Renewable energy czar locks onto near neighbour insurance fears, offers national fix

Neighbours of renewable energy projects are consistently asking one question and it’s one the Australian Energy Infrastructure Commissioner (AEIC) now wants to put to bed: insurance. 

The fear is that if, say a fire, starts on a neighbouring property and damages a wind, solar or battery next door, the landowner’s existing public liability insurance is unlikely to cover the whole cost of the damage. They fear lifting their existing level of cover to account for the new infrastructure could be prohibitively expensive.

“Landholders living nearby to renewable infrastructure should not face increased insurance liability or costs,” says AEIC commissioner Tony Mahar.

His view and that of the insurance, renewables and farming industries is that communities expect “fair and reasonable protection from liability resulting from accidental damage to infrastructure.”

The AEIC is proposing a model where energy developers and operators contractually protect neighbouring landholders for energy project losses or liability.

“This collaborative initiative aims to help build social licence, a genuine partnership with rural and regional communities, and improve landholder confidence,” Mahar said. 

The initiative is the latest step in a process that was already underway last year, when the AEIC recommended neighbour agreements could include reimbursement for extra public liability insurance costs and set out who is responsible for any accidental damage to energy infrastructure.

Repairing relations with neighbours and communities is one of the top priorities for the leadership of the Clean Energy Council (CEC), whose board is now run by people from the biggest developers in the country. 

As a result it’s strongly backing the national idea as a way to be a good neighbour.

“Clean energy projects succeed when the people who live alongside them feel respected and protected, and this approach is a practical demonstration of that commitment,” the CEC’s William Churchill said in a statement. 

The insurance question is one that, to date, has not been answered satisfactorily by developers who have focused on assuring communities that they will have insurance, and that premiums don’t rise because of an energy project next door, rather than neighbours’ need to take on more themselves. 

A common phrase seen by Renew Economy on project and industry FAQs is a shortened version of a statement put out by the Insurance Council of Australia in 2024.

“The Insurance Council of Australia has noted that insurers do not have specific concerns related to insuring properties that neighbour clean energy infrastructure. Additionally, increases in premiums are highly unlikely to occur as a result of neighbouring clean energy projects.

“Wind farms have their own public liability insurance which will cover damage to local properties caused by the wind farm should that occur.”

Not a problem – yet

The AEIC says it’s not yet heard of a renewable energy operator pursuing a neighbour for liabilities under a public liability insurance claim – although the opposite has happened.

In 2017, neighbours sued Infigen over a bushfire started by a crow landing on power lines connecting the Woodlawn wind farm to the grid. Infigen, now owned by Iberdrola, settled in 2018. 

But while the risk is perceived, it’s a worry that needs to be dealt with before it becomes a reality, the AEIC says in a new position statement.  

“While underlying risks have always existed, the emergence of energy assets on neighbouring land has heightened the potential impact of the risks,” the AEIC says. 

Allowing the fear to fester will further erode social licence, trust and landholder confidence. 

Normal farm liability policies cover things such as weather events or machinery damage. They aren’t built to protect against major public liability exposures.

The AEIC is suggesting a national approach, starting with figuring out who is a neighbour for the purposes of insurance.

It suggests anyone who receives a neighbour payment, who has entered a contract with the project owner, lives within 3.5km or is close enough that the terrain, winds, and vegetation might put them at risk, could count as a neighbour to be covered by the project owner’s insurance. 

The next step is for developers and owners to hold their neighbours “harmless”, unless the damage was from negligent or wilful conduct, and for the parties to share responsibility – so a developer might pay for a fire extinguisher in a shed and the landowner will support those suggestions. 

And it recommends that while this should start as a voluntary guideline, it would be worthwhile for governments to build it into future guides and legislation.

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