A new approach to public liability insurance is seeking to address one of the biggest concerns of farmers and landholders living alongside proposed renewable energy developments – the potential cost if an accident originating on their property damages solar or wind infrastructure.
The Australian Energy Infrastructure Commissioner (AEIC) Tony Mahar on Tuesday announced the launch of a “hold harmless” approach, developed over 12 months in consultation with renewables developers, government agencies, insurance organisations, farming and landholder groups.
The approach – which includes a template developer deed poll and an insurance policy waiver – has been formally endorsed by the Clean Energy Council, the National Insurance Brokers Association and the National Farmers Federation, among others.
It is based on the premise that people who live near renewable energy facilities should not face or fear increased public liability insurance costs or coverage difficulties as a result of those developments.
Fear is the key word here – currently there is no precedent for a renewable energy developer or operator pursuing a neighbour for costs 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.
The Insurance Council of Australia, too, is on the record as saying the rising cost of cover in the regions is not linked with renewables.
“Premiums are rising because of the escalating costs of natural disasters, the increasing value of homes and vehicles making them more expensive to replace, and inflation pushing up building and vehicle repair costs,” the council told the ABC last year.
But Mahar says that as long the risk is perceived, and as long as accidents happen, then it is a risk that needs to be dealt with.
“We agree that premium pricing is going up for a whole range of reasons, one of which is the incidence of [extreme] weather effects. So for rural regional communities, this is one thing that they … have to worry less about,” Mahar tells Renew Economy.
“We want to demonstrate that the community’s concerns are being addressed in a collective, cooperative … and comprehensive way. That’s that’s the real outcome here.
“This is new for communities. They’ve got concerns, and the concerns are being addressed.
“This is a practical example of industry, insurers, farming groups and government working together to make the energy shift smoother and fairer for regional communities,” he adds in a statement.
Part of the working group has been global developer TagEnergy, which pioneered a range of “hold harmless” protections for its Nearby Neighbour Program at The Pines Wind Farm – a mammoth 2 gigawatt (GW) project with a big battery in the New South Wales Central Tablelands.
“The energy transition depends on strong relationships with the communities hosting renewable energy projects, and that means ensuring the people living alongside projects share in the benefits and are appropriately protected,” says TagEnergy’s managing partner of Australia, Andrew Riggs.
“We were able to bring practical, project-level experience to the AEIC process and contribute a developer perspective on how these protections can work in practice.”
One of the outcomes from the AEIC process is a template developer deed poll and an insurance policy “waiver of subrogation” draft clause offers a practical way for developers to waive their rights to pursue neighbouring landholders for accidental damage – unless they have acted recklessly or intentionally.
And while the AEIC and its collaborators agree there are “multiple regulatory and contractual ways” to achieve the same protections for farmers and landholders – VicGrid, for instance, has its own guidelines – Maher is hoping to establish a broad national standard for the renewables industry.
“We want a national approach,” he tells Renew Economy. “This …is a national transition and, ideally, it should be a harmonised national approach, recognising local differences, but a industry approach.
“What we’re hoping is that it becomes …a national standard. That everyone, all the key stakeholders, adopt it, and it becomes the new normal.”
From here, the AEIC is hoping to collect the more companies and industry groups to sign up to the joint statement and lend their weight to the cause of setting a national standard.
The AEIC says it will also “invite relevant stakeholders to participate in an annual review on the impact and any potential changes to the statement.”
Alongside the joint statement, draft definitions and additional information to support these key commitments and actions will be also published by the AEIC.
