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 confidence to developers to invest in feasibility activities

Feasibility permit:

•    7-year duration
•    provides for the permit holder to assess the feasibility of an ORE development that the permit holder proposes to carry out in the permit area 
•    gives the permit holder the exclusive right to apply for a commercial permit in the relevant area.

Minister launches application round:

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

Regulator (MBIE) assesses applications. Regulator:

• Notifies public of proposed developments and opens public submissions
• Consults with relevant Māori groups
• Assesses applications
• Ranks applications where applications are deemed in competition with each other (eg there are spatial overlaps). 

Minister determines whether to award a feasibility permit:

• Regulator makes recommendation to Minister
• Minster grants or declines permit.

2. Commercial permits (alongside consents) enable construction and operation of offshore renewable developments

Commercial permit:

• Up to 40-year duration
• Enables construction and operation of offshore renewable energy infrastructure (alongside resource and marine consents).

Developer applies:

• Developer applies before feasibility permit expiry
• Developer can reduce the size of the area (minor extensions may be considered).

Regulator (MBIE) assesses application. Regulator:

• Consults with relevant Māori groups
• Assesses application.

Minister determines award of commercial permit:

• Regulator makes recommendation to Minister
• Minister grants or declines permit.

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 or penalties apply for breaches of the legislation or 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 whether an offshore wind project is feasible. Determining this involves gathering all the information necessary to assess whether a project is technically, commercially, environmentally, culturally and socially viable.

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.