The transition to renewable energy in Australia is well underway. A range of factors has spurred this, but particularly the urgency for the world to move away from coal and other fossil fuels to reduce the increasing impacts of climate change.

Investment by governments in the sector has been significant, highlighted at the federal level by the Future Made in Australia plan, and in various states by the establishment of renewable energy zones (REZs). However, the transition has not been smooth in all areas. In some places, investment and delivery of renewable energy projects have faced substantial opposition at the local level.

Renewable energy projects can be significant in terms of their size, cost, and impact. This is particularly the case when renewable energy infrastructure is introduced in small or rural communities, where such investment represents a substantial change to their local area. Importantly, it has not always been evident where the benefits (and profits) from these projects ultimately go, creating uncertainty and the potential for conflicts for communities and local governments to navigate.

NSW Renewable Energy Planning Framework: Benefit Sharing Guidelines

The NSW Government has recently introduced its Renewable Energy Planning Framework to provide further clarity for all stakeholders in the sector. The stated purpose of the Framework includes:

• Ensure the development consultation is both meaningful and transparent.
• Ensure that communities benefit from renewable energy investments.
• Provide clear planning controls, objective development standards and guidance around understanding impacts.
• Provide support for landowners in navigating development and more transparent information about long-term costs.
• Enable faster and more consistent decision-making on proposals, aligning the level of assessment with the level of risk associated with a project.

The Framework consists of six guidelines and an accompanying set of assessment tools. Four of the guidelines—the Wind Energy Guideline, Transmission Guideline, Hydrogen Guideline, and Large-Scale Solar Energy Guideline—relate to specific types of renewables infrastructure. The other two policies—Benefit Sharing Guideline and Private Agreement Guideline—apply across all project types and outline expectations for administrative arrangements.

One of the most important elements of the Framework for local government is likely to be the Benefit-Sharing Guideline. The Guideline will be implemented through the Environmental Planning and Assessment Act 1979 (EP&A Act), and proponents will need to consider it when preparing proposals and Environmental Impact Statements (EIS), alongside the other type-specific guidelines in the Framework. This includes the definition of expected financial benefit sharing rates per megawatt-hour for each of the relevant renewable infrastructure types, which are then used to fund the delivery of community benefits, such as through community facilities, infrastructure, and programs.

The Guideline applies to State Significant Development (SSD) and Critical State Significant Infrastructure (CSSI) projects, both within and outside of the designated REZs. As there are existing schemes concerning compensation associated with the establishment of transmission lines for energy infrastructure, the Guideline also only applies to solar projects, wind projects, and, on rural land, battery energy storage systems (BESS).

The establishment of the Guideline recognises that:

• The benefits that flow from investing in and delivering renewable energy projects are not evenly distributed.
• Compared to other sectors, renewable energy projects typically employ fewer people on an ongoing basis, resulting in communities benefiting comparatively less in terms of new employment generation.

Community benefit sharing initiatives have been adopted for individual projects and as policy by some councils, an example being Uralla in NSW’s Northern Tablelands. However, the practice is not currently uniform, and models for realising community benefits differ.

Case study: Uralla Shire Council – Renewal Energy Community Benefit Policy

Adopted in 2023, Uralla Shire’s community benefit policy states that the Council will utilise the voluntary planning agreements available under the EP&A Act to deliver community benefits beyond those required to mitigate adverse impacts from renewable energy infrastructure. The policy aims to ensure that off-site benefits from renewable projects are generated for the community, the wider community shares in these benefits, and that the costs and benefits are equitably distributed—both within the community and across generations.

The policy sets minimum community benefit thresholds for solar and wind energy developments, at $850 and $1,050 per MW per annum, respectively, which are paid for the life of the development and indexed to the CPI.

Among the purposes to which the funding generated can be applied are the enhancement of public spaces, facilities for public recreation and community use, affordable housing, works to rehabilitate or conserve biodiversity values, or other purposes that Council considers to be in the public interest. While Council has responsibility for managing the funds, a Community Advisory Body provides advice on the projects to which funding is allocated.

Uralla’s approach demonstrates how even smaller councils can structure benefit-sharing effectively using existing planning mechanisms.

The Guideline outlines a series of six benefit-sharing principles, which are presented below.

NSW Benefit-Sharing Guideline principles

Source: NSW Government, Benefit-Sharing Guideline, November 2024.

The overall principle behind the distribution of benefits in the Guideline is that funds should be targeted to the people and communities that are most likely to feel the effects of the renewable energy development—on a ‘balanced consideration’ of the impacts experienced and the presence and size of population centres and communities, and not limited to the boundaries of a single LGA. Any benefit sharing arrangements agreed to are also expected to be reported publicly (including a register outlining the specifics of the funding and resulting programs) in the interests of transparency and clarity for the community.

The Guideline sets out two benefit sharing arrangements, which apply at different scales:

• Neighbourhood benefits: for individual landowners, businesses, small neighbourhoods and villages in the direct vicinity of a proposal, such as minor capital works, neighbourhood community facilities, local events/ clubs sponsorship, and subsidies.
• Local community benefits: for the local government area (LGA) scale, either council-run or community-led.

Regional benefits (e.g. across multiple LGAs) are not subject to the Guideline, with benefits at this scale coordinated through the NSW REZ Community and Employment Benefit Program.

Although all of these will be of interest to local government, the local community benefits arrangement may have the most significant implications for councils. These are identified as being targeted to LGAs, representing a generally greater value and number of beneficiaries than is the case for neighbourhood benefits. Suggested examples of potential programs for which community benefit funds could be used include:

• Recurrent costs of infrastructure, services, and facilities
• Additional or improved open spaces, public facilities or infrastructure
• Funding or works in-kind for neighbourhood community facilities (with an example being the installation of solar panels)
• Initiatives partnered with local organisations, such as scholarships for specific skill courses
• Sponsorship of community events or local groups.

The Guideline recommends that local community benefits are primarily administered by councils. Alternatively, benefits can be delivered through a project proponent in partnership with community organisations, if appropriate. However, the Guideline also suggests that council should administer at least 85% of the benefit-sharing value.

For council-managed programs, it is noted that this presents an opportunity to consolidate funds across multiple projects, thereby increasing the potential impact of the benefits. The Guideline recommends that councils use a formal planning agreement (i.e. subject to the EP&A Act) to create a community benefit fund. While being council-run, the community is also expected to be at the forefront of decision-making for the delivery of benefits, and to utilise committees and community groups to ensure this. Importantly for local government, programs resulting from the local community benefits arrangement, which include capital works that will ultimately become the responsibility of councils (e.g., ownership and/or management of an asset), must be implemented as a council-managed program. The practical implications of this for councils will be interesting to observe as the Framework is implemented.

There is also an expressed objective of ensuring that local Aboriginal communities benefit, particularly through support for economic participation (both direct and indirect), scholarship programs, and the sponsorship of events, as well as the provision of additional or improved community facilities.

NSW is not alone in its efforts to provide more clarity around planning and the benefits for communities from the roll-out of renewable energy infrastructure and REZs.