Official Complaint re: Wind Farm Lease Agreements


1st November, 2021

By Wind Farm Living



From: Wind Farm Living <moyne@windfarmliving.com>
Sent: Monday, 1 November 2021 8:11 AM
To: ‘Australian Energy Infrastructure Commissioner’ <aeic@aeic.gov.au>
Subject: RE: Latest Annual Report [SEC=UNOFFICIAL]

Dear Andrew,

Thank you for providing me with the link to your 2020 report.

https://www.aeic.gov.au/publications/2020-annual-report       (scroll down for email trail)

Option to Lease / Agreement to Lease

I note you have watered down the seriousness of the binding nature of the “Agreement to Lease” contracts by referring to these contracts as “Option Agreements”.

An ‘option’ agreement provides the developer with rights to lease some or all of a landholder’s property for the purposes of construction and operation of the project. Such an agreement should be in place for a specified duration of time.

https://www.aeic.gov.au/publications/considerations-landholders-entering-commercial-agreements

Many “Agreement to Lease” contracts, or as you term them, “Option to Lease” do NOT have an expiry date.

I therefore wish to officially complain about the Global Power Generation “Agreement to Lease”, and the Mumblin wind farm “Agreement to Lease” contracts that allow the wind companies, or any new owners of the wind farm business, an unlimited or infinite period to take out a final lease agreement.

With all GPG contracts and this new Mumblin wf contract, there is no expiry date for the “Agreement to Lease” contract. The companies have an unlimited – infinite period to take up the final Lease Agreement stage. Landowners could be left with an unknown contract status for decades, as was the case with the Hawkesdale and Ryan Corner wind farms.

After years of being left in limbo, and after many increases to the size and number of turbines on their land, host landowners are legally bound to agree to whatever the new owner of the wf decides to hand to them. 

  1. How is this acceptable in an industry that is proving to be more socially unsustainable as more wind farms are built.
  2. And why don’t you highlight this unfair tactic in your report?

General Environmental Duty (GED)

I note you made a brief passing mention of the GED in the “Complaints Handling and Emergency Procedures” section.

“Further, the Environment Protection Amendment Act 2018 (Victoria) will come into force in 2020 and may provide additional options for residents to raise complaints about ‘unreasonable noise’ and allege breaches of the general environmental duty that is central to the legislation”.

  1. Why have you not warned Victorian landowners of their criminal culpability under the new General Environmental Laws?
  2. Why have you not given more weight to the serious nature of any breaches of the GED laws?

Decommissioning

I see that you are beginning to sympathise with the landowners as to their inevitable decommissioning liability at the end of the wind farm. 

However, because the industry is unregulated, your comments are as useless as tits on a bull.   (see Decommissioning insert below).

The unregulated nature of the wind industry allows for an “anything goes” approach, and unfortunately your position as a political bureaucrat renders you impotent to stop wind companies “screwing over the hosts” in favour of their offshore investors.

  1. Why doesn’t the wind industry move towards regulation, with a governing regulator powers similar to the Building Control Commission (BCC) or the Red Meat Integrity System (ISC)?

Decommissioning

At the end of the project’s operating life, the clear expectation of all stakeholders is that the wind or solar farm will be decommissioned and all turbines, arrays and other infrastructure will be removed from the property, with the property returned to its original condition – to the extent that can be done.

Most, if not all, planning permits provide that these responsibilities to ‘make good’ rest with the project owner (i.e. the tenant). However, in the event of default or breach of the agreement by the project owner, the liability for decommissioning ultimately may rest with the landowner. Further, the landowner typically does not have title or ownership of the project’s assets and, as a result, may be unable to recover the costs of any decommissioning activities from selling the assets remaining on the property. Project operators/owners may also change many times during the life of the project.

From a landowner’s perspective, it is imperative that any commercial agreement to host assets and the related infrastructure clearly sets out the responsibilities for decommissioning and restoring the site and also provides the mechanism for security of the funding to pay for decommissioning.

A landowner may therefore also wish to seek ongoing evidence that the project owner has the capacity to fund the decommissioning activity and that such funds are properly set aside securely for that purpose. Examples that could be considered include bank guarantees, a sinking fund, a trust fund or a deposit held by the landowner. The Australian Government’s recent discussion paper on a proposed framework for regulating offshore renewable energy infrastructure proposes that developers lodge a decommissioning plan and decommissioning bond as a licence requirement.

While there are no documented examples of costs to decommission a contemporary wind turbine or solar farm in Australia, some published decommissioning plans have calculated costs that are approximately $400,000 per turbine. This cost could increase for larger turbines and could range up to $600,000 per turbine or more.

To put these costs into perspective, the fees earned for hosting the turbine for 25 years could be in the range of $250,000 – $625,000 (depending, typically, on the turbine capacity and when the wind farm commenced operations). It is therefore possible that the costs to decommission a turbine could be equal to or greater than the total income generated for the landowner over the 25 year lease period.

Some proponents are offering to deposit decommission funding into a trust fund, but typically not commencing until year 20 of the project life. There are a number of risks with the timing of such an approach. It would be much more acceptable, and at less risk to the landowner, for the developer to commence funding the decommissioning trust fund from commencement of operations.

We are about to enter a period where, for some of the initial wind farm projects around Australia, decommissioning activities will commence in the next few years. There will likely be increased concerns about this topic, particularly from host landowners. At a minimum, there needs to be clarity surrounding who is responsible for decommissioning, who pays and how those funds are secured to protect the landholder from default.

Wind Farm Living

Moyne Shire, Victoria, Australia

community@windfarmliving.com

A picture containing grass, outdoor object, outdoor, windmill

Description automatically generated

From: Australian Energy Infrastructure Commissioner <aeic@aeic.gov.au>
Sent: Monday, 1 November 2021 12:31 AM
To: xxx
Subject: Latest Annual Report [SEC=UNOFFICIAL]

Dear xxx

Our latest annual report was tabled last week in Parliament and is now available on our website.  Here is the link:

https://www.aeic.gov.au/publications/2020-annual-report

Also, we have updated our guidelines for landholders on matters to consider before entering into an agreement.  The latest version can be found at:

https://www.aeic.gov.au/publications/considerations-landholders-entering-commercial-agreements

You may wish to review and/or share with colleagues.

Best wishes,

Andrew

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