Our German Desk
Last week the Offshore Renewable Energy Bill (Bill) was introduced into Parliament. The Bill is the culmination of the discussion and consultation processes commenced by the Ministry of Business Innovation and Employment (MBIE) back in December 2022 and supports the current Government’s stated strategy to increase the supply of affordable, clean energy while at the same time enabling New Zealand’s transition to net zero carbon emissions by 2050.
The Bill’s introduction comes at the end of a turbulent year in the energy market in New Zealand with wholesale electricity prices skyrocketing throughout the course of 2024 amid energy supply issues, arising from subdued levels of renewable energy generation.
Offshore Renewable Energy – An opportunity for windy New Zealand
Offshore renewable energy refers to any infrastructure which is placed in or on the sea, and that generates energy from wind, ocean currents, light or heat from the sun, rain and geothermal heat. This includes:
- Floating solar
- Wave energy
- Tidal Energy
- Floating wind
- Offshore wind
Wind in particular is an abundant resource identified as presenting an opportunity for New Zealand offshore renewable energy. The International Energy Agency has noted that wind resources are generally of higher quality for energy production nearer to the poles, and the capacity factor (wind speed metric based on performance over the course of the year) is particularly high (between 50-65%) off the coast of New Zealand.[1] International developers interested in offshore wind energy, both fixed and floating foundations, have identified Waikato, South Taranaki Bight, North Taranaki Bight, and Southland as technically viable locations for offshore wind energy.
Permitting regime under the Bill
The Bill sets out the legislative framework for two classes of permits (in bold below), awarded by the Minister of Energy:
- Feasibility permit: This allows developers to begin on-site investigations and detailed design. This also gives the holder certainty that no other offshore renewable energy developers will be approved to develop the same site while they undertake feasibility studies.
- If a feasibility is granted, developers would apply separately for a consent under the Resource Management Act 1991 (RMA) and the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012 (EEZ Act).
- Commercial permit: Once a project was ready to proceed, the developer would apply for a commercial permit, to proceed to the construction phase. A commercial permit has a duration of 40 years, with provision for the Minister to extend it.
The Bill does not replace the need for existing regulatory requirements – consenting requirements under the RMA and EEZ Act would still apply. However as offshore wind has not been specifically provided for in the EEZ Act (which meant considerable uncertainty as a ‘discretionary activity’), the Bill now provides a specific pathway and much improved clarity for investors in offshore wind energy projects.
In order to obtain a feasibility permit, applicants will need to meet a minimum eligibility threshold and establish that they have the technical and financial capability to install, operate, maintain and decommission the proposed infrastructure. Additionally, the project must be likely to deliver benefits for New Zealand. In considering the award of feasibility permits, the Minister of Energy will have regard to (among other things) any significant risks to national security interests and any perceived impact on Treaty of Waitangi settlements. Consultation requirements for Māori groups are imposed on both the applicant and the Minister of Energy.
The Bill also creates obligations on permit holders to decommission their infrastructure at the end of its life, supported by financial securities needing to be maintained to allow the Crown to attend to the decommission if the permit holder fails to do so.
Final Thoughts
The Bill has been welcomed by industry participants as a critical legislative step in New Zealand’s overall plans for growth in the renewable energy sector. It provides a clear and specific framework as regards the pathway for investment in offshore renewable energy and is expected to pave the way for investment from industry participants. The Bill is expected to pass into law mid-2025, which will allow initial permits to be issued in 2026. Our team is following developments closely.
Our Corporate & Commercial team represent domestic and international clients operating across energy and infrastructure sectors. If you require further information, please contact Ben Hickson.
Disclaimer: The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice. Specific legal advice should be sought where required.
[1] Page 49, International Energy Agency “Offshore Wind Outlook 2019” (https://iea.blob.core.windows.net/assets/495ab264-4ddf-4b68-b9c0-514295ff40a7/Offshore_Wind_Outlook_2019.pdf)
