Big Batteries are now 'premises': NSW Land Registry Services

By Eugene Tan, Nathaniel Jende
Energy Property & Development Real Estate Renewable Energy

An end to mandated subdivisions 5 min read

The NSW Land Registry Services (NSWLRS) is expected to release updated guidance regarding the registration of leases for Battery Energy Storage Systems (BESS) in New South Wales.

This development allows BESS developers to document leasehold tenure as a lease of 'premises,' eliminating the need for time-consuming and costly subdivisions. This change aligns leasehold tenure for BESS with existing guidelines for solar farm and wind farm sites, improving the efficiency and bankability of renewable infrastructure projects in NSW.

In this Insight, we outline the change and explore its benefits, as well as offer a comparison to the position in other Australian states.

Key takeaways

  • In NSW, it is anticipated that NSWLRS will soon issue updated guidance on the registration of leases of parts of land on which BESS are situated.
  • Until recently, developers of a BESS occupying part of a registered lot pursuant to a lease for a term of more than five years would be required to obtain subdivision approval from the relevant consent authority, creating a lot on which the BESS is situated and a residue lot comprising the remaining land not occupied by the BESS.
  • Now, NSWLRS has indicated that leasehold tenure for a BESS can be documented as a lease of 'premises'—avoiding the time, cost and impacts to the boundaries of land by undertaking a subdivision.
  • This update in policy ensures leasehold tenure for a BESS in NSW is brought in line with existing guidance from NSWLRS for the leasing of solar farm and wind farm sites—which are already treated as leases of premises.

Overview: welcome news for renewable infrastructure developers and landowners

NSWLRS has indicated that a BESS site can be leased as 'premises' depicted on a deposited lease plan rather than requiring subdivision as a new lot. This means that instead of requiring time-consuming and costly subdivisions to create a new lot (and seeking subdivision approval from the relevant consent authority), leasehold tenure for a BESS in NSW can be documented as a lease of 'premises' for a term of any length (rather than being limited to less than five years).

We anticipate that NSWLRS will publish updated guidance shortly. However any developers currently proposing to construct a BESS on land owned by a third-party should consider utilising a lease rather than a long-term licence as is typically used at present.

When developing a BESS in NSW on part of a registered lot which is owned by a third party, infrastructure owners have typically either:

  • formally subdivided the BESS site from the remainder of the registered lot, in order for a lease for a term of more than five years to be granted in relation to the BESS site; or
  • sought to use a long-term licence of the BESS site to avoid triggering a deemed subdivision of land (which occurs when part of a registered lot is leased for a term of more than five years).

Both of the above approaches have drawbacks.

The subdivision of land requires approval from a consent authority (typically council), adding time and cost to the development of a BESS, and causing the boundaries of the land to be permanently reconfigured, which may not be acceptable to some landowners.

The use of a long-term licence does not provide the infrastructure owner with a registered interest in land—which has implications in terms of continuity of tenure upon sale of the land by the landowner, and the capacity of the infrastructure owner to grant security interests in relation to the BESS.

In contrast, since January 2020, NSWLRS has accepted leases of solar farms (and wind farms) being described as a lease of 'premises'—avoiding the need to permanently reconfigure the relevant part of the land by subdivision. To document this, NSWLRS requires a surveyor to prepare a deposited lease plan of the solar farm 'premises', which is defined by reference to a boundary fence. Importantly, the registration of a deposited lease plan does not constitute a subdivision and does not require approval from a consent authority.

With NSWLRS accepting the lease of a BESS site as the lease of a 'premises', landowners can now grant a lease for a term of any length in relation to part of a registered lot, without needing to subdivide the BESS site from the remainder of the registered lot.

Perspectives from other states

NSW is currently leading the way in terms of providing flexibility to register long-term leases of renewable infrastructure sites without the need for subdivision.

In Victoria, leases are not required to be registered at all, so the issue of subdivision does not arise.

In Queensland and Western Australia, leases for solar farms, wind farms and BESS sites are still treated as leases of land and, accordingly, will typically require a subdivision approval from the local council or planning commission (as applicable). Additionally in Western Australia, it is common for these types of renewable infrastructure assets to be situated on Crown land, meaning it will often be necessary to comply with the alternate approval pathway to obtain a leasehold interest in Crown land.

What this means for you

This change by NSWLRS is timely for the growing number of BESS projects on which Allens has been advising throughout NSW, including the Waratah Super Battery—currently the largest committed BESS in the world. It also reduces the time and cost of obtaining long-term leasehold tenure for the growing number of renewable infrastructure and energy transition projects we are seeing which seek to co-locate a larger BESS with their generation assets or which are designed for development on any third-party land where only part of the registered lot will be occupied by the BESS.

Renewable infrastructure developers and owners should consider utilising long-term leases in NSW rather than undertaking the subdivision of land or relying on long-term licences, given the enhanced protections and securitisation options which are possible with the use of a long-term lease. Increasing the availability of long-term leasehold tenure for BESS in NSW ultimately enhances the bankability of these projects.

The Allens team is continuing to lead the market in the development of transaction and tenure structures that support the delivery of renewable infrastructure assets, to power the energy transition. Contact our team to discuss how we can work with you to deliver your projects.