Setting the scene: The path to a final investment decision
Renewable energy projects are often a leap of faith for developers, requiring significant upfront investment of time and money before the final investment decision (FID).
Projects must simultaneously progress four integrated workflows: securing land, environmental assessment and development approval, optimal layout design and engineering, and grid connection agreement. Changes and adjustments in any one workflow can lead to rework in others, increasing costs and delaying progress.
While interconnected, each workflow poses its own set of challenges.
1. Securing land
Securing access to investigate potential sites and negotiating rights to develop an area — through a long-term lease or outright purchase — from the landholder is usually the first hurdle for renewable energy projects. Developers must navigate and address the concerns of multiple stakeholders and interest groups on an ongoing basis while limiting their impact on the design and impact assessment workstreams.
Key pain points in the process include:
1
Navigating a mix of federal, state, and local regulations and complying with land use and zoning restrictions.
2
Addressing the impacts of construction and the ongoing project with local landholders.
3
Negotiating access agreements and fair compensation for short- and long-term property impacts.
4
Working through any native title claims and Aboriginal land rights considerations.
2. Environmental assessment and development approval
Renewable energy projects go through a rigorous environmental assessment process that evaluates their impact on biophysical and social factors, aiming to strike a balance between environmental and social protections and broader social and economic priorities. Balancing efficient and robust environmental assessment while maintaining a flexible layout is key to obtaining constructable development consent.
Key pain points in the process include:
1
Conducting impact assessments in accordance with highly prescriptive guidelines or uncertain and evolving regulator expectations.
2
Prioritising investment in extensive fieldwork, monitoring and modelling when design confidence is still low.
3
Program delays and costs due to stakeholder needs or due to the identification of sensitive environmental features requiring avoidance.
3. Layout design and engineering
Design confidence generally increases as projects pass through development stages and site constraints — including land use and zoning, environmental and heritage constraints — are progressively identified and risks resolved. In the past, high-level concept designs with minimal technical detail were sufficient to obtain development approval. However, regulators have steadily increased expectations for design confidence at the environmental impact assessment stage. A level of specificity resembling detailed designs is now required. For developers, there is mounting pressure to get it right the first time.
Key pain points in the process include:
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Increasing up-front investment for a more detailed design to meet regulatory expectations, often before viability is fully confirmed.
2
Producing plans with a higher degree of design certainty at the environmental impact assessment stage, while maintaining enough flexibility to respond to new findings/ needs.
3
Avoiding overly rigid designs that can result in onerous approval conditions, delayed construction, or costly post-approval redesigns.
4. Connecting to the grid
Technical modelling and grid connection studies evaluate the feasibility and potential impacts of integrating new renewable energy projects into the grid and are mandated by the regulator. Regulatory approval and a signed connection agreement with the relevant network service provider are pre-requisites for connecting a facility to the grid.
Key pain points in the process include:
1
Absorbing time and cost impact of delays caused by bottlenecks when new project proposals outpace the approval process.
The need to reduce time to market while navigating the challenges and risks outlined above underscores the need for continued innovation and process improvement.
The following articles explore several practical approaches to improve approval timelines and outcomes.
Next: Fostering a culture of cross-discipline information sharing
Navigating the processes above relies on accurate and timely information and a high level of confidence in the consultants you’ve engaged to get it right, first time. Effective cross-discipline alignment, information sharing and collaboration supports both requirements.
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