various stages through the process and this is likely to be replicated by the environmental assessment processes in other states. For the Seadragon project, the EIS guidelines and EES scoping requirements outlined the requirement for community and stakeholder consultation to be undertaken, reported on and incorporated into the project design and the EES/EIS. This included the required preparation of a Stakeholder Engagement Plan, reviewed by both state and Commonwealth agencies, which is a live document that is publicly available on the Victorian Department of Transport and Planning website. By the time a Management Plan under the OEI regulatory framework is submitted, stakeholders and local communities will typically have been extensively consulted with for several years prior, often on multiple projects in the same region. There is a high risk that the community will experience consultation fatigue if the OEI regulations duplicate the consultation requirements of the EES/EIS process.
Any consultation required under the OEI regulations should be well defined and restricted to stakeholders (e.g.
– other specified marine users) that have a clear interface with the relevant project and will be potentially impacted by the associated activities. It is critical that consultation regarding environmental, social and amenity matters associated with the fundamental appropriateness of the project, which have been addressed at length and thoroughly through environmental assessment processes, are not re-prosecuted. This would be unfair on communities and proponents and would cause significant delays and inefficiencies for projects, stakeholders and the Australian energy sector. Where further consultation is required to address specific OEI regulation requirements, it is critical that this is undertaken in a timely fashion.
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We consider that the wording of proposed Section 57 (1) (b) may need revision to ensure that Traditional
Owners are justly and adequately consulted with. Noting that areas recognised in Victoria as potentially allowing Native Title (within the meaning of the Native Title Act 1993) are limited and sea country has little legal recognition, we consider the definition of First Nations groups to be consulted with should be broadened.
2.7 Need to improve decision making timeframes
Flotation Energy is concerned the assessment timeframes proposed within the draft regulations will create significant delays for project delivery times, particularly when viewed cumulatively. Please see the examples below.
Assessment timeframes
We note that a 90-day decision period for the assessment of a Management Plan seems excessive, especially when compared to an equivalent of 30 days for the assessment of an Environment Plan under the OPGGS
(Environment) Regulations and given that the Regulator has the ability to request more time for assessment with reasons. We anticipate that even for complex Management Plans that an assessment should be possible within 60 days and hence a 30-day statutory timeframe as a default should suffice. Regulators need to be adequately resourced to promptly review plan submissions and revisions.
Design Notification Scheme timeframes
The draft regulations state a minimum of 60 days will be required by the Regulator to consider a design notification and provide feedback. When combined with time to incorporate this feedback into the Management
Plan this will effectively add at least 90 days to the assessment process.,
2.8 Need to avoid duplication
Flotation Energy’s Seadragon project was the second-most advanced in the country, having obtained a decision on its project EPBC Act and EE Act referrals, established scoping requirements for its combined
EES/EIS and significantly progressed engagement with both State and Commonwealth departments through a joint Technical Reference Group (TRG) process. The Seadragon team’s experience is that several requirements of a Management Plan proposed under the draft regulations are either duplicated with other requirements under the EPBC Act and EE Act or could be better ‘called in’ to the OEI Regulations rather than necessitating new and duplicating documents.
For example, it is critical the Stakeholder Engagement Strategy required by the Offshore Energy Infrastructure
Regulator (the Regulator) for management plans is consistent with the Stakeholder Engagement Plan prepared for the EES/EIS. Furthermore, it is critical that the Regulator recognises the extensive consultation that will have already been undertaken or planned for the EES/EIS process.
As noted above, the design notification scheme also poses potential duplication.
We recommend that DCCEEW carefully considers the practicalities of monitoring compliance with conditions under the EPBC Act, to avoid duplication. The draft regulations require that any obligations under the EPBC
Act, including any conditions of approval, be referred to in a Management Plan. We note that monitoring of compliance with obligations under the EPBC Act is likely to be conducted by the Commonwealth Environment
Protection Authority, rather than the Regulator. Whilst we note the importance of referencing environmental requirements in the management plan, it is critical that there are not two sets of overlapping compliance documentation to be updated and reported on.
It is critical that the Regulator use the provisions under proposed Section 91 (refer page 12 of the consultation paper) to allow proponents to address matters in Management Plans by adopting or referring to material in another document (an instrument or other writing). It is important that this Section 91 provision extends to documents approved under other legislation (e.g. EPBC Act) to avoid duplication, overlap and community or stakeholder confusion.
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3 Closing
Thank you again for the opportunity to provide feedback on the proposed assessment method. We look forward to continuing to work with DCCEEW towards the establishment of a successful and prospering offshore wind sector in Australia. We would welcome the opportunity to discuss our submission in more detail.
Yours sincerely,
[redacted]
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Appendix 1
About us
Flotation Energy Pty Ltd
Flotation Energy Pty Ltd is an Australian offshore wind developer, established in 2019, to identify and develop commercial offshore wind projects. We are one of Australia’s offshore wind pioneers, helping to kick-start the offshore wind industry and contributing to the development of the legislative and policy framework at both
Federal and State level since 2019. The company has offices and locally based teams in Melbourne, Gippsland and Fremantle.
Flotation Energy Pty Ltd is a wholly owned subsidiary of Flotation Energy Ltd, a specialist offshore wind developer, headquartered in Scotland. Flotation Energy is now owned by TEPCO Renewable Power, part of the Tokyo Electric Power Company Holdings Inc (TEPCO) group, Japan’s largest electricity utility and a significant investor in electricity projects across Japan, Australia and internationally.
Flotation Energy has a proven track record in the development and delivery of offshore wind projects, with the team delivering some 3 GW of fixed offshore wind to operation in the UK and more recently the world’s largest offshore floating wind project (the 50 MW Kincardine Offshore Floating Wind). The company has a growing project pipeline of 12GW of offshore wind projects in the UK, Ireland, Taiwan, Japan and Australia; is leading the oil and gas transition including powering offshore infrastructure, and plans to expand into other key markets.
The expertise of the Flotation Energy team lies in identifying prospective offshore wind projects, supporting the development of enabling legislation and regulation, securing effective partnerships, project and engineering management of large infrastructure projects. Our expertise is derived from experience of delivering offshore wind in the UK over the last 30 years. This is supported by an entrepreneurial mindset, commitment to and understanding of its target markets, and its pioneering work in decarbonising oil and gas assets. We develop our own projects, but also recognise the benefits of collaboration and working in partnership with other developers to deliver proven, cost-effective solutions. In 2021 Flotation Energy secured development rights with joint venture partner, ACS Cobra, for 480 MW fixed project in the Eastern Irish Sea (UK) amongst gas platforms due for decommissioning. In September 2022, Flotation Energy announced a partnership with
Vårgrønn and secured 1.8GW of offshore floating wind development rights in the North Sea to power and decarbonise UK oil and gas platforms. Environmental planning consent for Flotation Energy’s Green Volt project was achieved in April 2024. This is the largest floating wind farm in the world to achieve consent and will be the largest floating wind farm in the world when completed in 2029.
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