Energy (Renewable Transformation and Jobs) Bill 2023: The next step in QLD’s energy transition

Twelve months ago, the Queensland Government released the Queensland Energy and Jobs Plan (the Plan) – a $62 billion plan outlining the future of Queensland’s energy transition. Read our alert on the Plan here.

After four weeks of consultation on an exposure draft in June, the Energy (Renewable Transformation and Jobs) Bill 2023 (the Bill) was introduced to Parliament this week to enshrine the commitments from the Plan into law.

Key highlights of the Bill include:

legislative targets for renewable energy in Queensland – 50% by 2030, 70% by 2032 and 80% by 2035;
public ownership targets for 2035 – 100% of transmission and distribution assets, 100% of deep storage assets (i.e. pumped hydro > 1500MW) and 54% of generation assets; and
facilitation of investment and access to Renewable Energy Zones (REZ) – to unlock the transmission infrastructure required to meet the renewable energy targets.

The Bill is a positive step forward by the Queensland Government to address the infrastructure constraints currently faced by Queensland’s energy transformation to commit (in law) to ambitious renewable energy targets.

We expect more detail to come forward in the accompanying regulations.

Below is a summary of key matters addressed in the Bill and our thoughts around important next steps.

What’s in the Bill?

Renewable energy targets: Legislated renewable energy targets for Queensland of 50% renewable energy by 2030, 70% by 2032 and 80% by 2035 (as previously committed in the QEJP). The Bill also creates reporting and review mechanisms that implement these commitments. Queensland follows Victoria as the second state to legislate renewable energy targets (although the Commonwealth, South Australia and the Northern Territory have committed to non-legislated targets).
Public ownership of energy assets: A public ownership strategy will be required to be prepared by the Minister setting out targets of 100% ownership of transmission and distribution assets, 100% ownership of deep storage assets (defined as pumped hydro storage with a generation capacity of at least 1500MW), and a target equal to or more than 54% ownership of generation assets. The strategy must be prepared by the end of 2025 and will set out how these targets will be achieved and maintained by 2035.
Infrastructure planning: A statutory mandate for the Minister to develop the "Queensland SuperGrid Infrastructure Blueprint" to identify and plan significant electricity and infrastructure projects (e.g. priority transmission investments, REZ transmission networks and large-scale energy storage). The first Blueprint was released in September 2022 and is required to be reviewed under the Bill by 31 May 2025. The Bill also proposes amendments to the Electricity Act 1994 (Qld) to remove barriers to new grid supporting technologies such as batteries and synchronous condensers.
Priority transmission investments: The Bill outlines the framework for a project to be identified, assessed and declared as a priority transmission investment. The legislative framework includes powers for responsible Ministers to direct Powerlink to construct priority transmission investment.
Renewable Energy Zones: Authority for REZs to be declared by regulation and provision for coordinated and streamlined connection and access to transmission networks in REZs (as distinguished from the process under the National Electricity Rules). Streamlined REZ processes have previously been created in New South Wales under the NSW Electricity Infrastructure Investment Act 2020 (NSW).
Job Security Guarantee and Fund: A ‘Job Security Guarantee’ for employees and contractors at publicly owned coal-fired power stations and other prescribed facilities, whose employment is affected by the implementation of the renewable energy targets. Under the guarantee, employees will be provided with training for, or access to, employment opportunities and other benefits or opportunities in relation to changes in operations. The bill also establishes the Job Security Guarantee Fund to implement the job security guarantee.
Governance and advisory bodies: Establishment of advisory bodies like the Queensland Energy System Advisory Board, Energy Industry Council, to facilitate and oversee implementation of the legislative targets and frameworks, and the Queensland Renewable Energy Jobs Advocate to advise on worker and industry impacts.

What’s changed since the exposure draft in June?

While the Bill follows the same high-level aims and structure of the draft, key changes include:

Inclusion of ‘Geothermal’ and ‘hydropower, other than pumped hydro energy storage’ as sources of renewable energy to reach Queensland’s statutory renewable energy targets. The draft Bill previously only recognised solar, wind and biomass.
An increase in the public ownership target for generation assets from 50% to 54%. The definition of ‘generation assets’ has also been clarified to now exclude assets used to generate electricity for conversion to energy suitable for export (such as hydrogen), generators less than 30MW, and assets using electricity to create a stored source of energy.
Queensland Government’s public ownership strategy will be required to describe how the State proposed to maintain ownership of publicly owned coal-fired and gas-fired power stations.
Electricity generated in Queensland by consumer devices, such as rooftop solar, is now required to be considered in the Infrastructure Blueprint.
Greater detail surrounding connection and access to transmission networks in REZs (although subject to forthcoming REZ management plans) has now been included.
The definition of ‘affected energy worker’ for the purposes of the Job Security Guarantee has been expanded to capture affected energy contractors.

What’s next?

REZ declaration, access and funding

The Queensland Government released a draft REZ roadmap in July identifying 12 potential future REZs it is aiming to have developed and connected to the grid by 2035. Consultation on the draft roadmap closed on 22 September 2023. The first REZ declarations are proposed to be made in 2024.
Under the Bill, REZs will be declared by regulation following approval by the Treasurer and a recommendation by a REZ delivery body (being, a government entity appointed by gazette under the Bill - Powerlink). The regulation will identify the boundary of the REZ, its objectives, the applicable management plan for the REZ and the REZ transmission network. The declaration will remain in force until repealed, and any amendment or repeal is subject to the Minister being satisfied it will not adversely affect any REZ participant.
In order to connect to a REZ transmission network, a connecting entity making an application to connect must be an eligible entity for a project that is an eligible project (as determined by the process in the applicable management plan for that REZ). The management plan for a REZ will be developed by the relevant REZ delivery body and each management plan will provide for a tailored dispute resolution process in respect of connection and access to the REZ transmission network (rather than under existing NER processes). Ultimately, access and connection arrangements for a REZ will only be known once the management plan comes into force.
The Bill does not provide bespoke funding for REZs – rather, REZ transmission infrastructure is self-funded under the REZ framework which enables Powerlink to decide fees and charges payable by a participant for connection and access to the REZ transmission network. The Bill also provides that the Minister may declare that unrecovered establishment and operational costs, and REZ assessment costs, can be recovered by Powerlink through charges for prescribed transmission services.
More detail is still to come in Regulations – the REZ framework under the Bill relies on a number of regulation-making powers including REZ declarations and further matters to be included in a REZ management plan.