Overview of the offshore renewable energy regime

Infographic showing an overview of the regulatory regime for offshore renewable energy that was agreed to by Cabinet.

The proposed regime will:

• give developers greater certainty to invest
• allow the selection of developments that best meet New Zealand’s national interests.
• manage the risks to the Crown and the public from offshore renewable energy developments.

The regime covers all forms of offshore renewable energy. Offshore wind is the most developed technology.

Indicative offshore wind project timeline

Feasibility – 7 years

Commercial – 40 years (construction – 3-5 years, operation 20-35 years, decommissioning)

Offshore renewable energy projects will require two permits

1. Feasibility permits will give greater certainty to undertake feasibility studies

Feasibility permit

Feasibility permit assessments will give priority to project that are most likely to be delivered successfully, at a pace and scale to deliver the greatest benefits to New Zealand:

• 7-year duration
• comparative assessment
• gives the exclusive right to apply for a commercial permit in the relevant area.

Minister launches application round:

• Minister for Energy will set terms of round eg technology and region
• Minister for Energy and Resources may restrict seabed mining permits in areas within the round
• Developer identifies site and consults with iwi/hapū before applying.

Regulator (MBIE) assesses application. Regulator:

• Notifies and consults publicly
• Consults with relevant Māori groups on Treaty Settlement impacts
• Assesses application
• Ranks applications where there are overlaps or overall limits.

Permit granted:

• Regulator makes recommendation
• Minster grants or declines permit
• Feasibility permits will be subject to ‘use it or lose it’ type conditions.

2. Commercial permits (alongside consents) will enable construction and operation

Commercial permit

Commercial permit assessments will focus on final checks before construction begins.

• Up to 40-year duration
• Pass/fail assessment (non-comparative)
• Enables construction and operation of offshore renewable energy infrastructure (alongside resource and marine consents)

Developer applies:

• Developer applies when ready (within 7 years of being granted feasibility permit)
• Developer can reduce the size of the area (minor extensions may be considered)

Regulator (MBIE) assesses application. Regulator:

• Notifies application
• Consults with relevant Māori groups on Treaty settlement impacts.
• Assesses application (non-comparative and only where not covered by other legislation)

Permit granted:

• Regulator makes recommendation
• Minister grants or declines permit
• Applicants provide feasibility data to the regulator.

Costs will be recovered

• The regulator will recover the costs of administering the regime through fees and levies.
• The government will not collect royalties, as this would deter investment and the costs would flow through to consumers.

Permits may be changed

• Permits may be varied, transferred, and surrendered, with agreement from the Minister.
• The Minister may also agree to a change of permit holder.
• A range of offences and penalties apply for breaches of the legislation and permit conditions. The Minister can revoke permits in the case of serious breaches.

Decommissioning

• Decommissioning obligations apply to generation and transmission infrastructure.
• Financial security will be required to cover full decommissioning costs. Financial security would build up to reflect key risk periods ie construction and towards the end of asset life.
• Trailing liability will be limited to the previous permit holder. It will continue until financial security has fully accrued, or the Minister for Energy agrees to release the obligation. 

Safety zones

Safety zones can be declared around offshore renewable energy activities to manage risks to people and infrastructure.

Projects will also require environmental (and other) approvals

Developers will need:

• Resource consents under the RMA or its successor eg for transmission cables running through the territorial sea and onshore infrastructure
• Marine consents under the EEZ Act for activities in the EEZ eg for turbines
• Other relevant approvals eg under the Overseas Investment Act 2005 and Maritime Transport Act 1994.

Offshore renewable energy projects will only be eligible for environmental consents, including through the fast-track approvals process, if they hold a feasibility or commercial permit (to avoid land banking outside the regime).

This diagram shows the stages of an offshore renewable energy project

1. Feasibility

The feasibility stage is an opportunity to determine the appropriate scale and location of offshore wind infrastructure. Determining this involves gathering all the information necessary to assess whether a project is technically, commercially, environmentally, culturally and socially appropriate.

2. Construction

Constructing offshore wind energy infrastructure can coast hundreds of millions of dollars and take several years. There are a series of activities that take place to prepare the site, manufacture the components needed and construct the infrastructure.

3. Operation and maintenance

Offshore wind infrastructure can be in operation for decades. It needs frequent maintenance and inspections to check that components are working efficiently. Ongoing compliance with health and safety and environmental regulation will be a large part of the activities at this stage.

4. Decommissioning

Components, such as turbines, will need to be decommissioned at the end of their useful economic lives. As the majority of offshore wind energy infrastructure has been constructed in the twenty-first century, there is little global experience in this area, but there are many similarities with offshore oil and gas, and lessons learned.