Key details and actions 8 min read
Following the release of the Queensland Energy and Jobs Plan (the Plan) in September 2022, the Queensland Government has revealed draft legislation—the Energy (Renewable Transformation and Jobs) Bill 2023 (Qld) (Draft Bill)—which it intends to use to implement the Plan.
The Queensland Government has taken further action on:
- Sustainable liquid fuels strategy: releasing an 'options and opportunities paper' for stakeholders to have their say on the development of the sustainable liquid fuels strategy, which will set out how the uptake of next-generation future fuels hydrogen and electrification will be accelerated. Feedback can be submitted via email until 23 August 2023. The strategy is expected to be released for consultation in 2024.
- Other legislative frameworks: releasing the Gas Supply and Other Legislation (Hydrogen Industry Development) Amendment Bill 2023, which aims to provide a clear regulatory assessment pathway to authorise the construction and operation of pipelines for hydrogen and hydrogen carriers in Queensland by amending the Gas Supply Act 2003 (Qld) and the Petroleum and Gas (Production and Safety) Act 2004 (Qld). The Bill has been referred to the Transport and Resources Committee, which is due to report back to the Queensland Parliament by mid-July 2023.
- SuperGrid training centre and transmission hubs: opening the first training centre and transmission hub in Gladstone, which is located in the Central Queensland Renewable Energy Zone.
This Insight explores the Draft Bill and identifies key details still to be provided.
You can learn more about the commitments made in the Queensland Energy and Jobs Plan in our previous Insight.
- The Department has released draft legislation and a consultation paper. Submissions on the Draft Bill close on 30 June 2023.
- The Plan will enshrine a high degree of public ownership over Queensland energy assets, with 100% of transmission, distribution and deep storage assets to be publicly owned, and over 50% of generation assets to be publicly owned.
- The Renewable Energy Zone framework is likely to be simpler than in other states, however the lack of detail around the framework and connection process means investors will need to wait for further information to be provided by the Queensland Government to have a clearer picture of the implications for planned projects and opportunities for new projects.
This will impact Queensland significantly. In particular, those investing or doing business in the state, along with board members and business development teams in organisations involved in developing and delivering energy projects, should familiarise themselves with the proposed Draft Bill. Given the ongoing consultation process, anybody involved in submitting feedback on behalf of your organisation should also be kept up to date on the current status of the Draft Bill.
The Draft Bill is designed to be the legislative foundation for the Plan, and seeks to provide a legislative backing for the state's ambitious energy transition targets.
At a high level, the Draft Bill seeks to:
- enshrine Queensland's renewable energy targets in legislation
- set out the strategy and reporting mechanisms for public ownership of renewable energy infrastructure
- provide a legislative basis for the SuperGrid Infrastructure Blueprint
- facilitate identification and construction of priority transmission investments.
Part 2 of the Draft Bill outlines Queensland's renewable energy targets of:
- 50% by 2030;
- 70% by 2032; and
- 80% by 2035.
It is not yet clear how progress towards these targets will be assessed, with the Draft Bill proposing that the Minister for Energy (the Minister) will be responsible for deciding the methodology for calculating the proportion of electricity generated in Queensland from renewable energy sources. Once settled, the methodology will be published on the Department of Energy and Public Works' website. The Minister will also be responsible for publishing an annual statement that provides an update on the progress made towards Queensland's renewables targets.
To ensure the legislation can flexibly respond to changes over time, the Minister is required to review the renewable energy targets at least every five years to assess the appropriateness of the current targets, the progress made towards achieving the targets, and any other relevant factors. The Draft Bill also proposes that in 2030, the Minister will review the targets and determine whether to set additional targets beyond 2035.
Part 3 of the Draft Bill sets out targets for government ownership of energy assets. Specifically, the government currently intends for transmission, distribution and deep storage assets1 to be 100% publicly owned, with generation assets set to be 'more than 50%' publicly owned. The precise targets will be codified in a public ownership strategy (to be released at a date still to be confirmed), and will be periodically reviewed in conjunction with the SuperGrid Infrastructure Blueprint discussed below.
The Draft Bill contemplates three forms of 'public ownership'—specifically:
- ownership in whole or part of assets by the Commonwealth, state or local government
- direct or indirect rights or interests of the Commonwealth, state or local government, in an entity that owns, wholly or in part, relevant assets
- interests prescribed by regulation held in relation to relevant assets, under an agreement or arrangement prescribed by regulation to which the state or a government-owned corporation is a party.
Progress made towards the public ownership targets, including the percentage of public ownership for each class of energy assets and the manner in which the public ownership percentage of an asset class is calculated, will be publicly reported on an annual basis from 2025 onwards.
While the Department of Energy and Public Works (the Department) has indicated that it intends to meet the 50% public ownership of generation asset target through increased public investment rather than constraints on private investment, it is not yet clear how these targets will be implemented in practice and whether, for example, projects that qualify for one of the three public ownership categories may be prioritised over competing private projects in the connection and approvals processes.
It is also not yet clear whether privately owned rooftop solar will be counted in the context of the generation asset target. While the Department has expressed that it does not anticipate private rooftop solar being calculated within the general breakdown of public/private generation infrastructure, this item remains open for consultation.
Part 4 of the Draft Bill focusses on the 'Queensland SuperGrid Infrastructure Blueprint', through which the Queensland Government aims to identify key electricity infrastructure projects (including Renewable Energy Zones) and the sequencing and timing of project delivery, and may also address changes to the operations of the state-owned coal-fired generators.
The Blueprint will be reviewed and updated over time, with the initial review to occur by 31 May of 2025 and then typically every two years thereafter.
Similar to the NSW Electricity Infrastructure Roadmap, the Minister is able to declare 'priority transmission investments'2 which they can then direct Powerlink to identify and assess, and project delivery options under a modified regulatory investment test for transmission (RIT-T) process known as a 'candidate PTI assessment'.
Where the Minister directs Powerlink to carry out a priority transmission investment, they will also direct Powerlink to amend its Revenue Determination/Revenue Proposal (as relevant) to include the costs specified in the Minister's regulated asset base allocation direction in Powerlink's regulated asset base.
While few details have been confirmed at this stage, it appears the Queensland REZ access scheme is intended to be simpler than those in New South Wales and Victoria, both of which require a competitive tender for the allocation of access rights. Key details announced for the Queensland scheme include:
- REZ declaration: the Minister (on the recommendation from the REZ delivery body, currently intended to be Powerlink) may declare a part of the Queensland electricity network a REZ. Declared REZs will be smaller areas within the three broad regions identified in the Plan. Declarations will last for a minimum of 15 years after the first participant connects and will set out the objectives for the REZ (including the target connecting capacity).
- REZ management plans: when a REZ declaration is made, a draft REZ management plan for that REZ will be published for public consultation. The draft management plan will detail the technical qualities of the REZ (eg total capacity and target technology mixes), timeframes for development of transmission network assets and the processes and requirements for participants to connect.
- Access and connection: access and connection to a REZ will be determined in accordance with the requirements set out in the management plan on the basis of the following asset classes:
- REZ transmission network, being the nominated transmission lines (existing3 or new) within a REZ that participants may connect to and use to transfer their energy to the shared network; and
- REZ controlled assets, being assets in the vicinity of a declared REZ that may materially affect the functioning of the REZ. Powerlink may restrict connection to these assets to ensure the objectives of the REZ are achieved.
Powerlink will be responsible for negotiating access and connection agreements directly with each prospective REZ participant to fill the REZ to the nominated capacity.
- Funding and cost recovery: costs associated with REZ transmission network assets are intended to be recovered on a commercial basis from REZ participants. It is expected that the fees and charges payable to Powerlink by REZ participants under the network connection and access agreements will include an amount representing that participant's share of the establishment and operational costs of the REZ transmission network. If a residual shortfall exists and Powerlink is unable to reach a commercial resolution with the REZ participants to meet that shortfall, the Queensland Government may determine how the remaining costs are recovered (eg through a combination of Powerlink, government support or through transmission charges to consumers).
There are a number of details still to be revealed about the proposed REZ framework, including how:
- REZ participants will be identified
- the proposed framework will balance the need for investor certainty regarding the connection process, connection costs and timing of project delivery with the proposed flexibility, and coordinate this with the timing of transmission network investment decisions so as to mitigate the risk of inefficient investment of public funds
- Powerlink will streamline and coordinate the connection of multiple REZ participants with the delivery of the REZ transmission infrastructure.
The Queensland Government is aiming to release its REZ Roadmap later this year and its REZ Management Plans during 2024.
A number of new entities are proposed to be established pursuant to the Draft Bill, including the Queensland Energy System Advisory Board, the Energy Industry Council and the Queensland Renewable Energy Jobs Advocate.
The Energy System Advisory Board is proposed to be an independent board that will have several functions, including:
- providing advice to the Minister about long-term electricity demand projects, the optimal infrastructure pathway and achievement of the legislated renewable energy targets (including opportunities to accelerate achievement of the targets)
- preparing an annual progress statement assessing progress towards achieving the legislated renewable energy targets and matters relevant to the optimal infrastructure pathway
- any other functions conferred on the Board by legislation.
The Energy Industry Council is intended to advise the Minister on industry employment issues, and the Queensland Renewable Energy Jobs Advocate is intended to advise on, and promote opportunities for, employment, education and training in the Queensland energy industry.
- Private market participants that will be impacted by the Queensland Energy and Jobs Plan should familiarise themselves with the Draft Bill and make submissions by no later than Friday 30 June 2023.
- Market participants should continue to monitor the Queensland Government's activity in respect of the energy transition, including the additional details and documents scheduled to be published in the coming months.
Please contact any of the people below if you need advice or require more information about the Plan and what it means for your business.
Defined as 'assets prescribed by regulation that are used for long-duration storage of energy in a form capable of being converted to electricity'. These are expected to comprise the Borumba and Pioneer-Burdekin projects being developed by Queensland Hydro. It is not expected that the private sector would be prevented from developing long-duration storage assets in Queensland.
Priority transmission investments may be identified within the optimal infrastructure pathway set out in the SuperGrid Infrastructure Blueprint, but the Minister is also able to declare other projects that are identified as a priority due to changes in production, storage or demand of electricity.
While there are few details available about the REZ connection process at this stage, pre-existing connection arrangements at the time a REZ is declared are expected to receive grandfathering protection. Where there is a pre-existing connection application at the time a REZ is declared, that applicant will be able to make a connection application to connect to the REZ transmission network without losing the benefit of the work already carried out in relation to the existing application.