Overlapping resources and renewables developments – can these projects co-exist?
Approximately 95% of Australia’s landmass is uninhabited, giving the impression that little competition exists for the development of this land. In reality, vast areas of the Australian continent are endowed with valuable resources that are critical for the development of new ‘clean’ technologies, and this same land is often also ideal for other competing land uses, including agricultural pursuits or renewable energy developments. This predicament is more frequently leading to renewable energy operators scoping out land for wind and solar farm projects that overlaps with existing exploration tenements for mineral and gas resources.
These circumstances have led to various challenges and opportunities as both industries seek to use the land effectively while balancing their respective commercial goals. Some of the key issues we’ve been working through include conflicting land use rights under the current legislative regimes, lack of clear government policy regarding priority industries, and securing access to the constrained electricity network. However, many companies are also exploring ways to jointly develop renewable energy projects and extract minerals from the same land to achieve the highest and best use of the land.
Mining and petroleum rights in Australia
A mining or petroleum tenement, granted by a state or territory government, will generally allow the titleholder to:
- prospect or explore for a certain class or classes of mineral or petroleum (including conventional and coal seam gas, both onshore and offshore); or
- exclusively mine for minerals or produce petroleum over a specified area.
A titleholder possesses a unique form of land tenure, granted by the relevant legislation, which affords the titleholder a right to enter upon and explore or mine private land. Generally speaking, private landowners are entitled to compensation for such disruption, and may agree on the reasonable terms of the titleholder’s entry upon their land, but ultimately any objection raised by the private landowner may be overcome in arbitration or by a court at the request of the titleholder.
For example, the New South Wales Mining Act provides that a titleholder may undertake exploration activities pursuant to an exploration licence, but only if it has entered into an access arrangement agreed with each affected ‘landholder’. The definition of ‘landholder’ in New South Wales includes lessees, mortgagees and some other interest holders registered on title to the land. This may or may not afford a right to compensation to a renewable energy developer who is also intending to develop a renewable energy project on that same land. In our experience, whether the interests of a renewable energy developer are protected largely depends on the progress made in negotiations with the relevant private landowner, and the nature of any agreements in place.
Mining titleholders are generally not required to consult with a renewable energy developer, who often has no entitlement to consultation or compensation under the relevant mining legislation.
Our recent experience suggests that this gap in regulation is causing confusion among developers in both industries, with neither party wishing to impact the other, nor have their own project affected by the activities of others. There remains an opportunity for additional regulation on how multiple ambitious land users can move beyond competition for the same patch of land, to sustainably co-exist and perhaps even complement each other.
Arrangements between renewable energy operators and landowners
In contrast to the mining industry, there is currently no dedicated form of land tenure afforded to renewable energy developments in Australia. These projects – wind farms, solar installations, and other new forms of energy generation and storage – currently rely on more traditional land tenure arrangements, including leases and licences. These agreements usually provide the operator with rights to use a landowner’s land for a fee, conduct feasibility investigations, and eventually construct a wind farm, solar array or other renewable energy projects on the land.
The challenges of coexistence
The resources and renewables industries both play crucial roles in Australia’s economy, employment landscape and energy sectors, and the limited amount of suitable land for these large-scale projects inevitably means that co-existence and cooperation are essential. Common challenges experienced by developers of overlapping resources and renewables projects include:
- Lines of communication: large-scale projects, whether resources or renewables, involve project developers, investors, private landowners and government authorities. It is important that representatives from all interested parties regularly communicate in good faith to determine how adjacent projects might impact, complement or otherwise affect one another. These lines of communication should be established early to understand indicative project timing and to ensure the efficient use of land.
- Understanding of rights: the myriad of rights afforded by mining legislation around Australia, and a lack of regulation and understanding of how these resource projects are able to co-exist on land occupied by renewables infrastructure, means a complex task that often requires specialist advice and guidance.
- Correct documentation: where adjacent projects are required or desire to co-exist, it is extremely important to ensure each party’s rights and obligations are documented, and risk and liability is allocated appropriately between those involved.
Opportunities for cooperation
Notwithstanding some challenges, the proximity of resources and renewables projects offer several practical and financial benefits. For mining companies, renewable energy installations alongside their mining operations offer accessible and affordable energy generation and storage capacity, allowing them to reduce mine operation costs and emissions. For renewable energy developers, nearby mines can represent guaranteed energy offtake customers, and often allows access to established roads and other ancillary infrastructure.
As always, these arrangements require careful consultation, negotiation and documentation, a process which is not currently aided by appropriate regulation in most circumstances. All parties involved need to be informed about their rights under the relevant state or territory’s legislation, and remain collaborative to ensure the mutual success of their own and overlapping projects.
For more information on this topic, or to explore other articles from our 2023 edition of Emerging Issues for the Australian Energy and Resources Industry, click here.
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.