When there’s a worthy goal in sight such as solar or any type of renewable energy project communities can be boosted into action, write Franziska Mey and Jay Smiles, as long as the rules are fair and clear.
The writing is on the wall: Australia is in the middle of a transition to clean energy. Our energy supply is changing rapidly due to new energy technologies such as low-cost wind and solar photovoltaics (which are cheaper to build than new coal), battery storage, energy control and management systems and energy efficiency measures. We have ageing coal-fired power stations that will need to close in the upcoming decades. And we have entered the period of the empowered energy consumer and prosumer, decentralised clean energy generators and demand stability.
The choice we face is not between clean or dirty energy but rather how we transition to clean renewable energy: either we can leave it to chaotic and slow-moving market forces or we allow for a fair and just transition that ensures all Australians can take advantage of the country’s abundant renewable resources.
With more than 1.5 million solar rooftops, many Australians already participate in the transformation of the energy system. However, due to inhibiting circumstances a number of households are excluded from this movement. Among those “locked out” are tenants, apartment dwellers, those without solar access and low-income households.
Statistics show in particular poor solar penetration rates in postcode areas with the lowest socio-economic conditions, while the highest are in the second-lowest-income quintile. (It may surprise some that the uptake of solar in the highest income quintile postcodes are almost as low as the lowest income quintile.)
There are three main issues that hamper these locked-out customer segments:
- Accessibility, which is usually associated with unsuitable roofs and a disincentives for landlords to install new technologies (known as split incentives);
- Affordability, associated with a lack of access to up-front capital and credit unworthiness, and;
- In order to make new energy technologies and options less confusing there is a need for simplicity and trust to minimise the risk of default while maximising the benefits of uptake.
The opportunity to participate in and benefit from these new energy solutions is even more important at a time when electricity prices have doubled due to network gold-plating. There is already a strong business case for “behind the meter” solar PV and soon will be for batteries, which encourage reduction in consumption. The consequence would be fewer people using the grid, causing electricity prices to increase further and particularly affect already vulnerable households.
While some might be tempted to try to slow the pace of uptake of renewables, this is short-sighted. Instead, we need new models and policies that unlock the potential for these customers (renters, low-income households, etc) to participate in and benefit from clean energy solutions.
Since Australian policymakers are slow in responding to the new circumstances, community groups have taken it on themselves to develop and advocate for innovative models that can ensure no one is left behind. The Renewables for All project led by Community Power Agency and funded by Energy Consumers Australia has identified a number of models that operate and/or could be suitable for the Australian market. These models fall loosely into two categories: firstly, those that collectivise renewable energy ownership, for example community-owned renewable energy or Solar Gardens, and; those that provide solar at zero up-front cost and make the repayment over time easy for the consumer.
Model 1: Community-owned renewable energy
There are more than 20 community-owned renewable energy projects (CORE) in Australia. They range from Hepburn Wind to Repower Shoalhaven Community Solar, which offer households and businesses shares, or a number of panels in a solar or other renewable energy system, and the members/shareholders then receive a financial return on their investment. These projects also have non-financial benefits, including increased energy literacy, local economic development and resilience.
Although the Australian community energy sector still faces significant regulatory and cultural barriers it experienced a strong growth from two or three groups in 2010 to more than 80 groups in 2016. Various models of community energy have emerged as primary enablers for diverse segments of our communities to come together to access clean energy solutions by reaching beyond the bounds of a property.
Pingala’s Remote Aboriginal Community Solar project is a community-owned renewable energy project that specifically targets affordability. Pingala is a vocal Sydney-based non-for-profit which has collaborated with The Valley Centre to empower Indigenous communities and localise their energy source. Aboriginal communities across NSW are prone to suffer from severe weather events but also unemployment, adding to challenging living conditions.
A new energy business model which creates independence through solar power, battery storage and education has helped put control back into the hands of remote indigenous communities, with support from the NSW government.
AllGrid Energy, an Aboriginal corporation, is making plans to put the model into action by installing grid-connected solar and batteries for 60 houses at targeted sites.
The project is set to make sustainable living in remote NSW affordable and has also created a model which can be replicated by other Indigenous communities throughout Australia.
Model 2: Solar Gardens
The issue of accessibility can be addressed with an innovative model that is popular particularly in the US. “Solar gardens” enable renters and apartment dwellers to manage their power bills while mitigating climate change. A household purchases (or subscribes to) a share in a solar garden. In return, a retailer provides an on-bill credit for the electricity produced by the household’s share of the solar system, and the savings are greater than the purchase or subscription costs.
The system also works for low-income households when, as in the US, regulation requires the solar garden operator to offer a certain proportion of their capacities for free or at a discount to low-income customers.
While this model has contributed to a community solar boom in the US, solar gardens don’t yet stack up economically in Australia. The combination of low wholesale prices (for the electricity generated) and high network costs (electricity transported no matter how close the array is located to the consumer) would be at best marginal and at worst loss-making. New incentives and regulatory changes are needed to kick-start this new way of tapping into renewable energy sources and creating a win-win situation by enabling customers to benefit from distributed energy technologies, while maintaining some degree of grid utilisation.
That said, the benefits of solar gardens are starting to be recognised. Recently the Institute of Sustainable Futures in collaboration with Moira and Swan Hill councils investigated the potential of a solar garden project as part of the ARENA-funded local-energy trading virtual trials.
Model 3: Rates-based financing
In an effort to address affordability concerns local councils have been looking at ways to help ease the burden of the up-front costs of solar and energy efficiency. Rates-based financing has already been implemented for a number of commercial buildings across Australia, also known as Environmental Upgrade Agreements. In the residential space, the only example so far is Darebin Solar $avers, which has witnessed great success.
Three-hundred low-income households in Darebin were supported by their city council as they installed solar PV on their rooftops. With free up-front installation and a special rate charged to residents over 10 years, households were able to make the switch to clean energy.
Solar systems were designed to ensure electricity bills would be lower and the council used its own capital reserves to eliminate an interest rate on debt due to the program’s climate and social justice focus. The project specifically targeted low-income earners who, without the council’s financing, could not have afforded solar PV installation. Now a number of the Greenhouse Alliances of councils are looking at ways to scale the Darebin Solar $avers program across the state.
The Community Energy Congress
These examples are just the beginning, but the second National Community Energy Congress in Melbourne in late February will be a great opportunity to learn more about what is possible. Community experts, government and business representatives are coming together to discuss and to encourage the implementation of those and other new community energy models.
As community energy continues to strengthen and find its place in Australia’s renewable landscape, state governments are working to support the cause. Both NSW and Victorian have indicated policy and funding support for community energy, a fairer transition to clean energy and for the Community Energy Congress. We look forward to seeing other state governments follow in their footsteps.