Huge fire levies could “really hurt” wind, solar and battery projects, investors warn

Proposed changes to property tax laws in Victoria risk hobbling renewables growth at the worst possible time, the Clean Energy Investment Group has warned, with the potential to add millions of dollars a year in extra running costs to solar, wind and battery projects in the state.

The CEIG says the new threat to Victoria’s renewables sector is an “unintended consequence” of planned changes to Victoria’s Valuation of Land Act 1960 that are currently before parliament.

Essentially, the changes would see the value of renewable energy infrastructure assets included in calculations for the Fire Services Property Levy charged to properties and used to fund Victoria’s fire and emergency services.

Property owners currently pay the levy when they pay their council rates each year, the amount for which is based on a mix of fixed charges and variable charges adjusted with changes to the capital improved value of the land.

The CEIG says the proposal to factor in the value of solar and wind farms on properties could send the cost of the fire levy soaring by between 10-25 times, compared to current levels – a cost that is likely to be passed on to the renewable energy investors who lease the land.

For a project like the massive 1.3GW Golden Plains Wind Farm, the CEIG says this could boost project costs by an estimated $2 million-plus per year, or $10,000 per turbine – about 10 times what CEIG estimates they are currently liable for.

For the state’s energy and climate department, too, the timing could not be worse, following the much-hyped launch of the new-look State Electricity Commission and the race on to meet Victoria’s legislated target of 95% renewables by 2035.

CEIG’s policy director Marilyne Crestias says the proposed changes – which went before parliament without any consultation with industry – risks making Victoria less attractive for renewables investment and even deterring international capital from being invested in the state.

“This is really a large impost on generators and it will make their financial decision on whether to invest in Victoria or not more difficult,” Crestias told RenewEconomy on Tuesday.

“[This] could really hurt Victoria’s ability to meet its targets and, therefore, Australia’s targets as well,” she said.

“Generators understand that they need to pay their fair share of the fire services levy, but the changes that are proposed are really much, much bigger than that.

“By our estimates, the levy could go between 10 times to up to 25 times …and so we don’t think that’s a reasonable [amount].”

“We would think that the levy should be set at a much more reasonable rate that is much more proportionate.”

Crestias says CEIG has raised these issues with Victorian treasurer Tim Pallas and the state’s minister for energy, Lily D’Ambrosio.

“We know that the treasurer is very keen on ensuring that Victoria remains an attractive place to invest in so we very much want to continue engaging with them to resolve those issues,” she told RenewEconomy.

“And we think that it’s important to do that, you know, very soon because investors will be nervous … [if] they suddenly have to factor in much larger, unexpected costs into their contracts.”

A Victorian government spokesperson said in an emailed response to Reneweconomy:

“The amendment reinforces the original intention of the law.

“The Allan Labor government leads the nation in supporting the growth of renewable energy to secure a green energy future.

“We assess proposed amendments throughout the legislative process to ensure they reflect the government’s priorities, and that is happening in this case.”