The job cost of the Ballieu governments wind-farm policy

Blown Away

Brian Tee MLC, Shadow Minister for Planning, Sustainable Growth Major Projects and Infrastructure March 2013

Executive Summary
In 2011, the Baillieu Government made significant changes to the planning rules for wind farms, banning development in some of Victorias 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 Governments 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 Total jobs created through the construction of 3413 MW wind farms Total jobs created through the operation of 3413 MW wind farms 10955 853 Rest of VIC 23447 443

Even in the few areas where wind-farm developments are still possible, the Baillieu Governments 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 Governments wind farm policy. This report has analysed how many jobs these new projects would create:

Local Total jobs created through the construction of seven new wind farms Total jobs created through the operation of seven wind farms 7209 561

Rest of VIC

15430 291

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

Blown Away: The job cost of the Ballieu governments wind-farm policy

Blown Away
Wind farms have the capacity to make a significant contribution to Victorias energy mix while driving job creation and investment in rural communities with no cost to State government whatsoever. However, the Baillieu Governments 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 Governments 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 governments wind-farm policy 2

Jobs for local areas & beyond

Table 1 annual jobs required per 50MW of construction Direct employment Production and consumption induced employment Total employment Local 48 112 160 Rest of VIC 99 244 343

Table 2 ongoing operational jobs required per 50MW (annual) Direct employment Production and consumption induced employment Total employment Local 4 8 12 Rest of VIC 3 4 7

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 Victorias overall unemployment rate. Wind farms provide an opportunity to significantly increase employment in regional areas, and provide on-going highly skilled work. Region Barwon-Western Central Highlands - Wimmera Loddon-Mallee Victoria Source: ABS, 2013 Unemployment rate 6.3% 6.4% 6.2% 6.1%

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 farms Eg. 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 communities Land 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 nonrainfall dependent income for farmers. These payments can be reinvested back into farms and regional areas. Blown Away: The job cost of the Ballieu governments wind-farm policy 3

Difficult times for Victorias wind industry

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 applications

There 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 Governments 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 authoritys 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.
1 The Renewable Energy Target (RET) requires that 20 per cent of Australias 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.

Blown Away: The job cost of the Ballieu governments wind-farm policy

Approved or stalled?
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 governments 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 Direct employment Production and consumption induced employment Total employment Local 3276 7679 10955 Rest of VIC 6758 16689 23447

Table 4 permanent jobs created through ongoing operation of 3413 MW currently at risk in Victoria Direct employment Production and consumption induced employment Total employment Local 307 546 853 Rest of VIC 170 273 443

Blown Away: The job cost of the Ballieu governments wind-farm policy

Putting out the no entry sign

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 Direct employment Production and consumption induced employment Total employment Local 2156 5053 7209 Rest of VIC 4447 10983 15430

Table 6 jobs created by ongoing operation of 2246 MW of mooted wind farms Direct employment Production and consumption induced employment Total employment Local 202 359 561 Rest of VIC 112 179 291

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.

Blown Away: The job cost of the Ballieu governments wind-farm policy

Appendix 1 methodology and project list

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 Lal Lal Berrimal Crowlands Berrybank Mortlake Ararat Winchelsea Yaloak South Stockyard Hill Moorabool Portland wind farm (Stage 4) Mount Gellibrand Bald Hills Salt Creek/ Woorndoo Hawkesdale Ryan Corner Woolsthorpe Penshurst Drysdale Newfield Dundonnell Cherry Tree TOTAL

Company West Wind Energy Acciona Energy Pacific Hydro Union Fenosa Acciona Energy RES International Power Pacific Hydro Origin Energy West Wind Energy Pacific Hydro Acciona Energy Mitsui & Co Aust. NewEn Australia Union Fenosa Union Fenosa Wind Farm Develmt RES Wind Farm Develmt Acciona Energy NewEn Australia Infigen Energy

Location Ballarat Charlton Ararat Mortlake Mortlake Ararat Geelong Ballarat Ballarat Ballarat Portland Colac Melbourne Ballarat Port Fairy Port Fairy Woolsthorpe Hamilton Purnim Port Campbell Mortlake Seymour

Total (MW) 131 24 141 247 76 248 28 29 471 300 54 189 104 30 62 136 40 758 30 15 250 50 3413

Blown Away: The job cost of the Ballieu governments wind-farm policy

Appendix 2 Mooted projects

Project Dundas Tablelands Ben More Murra Warra Darlington Tarrone Barunah Park Willatook TOTAL

Location 20km N of Coleraine 50 km NW of Ballarat 40km N of Horsham 5 km E of Mortlake 25 km N of Port Fairy 50km S of Ballarat b/w Hawkesdale and Orford

Total (MW) 1000 130 200 345 60 250 261 2246

Authorised by Brian Tee 128 Ayr Street, Doncaster VIC 3108

Blown Away: The job cost of the Ballieu governments wind-farm policy