VicGrid’s Social Value Guidelines become mandatory for renewable energy projects from mid-2027
VicGrid and the Department of Energy, Environment and Climate Action (DEECA) have released updated Community Engagement and Social Value Guidelines for Renewable Energy and Transmission Projects, setting out the Victorian Government's minimum expectations for how renewable energy, storage and transmission developers engage with communities, Traditional Owners, landholders and neighbours, and how they should create social value and economic benefits through their projects in Victoria.
While first published in 2021, the guidelines have been significantly updated as a result of community and industry feedback.
Importantly, from mid-2027, when the Victorian Access Regime commences under the National Electricity (Victoria) Act 2005 (Vic) (NEVA), project developers seeking to connect to the state's declared transmission system will be required to demonstrate how they meet the Guidelines’ expectations and contribute to its outcomes as a condition of obtaining access to the grid.
Which projects are impacted?
The Guidelines apply broadly to all projects seeking access to Victoria's declared transmission system [1] under the new Victorian Access Regime under the NEVA. This will apply to all projects seeking connection, not just those within the declared Renewable Energy Zones ( REZs ).
However, the type of approval required depends on the nature of the project:
Projects within a declared renewable energy zone that meet the zone's designated technology type (such as wind, solar or both) must obtain a renewable energy zone authority.
All other projects seeking access to the declared transmission system must obtain a grid impact authority.
In both cases, applicants must prepare and submit a Consultation and Engagement Plan as part of the access application, providing direct evidence of how the project will meet the minimum expectations and contribute to the outcomes set out in the Guidelines. Applications will be assessed by VicGrid against a range of criteria, including social performance.
Transmission developers tendering to partner with VicGrid to deliver transmission projects as part of the declared shared network are also expected to consider the Guidelines alongside project-specific tender documents.
Until the Victorian Access Regime takes effect (expected mid-2027), the existing open access arrangements under the National Electricity Rules will continue to apply. However, VicGrid has indicated it will nevertheless expect renewable energy project developers to follow the Guidelines in the interim.
What do the Guidelines require?
Community engagement
At a minimum, developers should engage with:
communities surrounding the project, including the local government of the project area;
host landholders;
neighbouring and nearby landholders; and
Traditional Owners.
The Guidelines also include dedicated sections on engaging with local government and with local industry.
The Guidelines acknowledge that the geographical area of the relevant community will vary for every project depending on the project size, scale, location and impacts.
Developers are expected to engage early with communities, specifically prior to submission of planning permit applications or referrals under the Environment Effects Act 1978 (EES Act) or the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act).
The expectations are built on best-practice community engagement principles including timely and transparent information, integration of feedback, provision of diverse and tailored communication methodologies, respectful communication and ensuring there are clear processes for enquiries and complaint management and dispute resolution.
Engaging with neighbours and nearby landowners
The Guidelines establish detailed minimum expectations for developer engagement with ‘neighbouring and nearby’ landholders. These are defined as those directly adjoining the land hosting project infrastructure and those within ‘close proximity’, having regard to the project's size, scale, location and impacts.
Developers are expected to:
provide timely and transparent information at the earliest opportunity about the project's impacts and risks, what can and cannot be influenced through negotiation, and the role of consultation;
consult with neighbouring and nearby landholders on potential environmental, physical and operational impacts and risks, and seek to address concerns through project design and delivery, including ways to minimise, mitigate and manage them;
consult with neighbouring landholders on addressing insurance matters and provide transparent information on any perceived or potential implications and risks;
inform neighbours about planning scheme requirements, including setbacks, and discuss any implications and impacts; and
consult with neighbours on how agreements regarding impacts and benefits will be managed, including how agreements are developed and, where appropriate, formalised.
Key requirements for landholder agreements
For host landholder agreements specifically, the Guidelines require developers to negotiate transparently and ensure agreements address a number of prescribed matters. Developers are also expected to provide adequate support to landholders in the negotiation process, including provision of independent legal, financial, tax and insurance advice before entering into any agreements.
Key requirements include:
preventing contractual clauses from unreasonably restricting landholders from discussing details of the project with other community members;
providing adequate support to landholders, including sufficient time to consider commercial agreements, and cover reasonable costs incurred by landholders in obtaining independent legal, financial, tax and insurance advice before entering into any agreement;
ensuring preliminary agreements do not place long-term obligations on landholders beyond what was originally intended. For example, preliminary licence agreements should not commit landholders to host infrastructure or limit them from sharing information;
ensuring agreements are clear and fair regarding renewals or extensions and include provisions allowing landholders to terminate for valid reasons once the agreed term has ended; and
clarifying responsibility for paying increased costs or new costs associated with hosting the infrastructure, such as insurance premiums, rates, levies, land taxes or duties.
specifying developer responsibilities and commitments on decommissioning, remediation and any other end-of-life arrangements, including negotiation of landholder protections and financial safeguards (including in circumstances where the developer or project owner becomes insolvent or is wound up before the end of project life).
New public liability requirements
The Guidelines introduce a significant new expectation regarding public liability insurance, responding to landholder concerns raised during consultation on the Draft Guidelines, about increased liability risk when hosting or nearby to renewable energy infrastructure.
The overarching expectation is that developers must ensure host and neighbouring landholders do not face an increased liability position as a result of new renewable energy or transmission projects.
To meet this expectation, developers are required to:
limit their right of recovery against landholders. If an eligible landholder accidentally causes damage to the project, the developer is expected not to recover costs from the landholder beyond the landholder's public liability insurance limit. If a landholder does not have public liability insurance, the developer is expected not to pursue them for costs at all;
provide this commitment in writing. Developers are expected to inform all eligible landholders in writing about this commitment to limit recovery rights as early as reasonably possible before construction starts;
ensure their own insurers honour this commitment. The developer is expected to take all reasonable steps to ensure their insurance company agrees to the same limits of recovery rights, including by negotiating a waiver of subrogation in favour of eligible landholders; and
note that a release need not be provided in respect of damage caused by gross negligence or wilful misconduct, nor to public companies, large proprietary companies, companies registered outside Australia, or subsidiaries of those company types.
The public liability expectations will be reviewed within 24 months of the release of the Guidelines, or earlier in response to any significant changes in standard practices within the insurance industry.
Appendix B to the Guidelines provides detailed guidance, including an example deed poll of release that project developers may use to formalise the release. The release is expected to cover the construction, operational and decommissioning phases of the project.
What is a ‘neighbouring landholder’?
Importantly, ‘neighbouring landholder’ is defined for the purposes of the public liability expectations as a landholder whose property:
is within 3.5 km of the project boundary and located in a rural zone; or
shares a title boundary with the host property (or is separated only by a road) and is in a residential, industrial, commercial or special purpose zone.
Key takeaways
For renewable energy and transmission project developers, the updated Guidelines signal important changes:
From mid-2027, compliance with the Guidelines will be mandatory for projects seeking access to Victoria’s declared transmission system under the Victorian Access Regime.
Applicants will be required to demonstrate how they meet the Guidelines’ expectations through a Consultation and Engagement Plan submitted as part of their access application.
The Guidelines introduce detailed expectations regarding community engagement, engagement with Traditional Owners, neighbouring landholders and host landholders.
New public liability expectations require developers to take steps to ensure host and neighbouring landholders do not face increased liability risks as a result of renewable energy or transmission projects.
Developers should review their landholder agreements, engagement strategies and insurance arrangements now to ensure they align with the Guidelines ahead of the Victorian Access Regime commencing in mid-2027. Original and full article
Authored by Meg Lee & Natalie Bannister of Hall & Wilcox
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Meg has over 25 years’ experience advising clients on environmental and planning approvals, liabilities, and statutory regulation for major infrastructure, property developments and commercial transactions across a range of sectors including residential, industrial, health and renewable energy.
A significant component of her practice involves working with clients to obtain planning and environmental project approvals and rezoning of land, including running appeals and hearings before the Victorian Civil and Administrative Tribunal, Planning Panels and Ministerial Advisory Committees, as well as appeals in the Supreme Court. Meg works closely with consultant teams on environmental impact assessment processes for large infrastructure projects and renewable energy projects, including under the new Commonwealth regime for Offshore Wind Farm licences.
Natalie has nearly 30 years’ experience in property, planning and environment law, and acts primarily for energy companies, property funds of all kinds and participants in the social infrastructure and health sectors.
Her real property experience includes advice on land assembly including acquiring a variety of interests over private and public land, easements and co-use agreements, and a variety of complex commercial leasing transactions including options, agreements for lease, leases, assignments, variations, surrenders, development agreements and fund through arrangements.