PoweringWA has released a Consultation Paper on the Draft Guideline on Community Benefits for Renewable Energy Projects (Guideline). The Guideline sets out parameters for negotiating Community Benefit Agreements with communities that host renewable energy projects. The Guideline will likely form a benchmark for Community Benefit Agreements in WA in the future. Consultations are now open.
The Guideline is designed for use in large-scale, grid-connected renewable energy generation and storage projects, especially in the South West Interconnected System (SWIS).
Proponents recognise that effective community engagement is critical for social licence in renewable energy projects. The Guideline aims to establish a clear and consistent baseline framework for negotiating Community Benefits Agreements across WA. Once adopted, the Guideline will be a useful resource for project proponents wishing to deliver effective community outcomes, and for communities to better understand the types and amounts of benefits available.
Key takeaways and thoughts on the Guideline
- The Guideline, once implemented, will not be binding. Instead, it will be a reference for discussions on fair and equitable arrangements. It will support a project in the planning, regulatory and connection processes and eligibility for Commonwealth Government support such as the Capacity Investment Scheme. For this reason, it is expected that the Guideline will come to form the benchmark.
- Broad principles will apply to solar, wind, and battery projects across WA, particularly those intending to connect to the SWIS. The Guideline acknowledges that a tailored approach might be needed for the North West Interconnected System ‘due to different network characteristics and community contexts.’
- The Guideline sets out benchmark value suggested ranges for benefits per megawatt of the project. It notes that the value should be tailored based on a range of criteria and impact.
- Overall, having greater transparency and benchmark setting will be useful for both project proponents and communities. With a clearer sense on what is available and reasonable, parties should be able to reach better agreements more quickly.
- The Guideline flags that PoweringWA also intends to develop documents and case studies to support the implementation of the Guideline. It would be useful to see any proposed documents as part of the consultation period –especially if a template form is proposed – this is currently unclear.
- Governance is important, especially if a fund operates over a period of time with competing calls on its benefits. If the trend is towards longer term arrangements, project proponents will want to know that funds are properly applied and that the funds are not applied to causes that may damage the reputation of the project proponent. It is not clear that the governance arrangements proposed give enough detail on this.
- A thorough community engagement process can add significant internal costs. It can be difficult if a project is at an early stage and it is not yet clear whether it will proceed. If a template document is developed this could reduce costs.
- It is not clear if the measurement and reporting phases are proposed to be the responsibility of the project proponent during the project lifecycle, or if it is proposed that they are divested to the administrator of the funds as part of the governance arrangements. This is not clear. This responsibility could add significant costs.
- The Guideline proposes that Community Benefits are tied to the project and not to the proponent. Project proponents may wish to start building this into their documents. Any documents for the sale of the project or transfer of the lease will need to include a covenant to be bound by the scheme. There may also be an avenue for registering the Community Benefit arrangement as a positive covenant on the title to the land.
- Project proponents may want to provide feedback on the Guideline. Submissions can be sent to poweringwa@demirs.wa.gov.au
- We have set out below a short summary of the Guideline.
What are Community Benefits?
The Guideline notes that, by comparison with other significant projects, renewable energy projects involve large assets over significant areas of land, but do not drive the same level of ongoing economic activity after construction as other projects.
Community Benefits deliver positive economic and social outcomes to the broader community rather than direct payments to landholders or neighbours.
There is currently a wide range of Community Benefits available, with different features. They can be financial or non-financial and be one-off or over the medium or long term. There can be significant variation in the value of benefits and administration and governance arrangements.
Examples include:
- Legacy funding and grant initiatives
- Sponsorship
- Community infrastructure
- Innovative financing and co-ownership.
Principles for Community Benefits
The Guideline sets out some best practice principles for Community Benefit arrangements. They should be:
- appropriate to the project size and impact on the host community
- provide opportunities for lasting economic benefits
- equitable and inclusive, to include the affected community and distribute benefits equitably
- legacy building, to deliver lasting positive impact
- bespoke to the specific needs and concerns of the host community.
Benefit value guidelines
Although the Guideline recognises that each project is unique, it gives a proposed range for community benefits to be agreed as follows:
- $500 to $1,500 per megawatt per annum for wind projects
- $150 to $800 per megawatt per annum for solar projects,
over the life of the project and indexed to inflation.
The value should be tailored to impact on the community. It can take into account factors specific to the project including:
- population density and number of affected communities
- scale of the project and cumulative impact of projects in the area
- other fees and charges on the project proponent
- impact on amenities in the community
- benefits from the construction phase.
Developing community benefit arrangements
The Guideline sets out best practice principles for project proponents in engaging with community, including:
- engage early and before any development application, engage impacted groups
- deliver inclusive engagement – diverse and equitable
- be responsive to inputs
- engage with Aboriginal people and be responsive to their inputs and influence
- be accurate, transparent and accessible
- be aware of expectations, build long term legacy
- measure broadly and regularly and report accurately and transparently.
Benefits for Aboriginal Western Australians
The Guideline refers to the principles and actions in the First Nations Clean Energy Strategy for benefits to First Nations peoples. It also flags the separate rights and responsibilities project proponents have to First Nations people under cultural heritage and native title laws, and the specific Indigenous Land Use Agreements. Nothing in the Community Benefit arrangements overrides these separate obligations.
Governance and administration
The Guideline sets out some models that can be adopted, including:
- Local Government Administered
- Community Trust Fund
- Local Government-led Community Trust Fund.
Factors that need to be considered include the capacity of the local government to administer funds (especially if it is small), complexity, consultation and decision making on release of funds.
The Guideline acknowledges the diverging views on the start date for funding:
- Communities often want benefits to start during construction
- Project proponents cannot fund benefits before the project is generating revenue.
The Guideline does not offer a fixed view on this point, just that parties discuss and both perspectives are taken into account.
The Guideline suggests that benefits should flow during the life of the project and be tied to the project, not the project proponent.
Reporting and review
The Guideline emphasises the importance of reporting over time and reviewing and updating for value and effectiveness during the project lifestyle.
It also suggests setting clear evaluation objectives, identifying key factors for measurement of effectiveness and evaluation with diverse community groups.
Other considerations
The Guideline acknowledges other considerations such as:
- whether community benefits should flow to nearby communities or regional centres
- the impact on neighbours and the relationship between the landholder and their neighbours –suggestions for neighbour agreements are outlined in the Australian Energy Infrastructure Commissioner’s Observations and Recommendations
- the role of rates – project proponents already will incur rates and cumulative impact of this and other levies along with any community benefit funding
- development benefits – lasting benefits can derive from locals skills, job opportunities and housing and a considered project development approach within a flexible community benefit arrangement can deliver these.
Other resources
The Guideline acknowledges that there are already a number of resources in this area, including at a national level and provides links to these.
See more here.
