Important updates to Australia's offshore wind regulatory framework

Key takeaways

• The long-awaited Offshore Electricity Infrastructure Amendment Regulations 2024 (Cth) (OEI Amendment Regulations) came into force on 12 December 2024.
• The OEI Amendment Regulations provide important additional detail regarding the 'licensing scheme' for offshore electricity infrastructure.
• With the first feasibility licences for offshore wind projects in Australian waters issued in 2024, and the continued rapid development of the sector (particularly in the Gippsland declared area off Victoria), the making of the OEI Amendment Regulations occurs at a crucial time.
• The making of the OEI Amendment Regulations will allow licence holders to progress feasibility activities in their licence areas imminently.

The commencement of the OEI Amendment Regulations is the most significant legislative development for offshore wind in Australia since the making of the Offshore Electricity Infrastructure Act 2021 (OEI Act) and the Offshore Electricity Infrastructure Regulations 2022 (Cth). In this update, we provide a high-level overview of key elements of the OEI Amendment Regulations, including changes made to the draft OEI Amendment Regulations as a result of the public consultation process undertaken in April and May 2024.

 

What are the new regulations?

Management plans

OEI Act licence holders must have a MP approved by the Offshore Infrastructure Regulator before commencing construction or installation of offshore renewable energy infrastructure. The MP is legally enforceable and provides the Regulator with oversight of projects. The OEI Amendment Regulations outline specific MP content requirements, including as to planned activities; stakeholder consultation; compliance with the Environment Protection and Biodiversity Conservation Act 1999; and work health and safety.

MPs are designed to be revised and updated as the relevant project progresses. The OEI Amendment Regulations require licence holders to prepare a revised MP in certain circumstances, including where licence activities are to change significantly, or the licence holder identifies new or significantly increased risks or hazards. The earlier draft Regulations required licence holders to prepare a revised MP where 'a new stage of licence activities is to commence', or where 'the amount of financial security required in relation to the relevant licence increases', but these requirements have been removed from the final version.

There is also a general requirement for the licence holder to revise its MP every five years. Notably, the final version of the OEI Amendment Regulations provides for exemptions and deferrals from this periodic plan revision requirement – provisions which were not included in the earlier draft Regulations.

The Regulator must either approve or reject an application for approval of a MP within 60 days of application being made – this timeframe reduced from the 90 days proposed in the draft OEI Amendment Regulations.

Consultation

The OEI Amendment Regulations require licence holders to consult with relevant stakeholders and incorporate the outcomes into the MP.

The licence holder is required to consult relevant stakeholders only on the activities that the MP would authorise if it were approved. For the purposes of seeking approval of an initial MP, a licence holder is not required to consult with stakeholders on future longer-term activities that cannot yet be fully addressed due to the stage of the project.

The list of stakeholders that must be consulted includes relevant government departments; Aboriginal and Torres Strait Islander people, groups and organisations; other OEI Act licence holders and marine environment users; and adjacent communities.

Notably, the reference to "sea country" contained in the earlier draft Regulations has been dropped. Use of that term would have been a first in Australian legislation.

Stakeholder engagement strategy

The report on consultation included in the MP is intended to ensure there is a point in time capture, via the report, of consultation undertaken prior to the commencement of activities.

This consultation and reporting then feed into the ongoing consultation required in a stakeholder engagement strategy (SES). The SES is also to be described in the MP – though the SES itself will sit separately to the MP, and does not need to be submitted to the Regulator for approval.

The Regulator may only approve the MP if it is satisfied that the SES outlined is likely to ensure ongoing engagement with stakeholders.

Design notification

The OEI Amendment Regulations establish a design notification scheme. Before making an initial MP approval application for a proposed transmission and infrastructure licence (where the licence holder is proposing to undertake post-feasibility activity), or a commercial licence, the licence holder must give the Regulator a design notification. This allows the Regulator to provide early feedback to the licence holder on the layout and design of the project.

Once notified, the Regulator must "endeavour to give feedback" on the design notification within 60 days. A MP may only be approved if the Regulator is satisfied that the feedback it has given on the design notification has been adequately addressed in the MP.

The OEI Amendment Regulations also allow for feasibility licence holders and research and demonstration licence holders to make voluntary design notifications. This is a new addition, not included in the earlier draft Regulations.

Financial security

The OEI Act requires that licence holders must provide financial security to the Commonwealth to cover costs that may arise in connection with decommissioning of infrastructure, removal of equipment and property, and remediation of the licence area.

The OEI Amendment Regulations require licence holders to determine the necessary amount of financial security, with calculation methods to be demonstrated and verified in the MP. The Regulator may also direct the licence holder to arrange third party verification of financial security, and Explanatory Statement comments indicate that this power will be frequently exercised.

Licence holders may provide the maximum amount of financial security for the entirety of the licence period, or may set out a timetable for the provision of staged, discrete amounts in their MP. If a licence holder provides the timetable, it enables the licence holder to provide financial security on an iterative basis.

Licence holders generally have the discretion to choose the form of financial security they wish to provide, as proposed in the MP. However, the Regulator has the ultimate discretion to approve the proposed form. Additionally, the Minister may require that financial security be in a specific form.

Acceptable forms of financial security include cash deposits, credit facilities, guarantees and insurance policies. In contrast with the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth), foreign financial institutions are excluded from providing security, and self-insurance and parent company guarantees are not acceptable.

Safety zones and protection zones

The OEI Amendment Regulations outline the administrative procedures for implementing and managing safety zones and protection zones around infrastructure.

Safety zones up to 500 metres can be applied during installation and operations to ensure safety of workers and other marine environment users.

Protection zones can extend up to 1,852 metres (or one nautical mile) on each side of infrastructure, to safeguard from activities that may cause damage, such as anchoring.

The Regulator is also required to invite submissions from the public on protection zone applications – provisions which were not included in the draft OEI Amendment Regulations. This consultation process will be undertaken in addition to the licence holder’s consultation on its activities under the MP.

Work health and safety

The provisions of the Work Health and Safety Act 2011 (Cth) will govern work health and safety under the OEI Act. The OEI Amendment Regulations make some modifications to this Commonwealth WHS regime for OEI Act purposes, targeted mainly at the diving provisions, and aligning these provisions more closely with similar provisions in the Offshore Petroleum and Greenhouse Gas Storage (Safety) Regulations 2009.

The OEI Amendment Regulations also make some modifications to the usual Commonwealth WHS regime plant registration requirements, principal contractor duties, requirements for consultation with workers, incident notifications and reviewable decisions.

Notably, there is no safety case requirement for OEI Act activities, in contrast to the Offshore Petroleum and Greenhouse Gas Storage (Safety) Regulations 2009.

Fees

New application fees have been introduced for processes such as MP approvals, design notifications, and safety zone and protection zone applications. Licence holders must pay a AUD10,000 fee for submitting an MP for approval, and an additional fee for each revised MP.

The Regulator will also impose fees to cover expenses incurred by the Regulator as part of the assessment process.

Other provisions

Other key provisions include the requirement for licence holders to submit an 'Australian supply chain and workforce analysis report', and a requirement for licence holders to notify and report to the Regulator on 'dangerous high-risk situations'.

 

What's next?

The Australian offshore wind industry will spend time over the coming months digesting the detail of the OEI Amendment Regulations, comparing the provisions to the earlier draft Regulations, and contemplating the implications of new legislative requirements applying to licence holders.

There is no shortage of reading material for the industry, with the OEI Amendment Regulations themselves totalling 96 pages, together with an Explanatory Statement of 121 pages, and a suite of guidance material released by the Regulator comprising nine additional guidelines and seven additional policies.

With the OEI Amendment Regulations now made and the suite of accompany guidance material released, licence holders can proceed to finalise draft MPs that have been under development, apply to have their MPs approved, and then commence feasibility licence activities – including surveys and metocean data acquisition. It promises to be a busy 2025 for the Australian offshore wind industry.

If you would like a more detailed analysis of the OEI Amendment Regulations, please reach out to Jack Brumpton or Chris Mitchell.