Observations

1.1.1 Wind and solar projects and related assets

Background

The following sections largely relate to landholder matters regarding onshore wind and solar projects and their related assets (such as connecting transmission lines, substations etc.). They may also be applicable to large-scale transmission and storage projects.

Wind turbines and solar arrays are generally located on cleared primary production land owned or leased by a landholder, often referred to as the ‘host’ landholder. The land’s existing use is usually broad-acre agricultural production (for example, livestock or cropping). In general, a relatively small portion of the productive land is utilised for a wind farm’s operation, including turbine siting, hard stand, access roads and related assets such as transmission line easements, electrical substations, transformers and meteorological masts. The landholder usually continues to operate the agricultural production activities on the remaining land. By contrast, a solar array consumes most of the land that it resides on, with limited opportunities for co-located farming activities. 

There is usually significant disruption to the land during the construction phase of these renewable energy assets and ongoing access to the assets will be required by the operator for normal operations and maintenance over the life of the project.

Payments to Host Landholders

When developing an onshore wind or solar farm, or a large-scale storage battery project, a crucial initial step is to secure the land. To do this, the developer typically approaches one or more landholders in the desired location and presents the likely commercial benefits and income from hosting part or all of the project.

Host landholders for wind farms are generally paid a fixed amount per turbine per year under a long-term agreement for the life of the wind farm. This agreement is akin to a commercial lease and a term of 25 years with the option for renewal is common. The fee paid to the landholder may be a flat annual fee per turbine, regardless of size or capacity, or a fee based on the generating capacity of the turbine. 

Due to rapid advances in technology, the turbines installed on a project are often substantially more efficient than those that were available at the time the landholder entered into the agreement with the developer. Consequently, the landholder often hosts less turbines than originally envisaged. An agreement for a fee that is based on the generating capacity of the turbine reflects the reality that modern on-shore turbines have a much greater capacity (currently in the order of 5 MW – 7 MW) than turbines available in the recent past. 

Host landholders for solar farms and batteries are generally compensated by a fixed annual amount per hectare and the land is leased to proponent via a long-term lease agreement.
Landholders that host transmission lines may be paid for the required easement, disturbance to their property and farming practices, an option fee for entering into an option agreement and other fees such as the Strategic Payment Benefit Scheme, which was announced by the NSW Government in October 2022.

Host landholders may be entitled to have reasonable professional fees reimbursed by the proponent, including costs for legal, tax, financial, valuation and insurance advice.   
Hosting fees can become dated, especially if a landholder has entered into a fixed annual fee agreement. 

Several years ago, wind turbine capacity was in the order of 1.5 MW to 2 MW per turbine. Recently, wind turbine capacity is about 5 MW to 7 MW per turbine. Landholders who entered into wind farm agreements with a fixed annual fee per turbine several years ago may find that by the time construction commences, proponents have updated their designs to take advantage of the new, larger scale and more efficient turbines. The updated design often requires fewer turbines to achieve the same energy output as the original design. 

Similar issues are emerging in the solar industry, where the energy output capacity per hectare is increasing significantly due to ongoing solar technology improvements.

Many existing agreements did not contemplate the significant change in turbine and solar panel capacity that has now occurred. As a result, the agreement fee per turbine or per hectare payable to the landholder (based on the original smaller capacity technology) may not reflect the contemporary fee appropriate for the much larger output capacity wind turbine, solar array or battery. Further, the landholder’s overall fees may be less than expected due to the reduction in the number of turbines or solar array area now required. 

Landholders should check their existing agreements and ensure that any new agreements have provision to adjust the fees in the event of a turbine or solar panel capacity increase and/or a reduction in number of hosted assets.

Landholders should also have the ability to negotiate an escalation of fees annually with either a fixed annual increase or an indexed increase based on the consumer price index.

The point at which payment to landholders commences and ceases often varies between agreements. This is a matter for negotiation between the developer and the landholder. However, we suggest that a fair and reasonable approach would be for payments to commence no later than the start of project construction and cease no earlier that the completion of decommissioning and restoration of the landholder’s property. 

Fees may also be payable to the landholder during the development phase of the project in consideration of the landholder’s agreement to provide access to land and for the landholder’s agreement to grant the proponent an option (often exclusive) to use the land.

Other fee agreements may be required for hosting electrical substations, batteries, transmission line easements, access, transportation of blades and towers across property boundaries, location of project offices and the like. Landholders hosting these ancillary assets may or may not be wind turbine or solar array hosts but are still integral to the project.  

Development Process Phase and Scope Change Effects

As discussed in the previous section, potential host landholders are typically approached by a developer very early in the development, or ‘prospecting’ phase of a potential project. The primary objective is to obtain the landholder’s agreement to host assets in the event the project is developed, approved and proceeds. 

Landholders will typically enter into an initial agreement such as a ‘License Agreement’, ‘Access Agreement’ or ‘Option for Easement Agreement’. These agreements may document the landholder’s consent to host the assets, provide access to their property and/or enter into the commercial arrangements that must be in place if the development proceeds to the permit application stage. 

The initial licence or access agreement typically provides the developer with access to the landholder’s property for the purpose of surveys and investigations. It generally also provides the developer with exclusive rights over the property for a defined or undefined period. In most cases, the license agreement will need to be replaced with a long-term lease agreement (or ‘creation of easement agreement’ in the case of a transmission line) before any construction occurs. 

The terms of the initial agreement may bind the landholder to accept the terms of a later lease or easement agreement. Therefore, care should be taken when reviewing any license, access or option for easement agreements to identify any terms and conditions that are binding upon the landholder and incorporated into the subsequent lease or easement agreements.

It is essential that landholders obtain sound legal, financial and other professional advice before signing any agreement with the proponent. Agreements may contain terms and conditions unacceptable to the landholder and the landholder should be provided with the opportunity to identify, negotiate or strike out such clauses. 

In July 2021, our Office released a guideline for landholders entitled ‘Considerations for Landholders before entering into Commercial Agreements’, which is available on our website. The guideline has been widely utilised and is recommended reading for landholders (and their legal advisors) who are potentially entering into host or related agreements. The guideline was most recently updated in January 2023.

There is a spectrum of developers active in the industry, with a variety of skills, resources, experience and business models. Some developers intend to develop an asset that they will own throughout its life. Others will progress the project to a stage where it is eligible to secure (or has secured) a planning permit and then sell part or all the project to another entity that will endeavour to take the project through the construction and operation stages. 

Currently, wind, solar and battery developers do not require licences to prospect onshore projects, nor do they require approval to prospect in a specific location for a potential project site. Therefore, any person can approach a landholder to prospect a potential site and, via agreement, gain exclusive rights over the landholder’s property to pursue development of a proposed project.
It is important that landholders inform themselves about the reputation of the developer that has approached them and consider whether that developer will meet their expectations throughout the life of the commercial relationship. Landholders who engage with multiple developers prior to entering into an agreement may find that they have more opportunity to select a developer and negotiate an agreement that will suit their needs.

At the initial stage of the development process, it is not uncommon for a developer to propose more wind turbines or solar arrays than will be finally approved or installed. As a result, the developer often enters into preliminary agreements with landholders, some of which may ultimately ‘miss out’ on hosting assets or host a reduced number of assets. Even when the final number and type of assets is confirmed, the planned location of these assets may be further revised, which can also result in landholders hosting less assets, potentially earning significantly less fees than expected.

There are many reasons why a proposed project may reduce the number of generation and storage assets during the development phase. These may include increases in turbine or solar panel generation capacity and efficiency, transmission constraints, noise compliance setbacks, aviation safety, environmental impact and other planning requirements, financial constraints, community or neighbour concerns along with changes to policy, legislation or planning guidelines. Similar reasons also apply to changes in transmission route and the location of transmission towers.

These scenarios can create a ‘winners and losers’ situation for landholders, particularly those that may have disappointed expectations of hosting assets. A landholder expecting to host ten wind turbines (and expecting to receive payment for hosting ten turbines) may become aggrieved if the final approved wind farm has reduced or eliminated the assets to be hosted by the landholder as this will materially reduce or eliminate the landholder’s anticipated income stream.

The landholder may not only perceive that they have ‘missed out’ on an expected income stream but may then also raise concerns about the potential impact of turbines located on neighbouring properties, including changes in amenity, audible noise, construction disruption and loss of property value. The fact that the landholder’s neighbours are hosting turbines or arrays and receiving payments can further aggravate the situation for the landholder that ‘missed out’.
This situation may be exacerbated by developers conducting confidential, individual discussions and negotiations with specific landowners as this can create a level of distrust between neighbours and the developer. 

The consequences of these scope change scenarios can be severe. They can fracture support for the project within the community and divide the community in economic and social terms. Developers need to be mindful of the consequences of their conduct in landholder negotiations and the magnitude of the impact that scope changes can have for landholders.

The conduct of one developer has the potential to impact other developers undertaking projects in the region. At times, insensitive conduct by developers has brought the large-scale renewable industry into disrepute and lead to protracted litigation by project opponents to slow or stop the project.

The Commissioner has observed developers work successfully with landholders who have ultimately missed out on hosting some or all the expected assets on their property. Successful methods have recognised the landholder’s long-term engagement and commitment during the project’s development. Observed solutions include making payment to the affected landholder based on a range of parameters, such as the number and type of assets that the landowner had been originally expecting to host vis a vis the final approved design and the implications of that change.

Other issues affecting landholders include blade trespass (which occurs when a turbine blade traverses a landholder’s property boundary when being transported around a bend in the road), transmission easements (where a landholder agrees for a powerline to traverse their property for a one-time fee) and sway easements (where a project’s connecting powerline may sway over a neighbouring property in certain climatic conditions). In most cases, the affected landholder would typically negotiate and receive a one-time payment from the proponent or transmission company in exchange for granting authority for the friendly incursion on the land. 

The recent increase in wind turbine blade lengths has increased the possibility of blade trespass and the amount of vegetation clearance required along the chosen route for blade transportation.  Developers and their contractors need to be cognisant of these types of emerging issues and ensure they have appropriate agreements in place with landholders prior to submitting permit application plans. These include the transport management plan, transmission route plan, vegetation clearance plan and any offset requirements.

Finally, developers should also be proactive and transparent with landholders regarding the status of the project during the development and permitting phase and consult with landholders on any planning amendment submissions that may affect the landholder and local community.

Host Agreements

A host landholder agreement is similar to a commercial lease. Considerable time and money can be spent by developers in creating draft landholder agreements, which in turn should be carefully reviewed by the landholder and their solicitor before negotiating and subsequently executing the document. Both industry and landholders may benefit from a standard agreement document being produced and available for use that is fair and reasonable, complete and consistent with the relevant laws, similar in concept to the Law Institute of Victoria’s Lease of Real Estate (Commercial).

Some landholder host agreements reviewed by the Commissioner could be clearer in a number of aspects. Agreements should provide clarity on a wide range of day-to-day matters, including which party is responsible for paying rates, land taxes, emergency services levies and the like. The agreement also needs to be clear on termination provisions and the responsibilities regarding decommissioning of the project’s (i.e. tenant’s) assets.

Landholder agreements are not limited to hosting wind turbines, solar arrays or batteries. They are also required for high voltage transmission corridors, private powerlines connecting to power stations, substations, construction facilities, meteorological masts as well as construction and operational/maintenance access roads and land for the life of the project. The developer should carefully consider their approach and fairness to landholders in negotiating these agreements. Landholders should seek suitably qualified legal and financial advice before entering into any agreement.

Developers should also consider innovative opportunities for landholders and other community members to have an ownership stake in the project. This could be in the form of a community-owned project through to equity or debt participation in the project’s commercial ownership structure. There are some examples of these approaches in Australia and in other overseas jurisdictions such as Europe.

Construction

The project’s construction activities can cause significant disruption for the landholder and may have long-term effects. Typical issues range from management of gates – gates left open during construction activities can quickly lead to unplanned migration of livestock, often with challenging consequences – through to the impact of new roads and trenches created on the landholder’s property.

Construction itself can be a messy activity, particularly for wind farms. Construction sites include a significant amount of civil works, components waiting to be assembled, large trucks and equipment moving around and construction staff requiring on-site office space, kitchens, bathrooms, catering and, in some cases, accommodation. Construction of a wind farm or transmission line generally consumes a much greater area than when the project is completed. 

We suggest that landholders plan for the removal of any livestock and cease farming activities in the affected paddocks during the construction phase. Landholders should also be aware that use of additional areas of farming land may be required if major components of a wind turbine need to be replaced during the operating and maintenance phases of the project.

Landholders should take the opportunity to visit other similar projects, both under construction as well as operating, and experience first-hand the extent of the construction works, impacts on the land, and the final outcome in operation.  

Landholders can experience frustration during the construction of a project due to changes to the location and routing of internal roads and underground cabling. To reduce costs and improve access productivity, project contractors and sub-contractors may inadvertently select a different route to the one that had been agreed to with the landholder, causing an unexpected loss of pasture or cropping capacity as well as difficulties in moving livestock across the paddock.
Internal road construction in hilly and ridge terrain may lead to large roadway cuttings and embankments that can make it difficult or impossible to move livestock around the remaining paddock areas. Project roads should be designed to minimise the need for ‘cut and fill’ and vegetation removal, using the natural landscape wherever possible. 

Developers should engage in best practice gate management and design road access and fencing to minimise degradation to farming land and minimise or eliminate the need for livestock gates on internal project roads.

Once construction activities have concluded, the developer should ensure that proper and complete rehabilitation of the disrupted land is properly carried out in a timely manner, including restoration of paddock topsoil and pasture where required.

A construction project typically has multiple contractors and sub-contractors. It is not always clear who the landholder should contact to resolve issues, as they inevitably arise, during construction and post-construction rehabilitation. Developers should ensure there are clearly defined points of contact for landholders to raise and resolve issues during construction and post-construction rehabilitation. Developers should also design processes to escalate concerns that remain unresolved. Regular meetings between the developer and the landholder before and during construction may provide a forum to discuss and resolve the inevitable changes and issues that arise along the way.

Outgoings

The addition of energy infrastructure to a rural property is likely to cause increases in property outgoings such as council rates, land taxes, insurances and other levies. The asset installation may result in reclassification of primary production use land to industrial use land and may increase valuation of the property.

Landholder agreements should be precise and clear on which party is responsible for the cost and payment of outgoings and any increase in the outgoings due to the project. Without a specific agreement between the parties, the landholder, as the landlord, is generally liable for the payment of outgoings in the event the project operator defaults.

State jurisdictions vary in their approaches to calculate and levy items such as council rates and land taxes. The lack of consistency between jurisdictional approaches may have consequences from revenue leakage through to unforeseen levy charges. Some actions to clarify these matters are being taken, such as the NSW Valuer-General policy Valuation of Land Used as a Wind Farm (New South Wales Government, June 2019) but there may well be opportunities for tighter, consistent processes to correctly calculate, levy and collect these outgoing payments as a result of the deployment of wind turbines, solar arrays and other associated assets on the land.
Case law should also be monitored on these topics. A recent case, AWF Prop Co 2 Pty Ltd v Ararat Rural City Council [2020] VSC 853, may provide some clarity around the valuation methodology for land and capital improved value of land that is occupied by wind farm assets. This decision was appealed to the Victorian Court of Appeal, however the Court of Appeal agreed with the original judgment that the above-ground wind farm assets of the Ararat Wind Farm were chattels and therefore excluded from the land valuation.

By contrast, in the matter of SPIC Pacific Hydro Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 395, the Supreme Court of New South Wales ruled that the wind farm assets affixed to the leased land were fixtures rather than chattels, resulting in a significantly higher valuation for the purposes of assessing landholder duty.

Such decisions can have momentous impacts on the liability incurred by the landholder or purchaser from outgoings and it is best to clearly agree on who pays such liabilities in the host agreement.

Decommissioning

At the end of the project’s operating life, the clear expectation of all stakeholders is that the project’s assets and infrastructure will be fully decommissioned, with all turbines, arrays, batteries and other infrastructure being removed from the property. To the extent that it is possible, the landholder’s property should be returned to its original condition.

Most planning permits state that decommissioning responsibilities rest with the project owner (i.e. the tenant). However, in the event of default by the project owner, the liability for decommissioning ultimately may rest with the landholder. The landholder generally does not have ownership of the project’s assets and may be unable to recover the costs of any decommissioning activities from selling the assets remaining on the property. Project operators/owners may change many times during the life of the project, and this may put at risk any long-term funding arrangements to cover the costs of decommissioning or erode the enforceability of verbal agreements made over time.

Landholders should ensure that any commercial agreement to host assets and the related infrastructure clearly sets out the responsibilities and funding arrangements for decommissioning and restoring the site. The agreement should provide the mechanism for securing and maintaining the funding to required pay for decommissioning costs.

A landholder may seek evidence that the project owner has the capacity to fund the decommissioning activity and that such funds are properly set aside securely for that purpose. This could be achieved through a bank guarantee, sinking fund, trust fund or a security bond deposit. For example, the Offshore Electricity Infrastructure framework requires offshore wind farm licence holders to decommission all infrastructure and address environmental remediation at the end of a project’s life. Developers are required to provide financial security that covers the cost of decommissioning infrastructure to ensure these costs are not borne by the Australian Government.

While there are no documented examples of costs to decommission a contemporary wind turbine or solar farm in Australia, some published decommissioning plans have calculated costs of about $400,000 per turbine. This cost could increase for larger turbines and could range up to $600,000 per turbine or more. If a turbine has a structural failure and is unstable, it could cost millions of dollars to safely remove the turbine from site. 

To put these costs into perspective, the total fees earned for hosting a wind turbine for 25 years could be in the range of $250,000 - $750,000 (depending on the turbine capacity and when the wind farm commenced operations). It is therefore possible that the cost to decommission a turbine could be equal to or greater than the total income generated for the landholder over the 25-year operating period.

Some proponents are offering to make ongoing deposits into a trust to fund decommissioning of the asset. However, proponents generally commence making these payments in the later years of the project, around years 15 or 20. The delay in commencing payments creates risk as the project owner is required to source significant funding in the declining years of the asset. The risk to the landholder would be significantly reduced if the developer commenced making deposits to fund the decommissioning from commencement of the asset’s operations.

The decommissioning of some of Australia’s initial wind farm projects will need to commence in the next few years. This is likely to result in increased focus on concerns about this topic, particularly from host landholders and community stakeholders. At a minimum, there needs to be clarity surrounding who is responsible for decommissioning, who pays and how those funds are secured to protect the landholder from default and ensure the work is completed properly and in a timely fashion.

Private Transmission Line Easements

Renewable generation assets often require a private transmission line to be installed to connect to the public transmission grid. The developer is generally required to obtain easements from one or more landholders to route the private line to the public grid. These easements require negotiation with the landholder and cannot be compulsorily acquired. 

The Commissioner has received complaints from landholders who had agreed to allow an easement on their land (or who had bought land where the previous owner had agreed to an easement) for the purposes of installing a private transmission line.

Landholders typically receive a one-off payment from the proponent for allowing the easement, unlike a wind or solar farm host, who typically receives an annual payment. Some landholders receive an annual payment for the life of the project.

If the land is sold, the purchaser ‘inherits’ the easement and the prospect of a transmission line being built and operated on the land. If this has not been properly communicated, landholders may be surprised when the transmission contractor arrives at the property to conduct surveys and assessments, or even commence the works.

Private transmission lines give rise to a range of issues. We recommend that the industry consider the fairness of the easement agreement and other documents, the amount and method of compensation, the need for access agreements surveys, assessments, or land traversed to access the easement. There is also a need for appropriate disclosures of the easement and any related agreements to a purchaser of the land.

1.1.2 Large-Scale Transmission Projects

This subsection provides updated observations of landholder related matters about the development, planning, construction and operation of large-scale transmission lines.

Land Access

Project developers may need access to landholder’s property at various stages of a large-scale transmission project for the purpose of:

  • Assessing route options, including walking potential routes through the landholder’s property
  • Surveys and other environmental, cultural and technical assessments
  • Design and layout of preferred route
  • Final design and specific locations of towers, easements, underground trenches and associated assets.

Landholders are usually provided an opportunity to voluntarily grant consent to access their land and set out, in a written agreement between the parties, the arrangements for land access and protocols to be followed.

Some proponents pay a nominal fee to the landholder for initial access requirements, typically in the range of $1,000 to $10,000 per title. This provides some level of compensation to the landholder for any disruption and inconvenience. Not all developers offer compensation at this stage of the project.

Once the transmission route is finalised, land access is usually then covered by an option agreement between the landholder and the proponent. This type of agreement is discussed later in this section.

In the event the landholder does not grant consent for land access, the proponent may be able to rely on legislation that permits the proponent to access the land under certain conditions. It is important that this legislation is supported by a protocol or code of conduct which the proponent must follow prior to and when accessing the land.

The protocol may be developed by the relevant regulator or, in some cases, by the proponent. Ideally protocols designed by the proponent will be endorsed by the regulator. Involuntary land access should always be the exception and should be approved on a case-by-case basis by the proponent’s senior executives or CEO. Requests for approval should include a properly prepared assessment of why access is required, why and how the compulsory powers are to be used.

It is several decades since any long-distance, large-scale transmission projects have been developed in Australia and not all jurisdictions or proponents have protocols in place. There is also a general lack of enforceable codes of conduct that industry should adhere to in dealing with landholders and the broader community. In some cases, this has led to inappropriate and disproportionate behaviour by proponents and their contractors when accessing land under legislative powers. Forceful actions by proponents have caused great reputational and relationship harm and have fuelled mistrust in landholder communities.

Land access is a vitally important part of the development process, and it works best when there is an effective relationship between the proponent and landholder. An appropriate amount of time needs to be built into the project schedule to enable the proponent to establish effective relationships with landholders that pave the way for harmonious land access. Proponents should also ensure that they have a sufficient ‘early works’ budget to enable relationship-building activities and provide any fees payable to landholders for agreement to provide access.

Finally, the topic of land access for survey purposes is often one of the first interactions between the landholder and the proponent. It is an activity that will set lasting impressions on the landholder cohort. Proponents should invest in making these impressions as positive as possible.

There are significant opportunities to improve the skills and knowledge of front-line staff. TasNetworks is working with our Office to develop the inaugural in-person training program for Land Liaison Officers and other front-line support staff. The training will include role-plays so staff can practice and learn how to conduct effective meetings with landholders and the broader community. See also comments below in the ‘Landholder Relations’ sub-section.

Easement Acquisition

Once the proposed transmission line route is well defined, proponents will seek to secure the easements required to build the transmission line.

Generally, landholders who are potential hosts of the transmission line are asked to enter into an option agreement that allows the proponent to undertake further surveys and investigations on the land and provides the proponent with the option to create the easement.

Option agreements are typically for three years, with a further term of one year. Landholders are generally paid a one-time, non-refundable fee for entering into the option agreement and a further fee if the agreement term is extended. We recommend one option agreement per property title with fees payable for entry into each agreement.

Prior to entering into the option agreement, the landholder and the proponent agree on the total compensation, and its components, to be paid to the landholder in the event the option is exercised by the proponent. This has traditionally been a one-off payment that is separate and in addition to the fee payable on signing the option agreement. 

The compensation structure may be complex depending on the agreed impacts on the landholder’s property and the financial consequences of those impacts.

It is not uncommon for the compensation to be paid in parts, for example 75% of the compensation is payable on the exercise of the option with the balance to be paid at either the registration of easement or completion of project construction.  

If the landholder and the proponent cannot agree about acquisition of the easement, including about compensation, the proponent may seek to compulsorily acquire the easement. Each state has its own legislative procedure for compulsory acquisition of land. It is generally a lengthy process with opportunities for either party to make applications to court on various matters. 

It is certainly in the best interests of all parties that the proponent develops a good working relationship with the landholder and makes a genuine effort to negotiate in good faith the voluntary agreements for land access, acquisition of the easement and compensation. Some jurisdictions also require that the proponent may need to demonstrate their efforts to negotiate the voluntary agreement during the compulsory acquisition process.

Correspondence and Communications

The Commissioner has reviewed a range of correspondence and other documents prepared by transmission proponents for landholders and the quality of these documents is generally poor.

Letters are often written from the proponent’s perspective, rely on legislative powers, are cumbersome in structure, lack clear objectives and fail to succinctly convey key information. Communication often omits relevant contact information, details of next steps and information about where to send completed documents. For example, our Office reviewed correspondence from a proponent requesting a meeting with a landholder that failed to include any information about how the meeting would be scheduled. A phrase such as ‘we will be in contact with you via telephone in the next few days with the view to schedule a meeting in the week beginning 14 February 2023’ would have been sufficient.

Correspondence from proponents often references legislative powers, such as compulsory land access or acquisition. The purpose of the letter may be to invite the landholder to negotiate an easement acquisition agreement, but the letter is too quick to point out that if an agreement is not reached the proponent may compulsorily acquire the easement. Landholders receiving this correspondence are likely to perceive a threat and doubt the proponent’s spirit of genuine negotiation.

Correspondence should be written from the landholder’s perspective, clearly state its objective and provide the key information required to achieve the objective. 

Our Office is working with some proponents to develop their correspondence and we are encouraged by their willingness to improve. We would welcome opportunities to work with other proponents in this regard.

Project fact sheets and guidelines prepared by proponents have been mixed in their quality and content. These documents should be written from the perspective of the landholder or community member and should succinctly provide key information. For example, a fact sheet about the use of farming equipment underneath a transmission line that explains the need for a permit from the transmission operator to use equipment over a certain height should also clearly explain how to obtain a permit, including the timeframes and fees payable, along with the process to appeal a declined permit request. The height threshold should be realistic and consistent with regulator standards.

Landholder Relations

Proponents generally utilise ‘Landholder Liaison Officers’ or similar to engage with landholders. These officers are either employed by the proponent or by a third party that is contracted by the proponent to provide these services. The scope of the role varies and generally includes:

  • Establishing relationships with individual landholders
  • Understanding the landholder’s situation, property and farming enterprise or other land use
  • Negotiating and managing access to the property to conduct surveys and assessments which may be used in route selection decisions or environmental applications
  • Facilitating the negotiation process for option agreements and easement acquisition 
  • Being the proponent’s point of contact for the landholder and the landholder's advocate to proponent

As transmission projects on this scale have not been undertaken for decades, the skills required for these critical roles are not easily found and our office has observed mixed results in the effectiveness of these essential relationship management roles.

We recommend that the transmission industry revisit how to ensure these roles are effective and re-consider all aspects of the role including the ratio of officers to landholders, recruitment, training, prior experience, location, scope of role, performance measurements, feedback and other parameters.

1.2. Recommendations

1.2.1. The developer should ensure that landholder expectations are properly managed from the outset of negotiations and that potential host landholders are made fully aware of risks including variations to the project plan during the development phase. Changes such as a reduction to the number of hosted assets or relocation of assets on or from the landholder’s property may have significant impacts for landholders. 

1.2.2. License agreements that enable the developer to access and ultimately lease the landholder’s property should have fair and reasonable provisions, including for payments to be made to the landholder and for the landholder to terminate the agreement if expected milestones are not met within a reasonable period of time. Agreements should include clear timeframes for milestones such as the submission of permit application, financial close, commencement of construction works and expiry of the planning permit.

1.2.3. To improve transparency, developers should consider discussing the proposed project and negotiating agreements in an inclusive and holistic manner with all potential host landholders as a group. 

1.2.4. Developers should consider a standard template lease agreement with consistent commercial terms which is supported by industry and the relevant legal association in each state.

1.2.5. Developers should consider offering some level of payment to all initially contracted host landholders if the project proceeds, regardless of final allocation of assets on individual properties.

1.2.6. Host landholder agreements should be fair, reasonable, and written in plain English. The landholder should have access to and obtain appropriately skilled legal and financial advice before entering into any agreement. The New South Wales Government’s Wind Energy Guideline for State Significant Wind Energy Development provides some discussion on this topic, particularly within Attachment B of the publication. NSW Farmers’ Federation have produced a Renewable Energy Landholder Guide (GHD Pty Ltd, updated in 2019) covering topics related to host landholder agreements. Our Office also has published a guideline detailing items to check before entering into an agreement (updated in January 2023).  

Specific areas requiring clarity in landholder agreements include:

  • terms of the agreement, extension and termination clauses
  • clauses that require the landholder to enter into a subsequent agreement with predetermined terms and conditions
  • the scope of the agreement, including clarity about the subject land, proposed location of assets, works or investigations to be done and ongoing access
  • fees payable to the landholder during the project development (pre-permit), financial close (post-permit), construction, operations and decommissioning stages or their equivalent stages in a transmission project
  • timing, payment and calculation of payments and due dates for payment
  • allowance for and calculation of increases to payment amounts during the life of the agreement, such as a fixed annual increase or CPI increase
  • timing, payment and calculation of other compensation
  • reimbursement or payment of professional fees incurred by the landholder in negotiating agreements
  • protections and indemnities provided to the landholder by the developer
  • a dispute resolution mechanism
  • implications if the project is cancelled or materially delayed
  • implications if the project scope materially changes, particularly if the changes result in negative impacts for the landholder
  • variation to fees in the event of changes to wind turbine or solar array layout, turbine specifications, turbine capacity and the number of turbines or solar array area to be hosted
  • agreed internal road and other infrastructure locations (cabling, construction offices, substations, transmission lines etc.)
  • arrangements for use of additional land during construction and major maintenance activities
  • land access plan and agreement focusing on activities to determine the suitability of the site or route
  • property management plan, including developer and landholder responsibilities for key aspects of property management during the development, construction and operation stages such as access notice and protocols, biosecurity compliance, gate management, livestock management and road network plan.  
  • process for making changes to location and routing of project infrastructure to the landholder’s property (e.g., access roads, cabling) and responsibilities for maintenance of such infrastructure
  • any creation of easements that may be required
  • access agreements required for accessing easements 
  • arrangements for removal of ancillary infrastructure and the rehabilitation of disturbed land after the completion of construction works, such as replacement of soils over underground cabling or trenches
  • responsibility for costs and payment of additional council rates, land taxes and emergency services levies on the landholder due to the project
  • insurances to be taken out by the project operator 
  • insurances to be taken out by the landholder in respect of the project
  • insurances that may be required to be taken out by neighbours to the project (such as increased liability insurance)
  • landholder responsibilities when renting out the property to a third-party tenant
  • sale or transfer of the land by the landholder
  • restrictions on further development on the property
  • provisions in the event of subdivision of the property
  • an agreed process and template if a Mortgagee Consent is required
  • financial assurance provisions to protect the landholder in the event the project defaults (such as a deposit or bank guarantee)
  • decommissioning provisions, responsibilities of the parties and arrangements to ensure funding is assured and protected
  • remedies available to the landholder in the event of default by the developer
  • key contacts at the developer for raising and escalating issues and for handling potential breaches of agreement.

The above items could be set out in a standard template of a commercial lease agreement that is managed and maintained by an appropriate legal, industry or government body. 
Landholders and developers should also refer to the Commissioner’s guideline: 

Considerations for Landholders before entering into Commercial Agreements
which was updated in January 2023 and is available on our website.

Finally, landholders should be provided with an opportunity to visit a relevant project that is under construction to experience first-hand what is involved.

1.2.7.    Councils and state jurisdictions should audit the current processes for re-rating properties that host projects and related infrastructure and clarify how those properties are valued for the purpose of calculating land taxes, levies, duties and council rates. The process and calculations should be transparent to relevant stakeholders, be subject to audit and have an efficient and timely process to dispute the valuation.

1.2.8.    Other landholder agreements (such as agreements for transmission line easements, easement access or road access) should also be negotiated and finalised with the landholders in a fair and reasonable manner, with appropriate consultation with affected landholders and neighbours to determine the final route and design.

1.2.9.    Developers may wish to consider other forms of commercial engagement with landholders (as well as neighbours and community members) that allow for equity and/or debt participation in the project.

1.2.10.    The project’s construction plan, transportation plan and overall project design should be developed in close consultation with landholders and designed to respect the landholder’s need to continue primary production operations during and following construction. Particular attention should be given to the internal road layout to minimise the impact of access roads. Key contacts at the developer and/or its contractors should be provided to landholders to allow landholders to raise and escalate issues that arise during construction. Developers should also meet regularly with landholders during construction to proactively discuss and resolve issues and keep landholders informed of the project’s status.

1.2.11.    To ensure that professional conduct standards are adhered to by project prospectors and developers, state governments should develop mechanisms to promote and motivate best practice behaviour on issues ranging from preferred site selection through to engagement with landholders and community. Some examples of programs include the NSW Government’s ‘Renewable Energy Zone’ (REZ) designations, the Victorian Government’s ‘VRET’ program, ACT’s ‘Reverse Auction’ program and Queensland’s ‘RE400’ program. 

1.2.12.    State governments should consider the accreditation or licensing of developers (or adherence to an appropriate code of conduct) that is overseen by an appropriate industry or regulatory body. A similar approach is being taken by the offshore wind energy regulatory arrangements which designate areas for project development that require a developer to obtain a feasibility license and ultimately a commercial operating license.

1.2.13.    Transmission developers should review their landholder relationship management arrangements and ensure that personnel have appropriate experience, training and performance measures. Developers should establish landholder feedback mechanisms and ensure that there are sufficient personnel in place and appropriately located to provide coverage of the landholder community.

1.2.14.    Proponents should develop relationships with landholders well before the need arises to obtain land access or negotiate easement acquisition. If a proponent intends to rely on legislation to gain involuntary access or secure easements compulsorily, it must be prepared to demonstrate an appropriate level of genuine negotiation with the landholder before proceeding.

1.2.15.    Proponents should ‘walk the route’, ideally with the landholder, to ensure they have assessed the proposed route from the ground. This is also an opportunity to develop a relationship with the landholder and gain direct knowledge about issues and opportunities regarding the potential route. 

1.2.16.    State regulators should ensure that there are appropriate, enforceable protocols in place to govern the use of compulsory land access or acquisition powers. A compliance regime needs to be in place and penalties should be considered for material breaches of the protocols by the developer. The developer should be required to justify their use of the compulsory process.

1.2.17.    Transmission project plans need to include an appropriate amount of time, funding and personnel for the land access surveys and assessments to be carried out effectively. The plans need to be flexible to accommodate situations where land access may not be achievable.

1.2.18.    Transmission developers should carefully review their agreements, correspondence and communications to landholders (such as guidelines, fact sheets, updates and notices regarding land access or acquisition etc.). These should be written from a landholder’s perspective, have a clear objective and effectively communicate key information.

1.2.19.    Transmission developers and industry bodies need to complete the various agreements and templates required for easement acquisition. Such agreements must be fair and balanced and be fully considerate of the power imbalance between the landholder and proponent.

Further information