Social License – the key to electricity network development in Australia

Social License the key to electricity network development in Australia

As Australia’s ageing coal-fired generation is retired, it will increasingly be replaced by wind and solar in different locations, often long distances from the point of consumption. New and more advanced transmission networks and interconnectors will be required to move the power around the system, both locally and interstate. Increasing capacity, stability and resilience of transmission networks and interconnectors can lead to more customers accessing cheaper and more reliable electricity.

While the need for an effective and efficient transmission network to transfer energy generated in renewable energy zones to the countries power grid is recognised, it is fundamental the impacts on environment and communities be considered as a key piece of the puzzle.

Electricity consumers require a more resilient transmission network that will increase the supply of low-cost renewables, balance intermittent wind and solar resources, help meet diverse demand peaks and insure against the increasing unreliability of coal-powered generators. At present, however, investment in transmission networks is being held up by a complex regulatory regime that subjects transmission projects to excessive delays. Push-back from communities, concerned about the impact of overhead energy transmission is also becoming recognised as a major contributor to delays with escalating cost impacts on projects.

Community opposition to large-scale overhead transmission networks is rapidly emerging and signals a new challenge that will be faced by every new transmission project unless an enhanced regulatory framework is adopted, and community stakeholders are allowed to actively participate in the decision-making process. This opposition is not localised and is emerging across our nation.

Genuine stakeholder engagement processes

Discussions around this topic are certainly not new. As recently reported by Energy Networks Australia:

The common thread through all these reports is that we need to develop a balanced approach to community benefit and compensation issues. In fact, Re-Alliance is seeking to clarify with the AEMC and/or AER whether community benefit sharing can be funded under the current National Electricity Law (NEL) and National Electricity Rules (NER) including the RIT-T. RE-Alliance have also requested that the AER and the Australian Energy Infrastructure Commissioner work together to formalise advice regarding what level of landholder compensation is acceptable under the RIT-T.

While this is promising news for projects that cannot avoid impacts on existing land use, it is a band aid solution that does not address the cause of the problem, gaps in network planning policy and lack of social license.

By understanding the risks and potential impacts during a project’s inception, project delivery can be more robust, streamlined, and purposeful. Route selection can avoid strategic land use and sensitive areas that may trigger an Environmental Impact or EPBC Act referral. Involving the community early in the route selection process, avoiding selection of multiple corridors and adopting community supported guidelines will reduce project delays.

There is as an opportunity now to develop a genuine stakeholder engagement process that seeks to understand and avoid socio-economic and environmental impacts during a project’s inception rather than compensating for oversights made during the planning phase. Adopting a social license framework will streamline infrastructure investment, will expedite delivery, and will increase the overall net benefit to Australian economy and energy consumers.

Considering the Triple Bottom Line

General practice for new high voltage overhead transmission lines is to route in straight lines and turn corners as few times as possible without consideration of socio-economic or environmental concerns. This generally satisfies the RIT-T framework, the purpose of which is to identify the transmission investment option which maximises net economic benefits and, where applicable, meets the relevant jurisdictional or Electricity Rule based reliability standards.

A fundamental concern with the current regulatory framework applied to the RIT-T process is that the net economic benefit equals the market benefit less costs, it does not consider socio-economic or environmental disbenefits, the Triple Bottom Line (TBL).

Forty years ago, transmission planning policies did not fully appreciate ecological, biological, social, economic, cultural or communities impacted by electricity transmission lines. Instead, project proposals stumbled upon regulatory intervention, community opposition, and last-minute litigation because impact considerations had been left until the final siting phase. Adopting this historical framework to the new age of transmission will result in reactive planning and mitigation measures rather than a proactive approach.

Accounting for the full range of obligations, which include engineering resilience, safeguarding reliability, reducing carbon emissions, maximising economic benefits, facilitating renewable generation technologies, and avoiding unnecessary impacts on landscape and the environment, will be critical. There is much work to do, especially when accounting for socioeconomic and environmental concerns. Recognising the need for public and environmental policy and developing new methods to apply this early in project development will minimise risks to project investors, better serve the environment and public interest.

The Importance of Route Selection

Transmission network construction is a complex engineering process. Routing a transmission line is much more difficult than routing any other public infrastructure. The current regulatory framework and process of integrated assessment used to inform decision making by all authorities (Ministers, local government, and statutory authorities) is time consuming and does not always produce satisfactory results.

Operationally, construction of a large-scale transmission line can be completed in two or three years (depending on length). Unfortunately, years can be added to a project due to complexities of the current approval process, strong opposition from community groups, extensive community consultation, environmental assessments, potential for litigation, and project approvals. In some cases, projects may not proceed at all.

To simplify the process, the priority when planning a transmission line route should be to avoid land use conflict in the first place. Considering the different characteristics of essential elements of energy transmission, an approach to transmission route design should prioritise four primary aims:

  1. Use of existing Transmission Corridors or Rights-of-way
  2. Avoid or minimise socio-economic and land use conflict
  3. Avoid or minimise environmental impacts to conserve and enhance the environment
  4. Ensure the Triple Bottom Line is always considered

Route selection should try to avoid, minimise, or offset impacts on important environmental, social, cultural, landscape values and strategic land use conflict by utilising existing rights-of-way as a priority. Use of underground HVDC technology should also be considered as a preferred transmission option to avoid community and environmental impacts.

Under current regulatory framework, route assessment, planning, community consultation, cumulative impact avoidance and mitigation measures are dealt with by the network project proponent. This is an often-lengthy process impacts the economy, future energy infrastructure investment, communities, and energy consumers.

Establishing a Social License

The notion of a social licence to operate has become widely accepted, particularly in recent years. While a social licence is intangible, its practical, financial, and even legal implications are significant.

The social licence to operate is not something that, once earned, is fixed and unchanging. It varies over time in response to changes in the community and developers' behaviour. Different parts of a community might display different levels of acceptance to transmission route options. The social licence is therefore something that must be established then maintained every day; it is a goal towards which the industry must constantly strive.

The social licence helps to understand public sentiment toward energy transmission networks and guides actions that garner community acceptance and approval. It is therefore underpinned by the assumption that only genuine dialogue and willingness to understand and negotiate community expectations will enable successful network development in the long-term.

The social license to operate is made up of three components: legitimacy, credibility, and trust.

  • Legitimacy: this is the extent to which an individual or organisation plays by the 'rules of the game'. That is, the norms of the community, be they legal, social, cultural, formal, or informal in nature
  • Credibility: this is the individual or organisations capacity to provide true and clear information to the community and fulfil any commitments made
  • Trust: this is the willingness to be vulnerable to the actions of another. It is a very high quality of relationship and takes time and effort to create.

Transmission developers, regulators, market operators, relevant peak bodies and government need to partner with community in every aspect of planning, development and decision making, including the development of sound alternatives and the identification of a preferred solution. Community engagement is key to the success of any major infrastructure project and is most successful when it establishes and delivers on clear expectations and gives people the opportunity to truly influence decisions.

To meet the increasing demands of renewable energy transition, well informed community stakeholders should be able to self-nominate to actively participate in the decision-making process and be involved in the planning phase of electricity transmission networks. This will help reduce land use conflicts by:

  • Identifying potential transmission corridors and substation sites
  • Identifying areas where undergrounding is essential and overhead transmission is acceptable
  • Defining setbacks from materially populated township settlement boundaries, habitable dwellings, zones, overlays, buffers, culturally significant areas, and strategic agricultural/farmland

Developing constructive relationships and trust is most effective when it starts early, ideally during a project’s inception. Having routing and siting decisions guided by community through a more consistent rationale will be by far the greatest benefit to any electricity transmission project, particularly when considering the consequences of non-engagement. Community supported framework will produce more consistent, defensible, and transparent energy transmission route decisions.

Transmission planning increasingly will be driven by a fuller range of public policies, social license, and priorities, both state and federal. Policy needs to provide the stimulus to transmission planners to make those objectives a significant part of the planning process. It is vital we understand that public policy objectives need to include environmental and energy policy objectives. The number of state and federal initiatives to imbue land use and environment considerations earlier in the planning processes needs to grow considerably. The convergence of these state and federal trends, as well as new modelling tools and analytical methodologies should be implemented by planning authorities across the nation.

It is time to use the best information available by engaging with landholders and communities to inform infrastructure planning and to strive for those solutions that are high performers on energy supply, social, economic and conservation impact.

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