What are Australia’s renewable energy initiative?

by Martin Oliver June 7, 2016

Traditionally, electricity has been generated in polluting industrial-scale facilities and then distributed over long distances, resulting in some transmission losses en route. Recent decades, however, have seen the emergence of small-scale, modular and flexible delivery systems that are often known as distributed generation, or microgrids.

During the 1970s, a number of factors, including oil price shocks and opposition to the spread of nuclear power, led forward-thinkers to turn their attention towards renewable energy. In Denmark, small community wind farms had appeared by the mid-1970s and played a key role in ramping up the country’s wind power industry while improving turbine technology. Today, the country has more than 2100 community wind farms in operation.

Community power then took off in Germany, again with a focus on wind generation, and this has resulted in 51 per cent of German renewable energy capacity now being community-owned. The movement is growing in a number of countries, including Japan, the Netherlands, the US, the UK and Canada; in these last two cases, it has faced uphill challenges due to difficult regulatory environments.

In developing countries, community generation largely involves hydro, biogas and solar photovoltaic. China, India and Nepal all have huge numbers of biogas installations, some of which are larger community-sized units.

Leading the way

Feldheim is a small village that lies about 60km southwest of Berlin, in the former East Germany. Starting in the 1990s, it partnered with a local company to build what is now a wind farm of 47 turbines on the edge of the village, in addition to a sun-tracking solar farm on a former military site a few miles away. A more recent addition is a biogas facility that processes agricultural waste and is connected to commercial buildings, homes and livestock enclosures.

The village runs its own microgrid that was financed by residents, using about 1 per cent of electricity generated while selling the rest back to the grid. It sets its own power prices, which are about 30 per cent below retail, while heating is roughly 10 per cent cheaper than the German average. The success of Feldheim is due to a combination of factors, including a highly motivated population, land that was suitable for wind turbines and the availability of agricultural wastes.

Australia comes close to having the world’s most expensive electricity, and New Zealand is not far behind.

In the Indian province of Bihar, the village of Dharnai is powered by a solar microgrid that opened in July 2014. This project, implemented by Greenpeace, involves a 100kW solar array that powers 450 residences plus businesses and streetlights. A further 80,000 villages across India could benefit from a similar setup and, while the Australian coal industry argues that its exported product can lift developing countries out of poverty, the Indian authorities are not in a hurry to connect rural villages to a largely coal-powered national grid.

Spreading to Oceania

Australia comes close to having the world’s most expensive electricity, and New Zealand is not far behind. Left largely unchecked, Australia’s power networks have profited from over-investing in poles and wires, a major contributor to the doubling of prices over the past few years.

Against this upward trend, the cost of solar panels has been steadily tumbling and wind is looking encouraging, too. According to Bloomberg New Energy Finance, by early 2013 the cost of wind generation in Australia had dropped below that of coal and gas, even leaving aside the now-defunct carbon price.

Given this background, it is perhaps no surprise that Australia (and to a lesser extent New Zealand) is seeing a significant groundswell of enthusiasm towards decentralised power generation.

Arriving in Australia during the 2000s, community power has been arousing interest across the country. Currently, more than 50 projects are underway and several are already up and running. Each success adds to a knowledge bank that can be used elsewhere. Benefits often include reduced carbon emissions, lower power bills and stable power prices, regional economic development, job creation, democratisation of the power supply and the prospect of income for shareholders.

With Australia having a sparse population outside the capital cities, poles-and-wires investment in rural areas sometimes makes little sense. In rural South Australia, where there are only three customers per kilometre of line, the CEO of SA Power Networks, Rob Stobbe, has predicted a fast shift towards autonomous rural generation.

Success stories

Australia’s first community wind farm and large-scale community power initiative was Hepburn Wind in Victoria, close to the twin towns of Daylesford and Hepburn Springs. A co-operative was chosen for the legal structure, and most of the funding (about AU$10 million/NZ$11 million) was raised via a share offer.

Following a 2004 public meeting, the project required seven years before power was connected to the grid. There are currently two wind turbines, each with a 2MW capacity. Others may later be installed, but at a different location. As with other wind farms, the expected economic life is 25 years, after which one option would be recommissioning.

All of the output is bought by retailer Red Energy and sold as GreenPower. While sufficient to power roughly 2300 homes, more than the population of Daylesford, in this case the electricity enters the national grid instead of a Feldheim-style community microgrid. An interesting spin-off from the project’s scale is that the quantity of energy produced is sufficient for it to compete on the wholesale market and therefore obtain a better price than via a direct purchase agreement.

The second community wind farm to come on-stream was on the southern coast of Western Australia. The Denmark Community Windfarm is located at Wilson Head, a rocky headland about 10km south of the town. Here the structure chosen was a limited company and the shares were sold within just a month.

The project took 10 years from conception to completion, with various bamboozling challenges, including a withdrawal of funding by the Howard government in 2006, some vocal local opposition and local and state government red tape. Each of the two turbines generates 0.8MW and the community has permission for a couple more. All the power is sold to Synergy, the state-owned power retailer, and is equivalent of 55 per cent of Denmark’s usage.

Despite generally being comparatively small-scale, solar photovoltaic is an important part of the community power mix. In Nimbin in the Far North Coast region of New South Wales, the local community centre collaborated with the Rainbow Power Company on a 45kW project involving panels on the roofs of six different buildings, five in the village and another a few kilometres out of town.

If hammering on the locked door doesn’t succeed, then finding a way around it may be the solution.

Repower Shoalhaven is a dynamic group on the NSW South Coast, which in mid-2014 unveiled the country’s largest community-owned solar farm. This involved covering the roof of the Shoalhaven Heads Bowling and Recreation Club with a 99kW system, of which 80 per cent is community owned and funded, with the remainder funded by the club.

Its innovative investment model, which could easily be replicated elsewhere, involved soliciting roughly AU$6300 (NZ$7000) per shareholder, with an anticipated pre-tax return of 7.9 per cent per annum over 10 years. At this point, investors will receive their principal back and the Bowling Club will be given the panels. This investment-based approach is particularly appealing for renters and unit dwellers, who are generally unable to put solar on their roofs.

Another solar installation was conceived, built and opened near Bega, also on the South Coast, in 2015. There, the group Clean Energy for Eternity designed a 50kW layout of panels at the Tathra Treatment Plant, spelling out the word “imagine” to anyone passing overhead. Some of the financing came from community members and other solar supporters, who were invited to purchase panels for AU$250 each, in the form of tax-deductible donations.

At the planning stage

Many other projects are either at the visioning, research or implementation stages. They include:

New England Wind, northern tablelands of NSW.
Mount Alexander Community Renewables, Castlemaine. Its major focus is on wind power.
Pingala, a group with a vision for a network of community-owned solar farms across Sydney.
Fremantle Community Wind Farm. This is stalled at present because the Fremantle Port Authority has been unwilling to lease the land in question.
Reinstating a historic hydro-electric power system in Warburton, Victoria. Judging from its Facebook page, this plan for a small-scale generator has gone quiet in recent years.
Farming the Sun, a plan for a network of five community solar farms in rural NSW.
In late 2014, the NSW government invited offers in the New England region for the state’s first zero net energy town that would run off a local community microgrid. Six applications were made, including from Inverell and Glen Innes.
A proposed Australia-first community energy retailer in the NSW Far North Coast region.
New Zealand’s only high-profile community wind farm at Waitati, near Dunedin in the South Island. The community has plans for three turbines, each with a capacity of 0.5–0.8MW, which will be sufficient to power 700 households.
The company NZ Solar Farms is keen on developing a network of community-scale solar projects in New Zealand.

Meeting the challenges

In Australia, the advocacy group Coalition for Community Energy has asked the Federal Government for an AU$50 million (NZ$56 million) grant to meet the steep costs involved in developing community power. While nothing has so far been put on the table, the Greens have stepped up and offered a generous AU$100 million (NZ$112 million.)

With the retail cost of power in Australia and New Zealand generally far higher than solar buyback rates, smaller-scale community solar currently relies heavily on a large on-site user, such as a club or sewage treatment plant. Behind the scenes, lobbying is taking place to allow “virtual net metering” that would enable electricity to be exported off-site for a good price, making community solar installations more economically viable.

Australia is remarkable for its unpredictable regulatory environment governing renewable energy, with federal and state policies in recent years swinging wildly anywhere between strong support and outright opposition.

Following the removal of Australia’s carbon tax, attention has switched to the Renewable Energy Target (RET), which, simplified, stands at 20 per cent by 2020. The RET’s Renewable Energy Certificate program, under which one REC, representing one megawatt worth of generation, is currently worth AU$35 (NZ$39), makes a big difference to the economic viability of community renewables.

New Zealand’s embryonic community power sector faces the difficulty of a challenging regulatory system. More positively, the country is working to achieve a target of 90 per cent renewables by 2020, up from a current figure of 78 per cent, and locally produced energy will hopefully be part of the mix.

At the time of writing, Coalition governments in NSW and Victoria are tying up most prospective wind farms in red tape with some of the world’s toughest rules, despite a lack of evidence that living close to a wind farm has the capacity to harm human health. According to Friends of the Earth, Victoria’s policies have “killed off” two community wind farms, one at Woodend in the eastern Macedon Ranges and the other at the Surf Coast.

No ambitious initiative would ever succeed if it ground to a halt as soon as it encountered its first obstacle. As with many other things in life, persistence is the key. If hammering on the locked door doesn’t succeed, then finding a way around it may be the solution.