Questions and answers on wind farm regulation

• How has the legislation changed?
• What are ‘large-scale wind farms’?
• Why is the EPA regulating large-scale wind farms?
• Does the EPA treat wind farms differently to other industries?
• Do all wind farms require a licence from the EPA?
• Who regulates smaller wind farms?
• Which operational large-scale wind farms require a licence from the EPA?
• Do large-scale wind farms under construction require a licence from the EPA?
• Is there a transitional or grace period to apply for a licence?
• How will the EPA carry out it’s ARA role during the transitional period before a licence is required?
• How do I apply for a licence and how long does the process take?
• Are licences publically available?
• What does the EPA regulate through licensing?
• Are there any environmental issues that the EPA does not regulate through licensing?
• How does the EPA deal with community complaints (including noise complaints)?
• Are licensees required to publish pollution monitoring data?
• What are the licence administrative fees for large-scale wind farms, and how do these compare to fees for general electricity works?
• How many wind farms will fall into each proposed fee tier?
• What is the conversion of MW capacity to GWh annual generating capacity?
• How has the low capacity factor of wind farms been taken into account in the fee structure?
• Why don’t licence administrative fees incorporate the ‘polluter pays’ principle?
• Are wind farms required to pay load based licensing (LBL) fees?
• How does the State significant development assessment system interact with the EPA’s licensing regime?
• What is the role of the consent authority?
• Will the EPA’s wind farm licensing be consistent with the planning approval?
• What is the purpose of a licencereview?
• How does the consent authority and the EPA deal with duplicated roles and responsibilities?
• Can annual reporting requirements be aligned?

How has the legislation changed?

The wind farm amendments in the Protection of the Environment Operations Amendment (Scheduled Activities) Regulation 2013 include changes to:

• Schedule 1 of the Protection of the Environment Operations Act 1997 to list the activity of ‘electricity works (wind farms)’ that meets specified criteria as a scheduled activity (see the question: what are ‘large-scale wind farms’?).
• Schedule 1 of the Protection of the Environment Operations (General) Regulation 2009  to set out applicable licence administrative fees for the activity
• Schedule 8 of the POEO General Regulation to extend certain transitional provisions so they apply to any wind farm commencing construction or beginning operations after the Regulation commences (see the question: is there a transitional or grace period to apply for a licence?) for more detail).

What are ‘large-scale wind farms’?

Large-scale wind farms’ refers to those wind farms that meet the definition of the scheduled activity ‘electricity works (wind farms)’ in clause 17 of Schedule 1 to the Protection of the Environment Operations Act 1997 (refer to this clause for the precise legal definition). In simple terms, a large-scale wind farm is one that

• is approved as state significant development (SSD) under Part 4 of the Environmental Planning and Assessment Act 1979 (this also refers to approvals granted under the old SSD provisions that were repealed on 1 August 2005)
• is approved under Part 3A of the EP&A Act (now repealed) and/or
• was operational before 1 December 2012 with a capacity to generate more than 30megawatts of power.

Most wind farms currently under assessment and likely to be determined in the near future are transitional Part 3A projects.

Why is the EPA regulating large-scale wind farms?

The NSW Government anticipates an increase in renewable energy investment in NSW, with a major contribution expected to come from wind farm projects. However, the Government also acknowledges that there are widespread community concerns with some aspects of wind-farm developments, particularly operational noise.

The Protection of the Environment Operations Act 1997 is the principal legislation in NSW dealing with environmental issues, including noise. Before the recent legislative amendments, local councils were the appropriate regulatory authority (ARA) under the POEO Act for wind farms.

Wind farm noise is a complex issue. Wind turbines have unique noise-generating characteristics including a noise output that varies with wind speed. Some local councils reported that they do not have the necessary resources or expertise to effectively deal with complex noise issues from large-scale wind farms. Without significant capacity building, councils are likely to continue to struggle to meet the community’s and industry’s expectations of credible regulation

As the regulatory work for the ARA of large-scale wind farms is likely to increase, the Government decided to transfer the ARA responsibility under the POEO Act from local councils to the EPA.

As the State’s dedicated environmental regulator, the EPA is better placed to deal with complex noise issues, has the necessary expertise and has a robust regulatory framework for regulating large-scale wind farms.

Bringing large-scale wind farms into the EPA’s established environment protection licensing regime is the best approach for EPA regulation of the sector. The licensing regime is well established, strong, flexible and fit-for-purpose. Licensing provides an appropriate check-and-balance to ensure that the growing wind farm sector meets appropriate environmental performance requirements.

Does the EPA treat wind farms differently to other industries?

No. The EPA’s approach to regulating wind farms is consistent with the EPA’s approach to regulating all other industries. Section 45 of the Protection of the Environment Operations Act 1997 requires the EPA to take a number of matters into account when exercising licensing functions. This enables the EPA to regulate all industries types in a consistent, transparent, proportional and effective manner.

Do all wind farms require a licence from the EPA?

No. Only large-scale wind farms will require a licence (see the explanation of ‘large scale’ under the question: what are ‘large-scale wind farms’?). Smaller wind farms will continue to be regulated by local councils (see the question: who regulates smaller wind farms?).

Who regulates smaller wind farms?

Local councils are the appropriate regulatory authority under the Protection of the Environment Operations Act 1997 for smaller wind farms (i.e. not ‘large scale’ - see the question: what are ‘large-scale wind farms’?). Councils are also typically the consent authority for these wind farms under the Environmental Planning and Assessment Act 1979. Councils have access to a range of enforcement tools and powers under the POEO Act to carry out this regulatory role and under the EP&A Act.

Which operational large-scale wind farms require a licence from the EPA?

Gunning, Capital, Woodlawn and Cullerin Range are currently operating wind farms that will require an environment protection licence from the EPA. All these wind farms are located in EPA South Branch (EPA Queanbeyan office). The EPA’s appropriate regulatory authority role under the Protection of the Environment Operations Act 1997 for these operational wind farms commenced on 28 June 2013. However, the operators of these wind farms have until 28 March 2014 to apply for a licence (for more, see the question: is there a transitional or grace period to apply for a licence?).

Do large-scale wind farms under construction require a licence from the EPA?

Yes. Work done at premises to enable a scheduled activity to be carried on (called ‘scheduled development work’) must be licensed (section 47 of the Protection of the Environment Operations Act 1997. The EPA’s appropriate regulatory authority role under the POEO Act for these under-construction wind farms commenced on 28 June 2013. However, proponents/operators of large-scale wind farms that are under construction (or about to commence construction) have until 28 March 2014 to apply for a licence (for more, see the question: is there a transitional or grace period to apply for a licence?).

Is there a transitional or grace period to apply for a licence?

Yes. All large-scale wind farms (whether operational, under construction or about to commence construction) will have a transitional or grace period of nine months from the commencement of the Regulation to apply for their environment protection licence.

All large-scale wind farms proponents/operators have until 28 March 2014 to apply for a licence. The EPA encourages wind farm operators/proponents to make their licence application as soon as practical before this date.

Schedule 8 of the Protection of the Environment Operations (General) Regulation 2009 specifies the transitional provisions for the licensing requirements for wind farms (refer to the schedule for the precise legal definition).

In simple terms, the transitional provisions state that a licence for either the construction or operation of a large-scale wind farm is not required until

• nine months after the commencement of the Amendment Regulation (i.e. by 28 March 2014), or
• the EPA determines a licence application that was made before 28 March 2014,
  whichever is the later date.

The EPA will be the appropriate regulatory authority (ARA) for large-scale wind farms under the POEO Act during the transitional period (not local councils) (see the question: how will the EPA carry out it’s ARA role during the transitional period before a licence is required?). The consent authority (usually DP&I) will also retain regulatory oversight via the consent. However, the EPA will take the lead role wherever this is appropriate and practical. (Also see these questions: what is the role of the consent authority? and  how does the consent authority and the EPA deal with duplicated roles and responsibilities?).

How will the EPA carry out it’s ARA role during the transitional period before a licence is required?

The EPA’s appropriate regulatory authority role under the Protection of the Environment Operations Act 1997 for large-scale wind farms commenced 28 June 2013. During the transitional period where licences are not required (see the question: is there a transitional or grace period to apply for a licence?), the EPA is able to use existing notice powers under the Protection of the Environment Operations Act 1997 (e.g. prevention or clean up notices etc.) and other general powers and provisions of the POEO Act, if environmental issues arise.

How do I apply for a licence and how long does the process take?

See the comprehensive Guide to Licensing, Licence forms and information on licence fees. Licences are generally granted or refused within 60 days of lodgement with the EPA. It may take longer if you have not provided all the necessary information and documents that the EPA needs to assess your licence application. For more information, see the question: is there a transitional or grace period to apply for a licence?.

Are licences publically available?

Yes. Licences and related information can be accessed via the EPA’s public register. All large-scale wind farms proponents/operators have until 28 March 2014 to apply for a licence (see the question: is there a transitional or grace period to apply for a licence?).

What does the EPA regulate through licensing?

The Protection of the Environment Operations Act 1997 contains a core list of activities that require an environment protection licence. These are listed in Schedule 1 of the POEO Act and are known as ‘scheduled activities’. If work is done at premises in order to enable a scheduled activity to be carried on, the work (called ‘scheduled development work’) must also be licensed under the POEO Act.

Environment protection licences are the central means by which the EPA regulates scheduled activities and scheduled development work, to minimise and manage the localised, cumulative and acute impacts of pollution in NSW.

The main environmental issue that the EPA regulates via a wind farm licence is operational noise. However, the licence may also address other environmental issues during the construction phase, such as construction noise, dust and sedimentation.

Are there any environmental issues that the EPA does not regulate through licensing?

Yes. Environment protection licences primarily deal with environmental pollution and waste. Even where a licence is in place, some socio-environmental issues are not regulated by the EPA.

How does the EPA deal with community complaints (including noise complaints?

Licensees are required to comply with the conditions of their licence, including noise limits. Any person is able to make a complaint or report a pollution incident at any time to the EPA’s dedicated 24-hour Environment Line – 131 555.

EPA officers take complaints seriously, considering each issue or incident on a case-by-case basis. Officers have access to a wide range of regulatory tools to address environmental performance issues. These tools include things such as consultation, education, letters, a range of notices, negotiated pollution reduction programs, licence variations, compliance audits, breach investigations, penalty notices and prosecutions.

EPA officers exercise regulatory discretion when deciding on the best course of action to take in a given situation.

Are licensees required to publish pollution monitoring data?

Yes, but only if the pollution monitoring is a requirement of their licence (refer to the EPA’s Requirements for Publishing Pollution Monitoring Data (PDF 116KB) for more information). Meteorological data (such as wind speed) is not considered to be pollution data and therefore does not have to be published.

What are the licence administrative fees for large-scale wind farms, and how do these compare to fees for general electricity works?

The Protection of the Environment Operations (General) Regulation 2009 has been amended to prescribe administrative fees for wind farm licences under Schedule 1. In absolute terms, wind farm fees are considerably less than the fees for general electricity works, including traditional coal, diesel and gas fired generation. The administrative fees use the same fee thresholds (in gigawatt hours) in terms of annual generating capacity. The table shows annual licence administrative fees for wind farms (compared to fees for general electricity works).

Licence fees are calculated based on fee units multiplied by the fee unit amount, which is currently $113. The fee unit amount is indexed annually in accordance with clause 9 of the POEO General Regulation.

How many wind farms will fall into each proposed fee tier?

What is the conversion of MW capacity to GWh annual generating capacity?

Existing coal- and gas-fired generators are required to convert the MW capacity of their plants to GWh in order to determine which fee ‘tier’ they fall into. This in turn determines the annual licence administrative fee paid to the EPA. The calculation used is a simple conversion of MW to GWh, which does not consider the capacity factor of the generator

• [MW capacity × 24 (hours in a day) × 365 (days in a year)] ÷ 1000 = GWh annual generating capacity

Wind farms will calculate their annual generating capacity in the same manner. For example, the calculation for a 45MW wind farm is

• [45(MW) × 24(hrs) × 365(days)] ÷ 1000 = 394.2 GWh annual generating capacity

On the basis of this calculation, this wind farm would fall into the lowest fee tier (<450 GWh annual generating capacity) and would be required to pay $1,695 in licence administrative fees each year.

How has the low capacity factor of wind farms been taken into account in the fee structure?

The lower fee (in absolute terms) for wind farms takes into account the fact that wind farms have a much lower capacity factor. Wind farm fee units have been prescribed so that the effective cost per GWh produced (based on capacity factor) for a wind farm is similar to that of coal- and gas-fired generators. The EPA’s analysis assumed an average capacity factor of 30% for wind farms compared to 85% for coal- and base-load gas.

Why don’t licence administrative fees incorporate the ‘polluter pays’ principle?

Licence administrative fees are not designed to encourage pollution abatement, but rather to reflect the resources required for the EPA to regulate the activity.

The NSW and Commonwealth governments have implemented a number of other mandatory schemes designed to encourage pollution abatement by applying the ‘polluter pays’ principle; that is, those who generate pollution and waste should bear the cost of containment, avoidance or abatement’ (Section 6(2)(d)(i) Protection of the Environment Administration Act 1991).

Examples in NSW include the Load Based Licensing (LBL) Scheme and the Hunter River Salinity Trading Scheme, both of which are administered by the EPA. More recently, the Commonwealth Government has introduced the carbon pricing mechanism, which is a greenhouse gas emissions trading scheme.

Wind farms are not be required to participate in any of these mandatory schemes, while coal- and gas-fired electricity generators are required to participate in one or all of them (depending on circumstances).

Are wind farms required to pay load based licensing (LBL) fees?

No. As stated above, wind farms will not be subject to LBL fees as they have no assessable pollutants. For comparison, the three biggest coal-fired electricity generators in NSW each pay fees of between $2 million and $5 million per annum.

How does the State significant development assessment system interact with the EPA’s licensing regime?

The development assessment stage is crucial to ensuring that environmental issues associated with wind farms are appropriately considered and dealt with through appropriate siting and design. The EPA plays a key role in the development assessment stage for State significant wind farms.

The State significant development (SSD) assessment system under the Environmental Planning and Assessment Act 1979 is explained by the Department of Planning and Infrastructure. Where an environment protection licence will be required for the proposed development to operate, the Director-General of the Department of Planning must consult with the EPA when preparing environmental assessment requirements (refer to the process flowchart) and when making a determination about the project proposal.

Following planning approval, the EPA cannot refuse to issue an environment protection licence if it is necessary for carrying out the approved SSD and the licence must be substantially consistent with the development consent. Importantly for wind farms, this means that noise limits prescribed in the development consent will be transferred directly into the environment protection licence. Similar provisions apply to Part 3A transitional projects.

What is the role of the consent authority?

The consent authority is responsible for determining applications made under the Environmental Planning and Assessment Act 1979 for development consent. If consent is granted, the consent authority is responsible for enforcing the consent conditions.

Will the EPA’s wind farm licensing be consistent with the planning approval?

Yes. An environment protection licence issued by the EPA must be substantially consistent with the development consent, as required under Part 4 of the Environmental Planning and Assessment Act 1979. This is a requirement up until the first licence review (see next questions). Also see the question: how does the State significant development assessment system interact with the EPA’s licensing regime?.

What is the purpose of a licence review?

Section 78 of the Protection of the Environment Operations Act 1997 requires that licences be reviewed at least once every 5 years. The licence review process provides another opportunity for the EPA to address any environmental performance issues that may have arisen since the licence was issued, in consultation with the licensee and other stakeholders.

The EPA has a range of tools that it can use at any time in the event that an environmental matter needs to be addressed that is not regulated by the environmental performance requirements specified in the licence.

How does the consent authority and the EPA deal with duplicated roles and responsibilities?

There is some overlap between the conditions of consent and environment protection licences. For example, the consent may contain noise limits for a wind farm, which are mirrored in the licence.

However, if an issue arises (e.g. an alleged non-compliance with a noise limit), it is not necessary for both the consent authority and the EPA to take action.

Generally, where an environment protection licence is in place, the EPA will deal with any environmental issues that arise as lead environmental regulator. Environment protection licences are a more flexible and effective tool for regulating environmental issues compared to development consents. However, the consent authority (usually the Department of Planning and Infrastructure (DP&I)) is also able to respond if it is necessary and warranted.

When deciding what regulatory action to take in a given situation, the EPA considers a range of factors and exercises regulatory discretion. In terms of the community making complaints, they may direct these to either the consent authority or the EPA’s Environment Line (131 555). Protocols are in place to refer complaints to the responsible regulator.

Can annual reporting requirements be aligned?

Yes. Licence annual reporting periods are based on the licence anniversary date. However, licensees can apply to have their annual reporting period adjusted to be aligned with the reporting requirements under their planning approval (or for any other reason), for a nominal fee of $226. Contact the EPA’s Regulatory and Compliance Support Unit on 9995 5700.