Anyone living within two kilometres of a planned wind farm would have a right to veto it and delay its development, under strict new state guidelines.
The proposal would give residents greater control over wind farms than they now have over other power stations, or over coalmines or coal seam gas developments.
Wind farms lobby government to drop noise controls
The government said it supported the rapidly growing wind industry and remained committed to the target of generating one-fifth of the state's electricity from renewable sources by the end of the decade.
The Planning Minister, Brad Hazzard, said aspects of the guidelines were ''some of the toughest in the country, possibly the world'', but they would not stifle up to $10 billion in investment expected to flow into the sector by 2020.
The plan would force NSW wind farms to be some of the quietest developed at less than 35 decibels, compared with 40 decibels in Victoria, South Australia, New Zealand and Europe, and 50 in the US.
The opposition said the guidelines would ''decimate'' the industry and the Greens believed that slowing wind turbine development would mean more coal seam gas projects.
But several industry players said they could live with the new rules, although they were still digesting the details yesterday.
NSW has a central role in the national energy target of 20 per cent renewable energy by 2020 and, with wind power now the cheapest form of renewable energy, reaching the target would be more expensive if fewer wind turbines were approved.
The draft guidelines, which are open for public comment until March 14, are expected to affect about 13 of the 17 wind farm developments the government is considering.
The key change is the power granted to community complaints. Without written consent from every resident within two kilometres of a proposed wind turbine, a ''gateway process'' is triggered.
Under this process, the wind farm operator must lodge an application addressing a range of concerns about noise, visual impact, any effect on land values, and some other issues, which would then be considered.
Mr Hazzard said the aim had been to strike a balance between residents' concerns and wind power companies, and he expected neither to be satisfied.
''No one can win completely on this,'' he said. The two-kilometre setback was meant to encourage wind farm developers to consult the community, he said.
Mr Hazzard denied the government had given undue weight to the views of people who believed the low-level noise and vibrations from wind farms had health effects and said the government was simply applying ''the precautionary principle''.
''The jury is still out on health issues, very much so,'' he said. ''But we listened to everybody.''
A series of peer-reviewed studies has found no evidence that low-level sound from wind farms makes people ill.
Some people campaigning against wind farms believe evidence of stress and illness attributable to wind farms will be uncovered in the next few years.
Opposition to wind farm proposals is led by residents but their campaigns have received support from climate change sceptics, who believe wind turbines are an unnecessary alternative to coal-fired electricity.
A wind industry body, the Clean Energy Council, said it would examine the details of the new proposal but it was confident most wind farm operators would be capable of working within the new guidelines.
''The wind industry in Australia already faces some of the strictest development guidelines anywhere in the world,'' said the director, Kane Thornton. ''How well it can adapt to these rules will depend on how they are applied in practice - and that remains to be seen.''
The opposition spokesman on the environment, Luke Foley, said the draft law meant NSW would miss out on billions of dollars in investment and regional jobs. ''Victoria has already seen the industry pack up and leave the state after their restrictive policy was implemented and we will risk the same loss of jobs and investment here in NSW.''
The Greens said discouraging wind power investment would mean the promotion of coal seam gas. ''NSW is abandoning the most cost-effective option for reducing its carbon footprint, which in effect means it is giving the green light for coal seam gas projects across the state,'' said the planning spokesman, David Shoebridge.
Wind turbines in NSW now generate about 190 megawatts of electricity, or enough to power about 80,000 average households. But the industry is poised for massive growth, with enough turbines to power more than half a million homes planned for construction in the next five years.
Some states have considerably more wind power than NSW. South Australia generates more than one-fifth of its electricity from wind turbines.
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