Community Renewable Energy Policy Brief, Community Power Agency

8/2/2019 Community Renewable Energy Policy Brief, Community Power Agency

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NEW ENGLAND CO-OPERATIVE WIND FARM

PRE-FEASIBLITY STUDY:

COMMUNITY RENEWABLE ENERGY POLICY

BRIEF

Prepared by: J. Hicks & N. Ison

For: New England Wind Pre-feasibility Study

Community Power Agency

June 2011


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Community Renewable Energy Policy Brief2

1. CURRENT AUSTRALIAN RENEWABLE ENERGY POLICYThere are currently two main renewable energy policies that will benefit New England Wind

the Federal Renewable Energy Target and the NSW Renewable Energy Precincts Program.

Renewable Energy Target

The Federal Renewable Energy Target, legislates that approximately 20% of Australias

electricity comes from renewable energy sources by 2020. The target has been split into two

bands the Small-scale Renewable Energy Scheme (SRES) and the Large-scale Renewable

Energy Target (LRET). The project proposed by New England Wind will fall under the LRET

band.

The LRET policy works by requiring an increasing number of MWh of renewable electricity to

be generated each year. For every MWh generated, the generator registers for a Large-scale

Generation Certificate (LGC), to be sold to an energy supply organization generally through apre-negotiated power purchase agreement.

The creation of LGCs mean that renewable energy projects such as the one proposed by

New England Wind, will receive a higher price for the electricity it generates than the

average NSW wholesale electricity price. However, the actual LGC price fluctuates based on

supply and demand. For example, energy companies may already be close to their annual

required quota of LGCs, particularly if large renewable energy projects have recently come

online. In this case, the price of LGCs will drop. In the past the LGC price has varied

between $10 and $60 (ORER, 2011).

The fluctuations in LGC price presents a risk for New England Wind, negotiating a good

power purchasing agreement based on a high LGC price is likely to be important to ensuring

the financial viability of the project.

For more information see:www.orer.gov.au/publications/lret-sres-basics.html

Renewable Energy Precincts

NSW Renewable Energy Precincts is a program whereby six areas around the state of NSW

with significant renewable energy potential have been designated renewable energy

precincts. The NSW have employed a designated Coordinator for each precinct. Their role isto provide information, support, undertake stakeholder engagement and awareness raising

(OEH, 2011), network between the renewable energy industry, community and government

in those areas.

Already, the New England Renewable Energy Precinct Coordinator has provided invaluable

support to the New England Wind project, including helping to secure funding for this pre-

feasibility study. Such a program, helps identify synergies and opportunities within and

across precincts for both commercial and community renewable energy projects such as

New England Wind. Additionally, the Renewable Energy Precincts program provides greater

access to government, including decision makers who will affect the viability of the New
http://www.orer.gov.au/publications/lret-sres-basics.htmlhttp://www.orer.gov.au/publications/lret-sres-basics.htmlhttp://www.orer.gov.au/publications/lret-sres-basics.htmlhttp://www.orer.gov.au/publications/lret-sres-basics.html


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England Wind Project, both in the Office of Environment and Heritage and in other

departments.

For more information see:

www.environment.nsw.gov.au/climatechange/renewableprecincts.htm

Additional legislation relevant to the development of New England Wind are listed in

Appendix 1.

2. BEST PRACTICE COMMUNITY RENEWABLE ENERGY POLICYWhile the above policies are helpful, there are still significant barriers and challenges that

community renewable energy projects like New England Wind face in the Australian policy

context. Although challenging, it is possible that the New England Wind project will be able

to proceed without further policy intervention, however it will be difficult to develop a

vibrant community renewable energy sector in NSW without additional policy support.

Internationally, key barriers to community renewable energy projects have been identified

and policy responses implemented. Based on international examples, the Community

Power Agency proposes the following suite of community renewable energy policy

measures.

A policy environment that actively supports and enables the development of community

renewable energy (CRE) projects has four key features:

1. Funding available for the development phase of community renewable energyprojects, including feasibility and pre-feasibility work.

2. Support organisations and coordination3. An appropriately scaled Feed-in Tariff that covers all renewable energy technologies.4. Guaranteed grid connection

These policies are key interventions to overcome common barriers that community

renewable energy projects face. They have been proven internationally to foster the rapid

uptake of CRE, as will be seen in the examples that follow. However, it should be noted that

the implementation of community renewable energy support policies such as these, should,like any good policy initiative, be seen as medium term support to transform a fledgling

sector with significant promise, into a vibrant and self sustaining sector that will deliver a

multitude of public good.

2.1.1. DEVELOPMENT FUNDINGRationale for Policy intervention:

Perhaps the biggest barrier CRE projects face is finding the financing to take a project from

an idea to a tangible plan: taking it through the pre-feasibility, feasibility and planning

approval stages. These stages are the most risky for any renewable energy venture,
http://www.environment.nsw.gov.au/climatechange/renewableprecincts.htmhttp://www.environment.nsw.gov.au/climatechange/renewableprecincts.htmhttp://www.environment.nsw.gov.au/climatechange/renewableprecincts.htm


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however unlike private enterprise or even government bodies, community actors do not

typically have large reserves of capital to draw on.

A relatively small amount of money in the form of a government grant or loan has been

shown to make a significant difference to the development of vibrant community renewable

energy projects and the broader sector as the Scottish and Welsh have found. The state ofOntario, Canada, also has a development funding scheme that was introduced in late 2009

(MEI 2009). This scheme provides a one-off grant of up to $200,000 to CRE feasibility

studies. They also offer loans guarantees to CRE projects owned by Indigenous peoples.

Description of policy mechanism:

CRE development grants (or loans) are typically government funding schemes that

community groups can access to pay a project coordinator, hold events, pay expert

contractors and/or any of the many other tasks that it requires to develop a CRE project.

Many such funding programs have stipulations as to what projects are eligible in order to

ensure multiple benefits such as carbon reduction, job creation, community development

etc. Such funding programs are often most successful if delivered at arms length from the

government.

Best practice examples:

Community Renewable Energy Scheme (CARES), Scotland

The Scottish Parliament has provided funding support for CRE since 2002. In 2009, the

CARES program was introduced as an update to previous grant programs. The aim of CARESis to:

Reduce carbon emissions; Reduce community reliance on imported energy increasing self-sufficiency; Increasing renewable energy capacity in Scotland; Reduce energy bills; and Provide added value for communities including jobs, economic benefit, awareness

raising and more.

Two types of grants are available through the scheme:

1. Technical grants of up to 15,000 for feasibility and scoping studies, capacitybuildings, community consultation and wages.

2. Capital grants of up to 150,000 for capital costs of installing a renewable energyproject.

Grant eligibility is based on organisation type, technologies and a short list of essential

project criteria. Eligible organisations must be not-for profit and include non-profit and

charitable organisations, cooperatives, local authorities, housing associations and non-profit

education institutions. Technologies covered include hydroelectric, wave and tidal, green

hydrogen, fuel cells, geothermal, solar PV and solar hot water, heat pumps and automated


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wood fuel heating systems. Essential criteria include an energy efficiency assessment,

demonstrated community benefit, involvement and support, technical viability and access to

those seeking to replicate the project (CES 2010).

The delivery of CARES was put out to tender and won by Community Energy Scotland, a

charitable association with the aim of building confidence, resilience and wealth at thecommunity level in Scotland through sustainable energy development (CES 2011).

In 2011, due to European Union competition laws and the introduction of a UK wide feed-in

tariff for community scale projects, the CARES grant program was changed to a government

loan program.

Ynnir Fro, Wales

In 2010, the Welsh Assembly established the Ynnir Fro Program to support the

development of community renewable energy projects. Similar to Scotland, two types of

grant funding are available preparatory stage grants and capital grants. Preparatory grants

of up to 30,000 fund feasibility studies and other preparatory costs; capital grants fund

capital costs of up to 300,000 (Energy Savings Trust 2010).

Welsh social enterprise organisations including community interest companies,

cooperatives, charities and more are eligible, if they are deemed to have a primarily social

purpose and seek to reinvest surplus into the community or the organisation. However,

schools and social landlords are not eligible. Other eligibility criteria include a minimum

annual income and energy generation per project; these are different for each of the three

eligible technologies hydro, wind and biomass. Additionally, projects are required to

employ a least one part-time employee within the first two years of completion.

Grant funding is mediated by a network of locally based technical development officers who

also provide project development support (ibid).

2.1.2. COMMUNITY ENERGY SUPPORT ORGANISATIONS ANDCOORDINATION

The existence of more than 1000 community renewable energy projects across Europe and

North America, as well as the soon to be operational Hepburn Wind in Australia, shows that

communities have the capacity and drive to develop complex renewable energy projects.

Nevertheless, the research of Ison (2010) demonstrates that like any infrastructure project,

outside expertise and support are also needed. This support and expertise varies from

employing technical consultants to do wind mapping, environmental impact statements and

system design, to working in partnership with a commercial renewable energy developer or

dedicated community renewable energy support organization.

The best government policies recognize the need for such support and not dissimilar to the

NSW Renewable Energy Precinct Program provide coordination through a network of local

development officers. Both Community Energy Scotland that delivers CARES and Yrrin Fro

include this feature. Development officers on the ground can provide tailored support to


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meet individual group needs, while networking across groups to help identify and address

common challenges.

Such co-ordination support can be provided by either government or a dedicated

community renewable energy support organisation, both approaches have their advantages.

However, if the delivery of grant funding is also contracted to the community renewablessupport organisation, it is likely that more flexibility in and speed of support is possible as

the case of Community Energy Scotland shows (Hicks and Ison, in press).

2.1.3. FEED-IN TARIFFRationale for Policy intervention:

Negotiating power purchase agreements and cost are a significant barrier to the take up of

more socially and environmentally sustainable energy options such as community renewable

energy projects. Currently, the wholesale cost of electricity in NSW is approximately 4c/kWh(AEMO 2011); electricity generated from community scaled renewable energy projects find

it difficult to compete with this wholesale price generated by centralized fossil fuel power

stations. Policy support is needed to level the playing field, particularly while newer

technologies and approaches to energy are maturing and subsidies to existing fossil-fuel

power continues. Policy support such as a Feed-in Tariff (FiT) enables projects to be

financially viable, encourages investment and development of projects by a wide range of

actors from communities to commercial companies. Appropriately scaled and designed FiTs

ensure that renewable projects yield some financial return to communities and/or investors

for a given period of time (usually 20 years) and provide the stable investment environment

needed to foster a new industry.

Description of policy mechanism:

A FiT is a guaranteed price or premium rate for electricity generated from renewable energy

sources, usually guaranteed for a given number of years.

A well designed Feed-in Tariff (FiT) that covers community scale projects, which are typically

(although not always) in the 50kW-10MW range, enables CRE projects to access investor and

debt financing as it minimises the risk to those who invest. A good FiT can help develop the

renewable energy sector more broadly as well as make the fledgling CRE sector financially

attractive. A well-designed FiT would include the following features:

Coverage of all renewable energy technologies, including solar PV, solar thermalpower, wind, sustainable biomass and small-scale sustainable hydropower.

Coverage of at least medium scale projects 50kW-10MW, although a FiT that alsocovers small-scale and large-scale projects are good for the renewables industry

more generally and good for households.

FiT prices that guarantee approximately a 6% return on investment for typicalprojects of each technology type and at each scale range.

A long-term guaranteed price, at minimum 15 years.


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A tariff that declines gradually for new projects each year, to prevent the creation ofa price bubble and to keep up with the decline in the cost of renewable energy

technologies over time.

Guaranteed grid connection rights and responsibilities (see below).

Best practice examples:

Internationally, FiTs are the most favored policy to support the take up of renewable energy,

having been implemented in some form in 19 European countries (BMU), at least six US

states and at least nine other countries across the world. The best examples of FiT policies

that support community projects are found in Germany, Ontario and UK.

Germany

Germanys EEG was the first national Feed-in tariff and has perhaps been the most

successful to date. The tariffs legislated are optimized for different technologies at different

scales, with premiums available to incentivise additional benefits. For example, different

tariffs are available for bioenergy projects below 150kW, 150-500kW, 500kW-5MW and 5-

20MW (BMU, 2007). Additionally bonus premiums are available for the type of feedstock

and the use of innovative technologies. Other technologies covered include PV, wind,

geothermal, hydro and landfill and sewage gas.

Because the EEG covers community scale installations, in addition to increasing the uptake

of commercial and household scale renewables, the policy has supported the development

of a wide range of different CRE projects. Examples include:

Over 200 bioenergy villages, such as Juhnde in central Germany which is a co-operatively owned community anaerobic digester system, which produces heat and

electricity for the village;

Community owned wind farms such as the Burgerwindpark in north-west Germanyand the Freiburg city wind-farm; and

Developer/community wind partnerships such as Dardesheim.Ontario

Inspired by the German experience, the Canadian State of Ontario implemented a FiT policy

in 2009 under the Green Energy Act. This Act is designed to support a cross section of CRE

projects through offering differentiated FiT rates based on technology type, size, location

and ownership. The FiT supports wind, hydro, solar, biomass & biogas developments, size of

projects is generally up to 10MW except for wind, which is uncapped, and hydro which is

capped at 50MW (MEL, 2010). It also offers premiums based on project ownership, with

CRE projects receiving a $0.01/kWh bonus and Indigenous-owned projects receiving a

$0.015/kWh bonus. In this way, the FiT enables farmers, community groups, Native

Americans, and Native Canadians to participate directly in the development of their own

renewable resources, on an equal footing with commercial power producers (Gipe 2010).


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As of November 2010, a little over a year after the policy was implemented, 384 MW of CRE

projects had been approved for the FiT, representing 16 % of the states 2,500 MW of

renewables approved under policy (Gipe 2010). Collectively, these CRE projects will supply

over 600,000 Ontario households! Further, the government claims the Green Energy Act will

create over 50,000 jobs in its first three years (MEI 2011).

In Ontario, the FiT was coupled with policy to streamline the renewable energy development

process, guarantee grid connection, guarantee project loans to low-income and Indigenous

people, promote energy efficiency, build state renewables manufacturing and implementing

a smart grid in order to ensure maximum effectiveness and benefit from the FiT (MEI

2011).

UK

The UK FiT is designed to support household, small business and community scale renewable

energy projects. Different tariffs are available for electricity generation from solar PV, wind,hydro and anaerobic digestion projects up to 5MW (DECC n.d.). An additional tariff is

available for every kWh of electricity exported on top of the generation tariff. The FiT policy

works in combination with the UKs Renewable Energy Obligation for large-scale

renewables. The Renewable Energy Obligation is a certificate scheme similar to Australias

Renewable Energy Target.

The FiT is one of many factors that are contributing to the wave of CRE projects particularly

wind and small hydro that are running or under development across the UK.

2.1.4. GUARANTEED GRID CONNECTIONA challenge that many community renewable energy projects face is negotiating a grid

connection agreement. Connecting to the electricity grid is essential to the success of a

community energy project such as New England Wind.

One mechanism for overcoming this barrier is to legislate a grid connection guarantee,

whereby grid operators are required to connect all projects at a reasonable distance from

the grid at a reasonable cost and utilities are required to purchase all electricity supplied.

Guaranteed grid connection is a typical feature of a good FiT policy, such as Germanys EEG

and Ontarios Green Energy Act. Indeed the EEG additionally gives grid and generationpriority to renewable energy sources. That is when the grid is operating at full capacity,

conventional power stations must reduce their electricity production to favor renewable

energy generation (BMU, 2007).

A grid connection guarantee reduces the institutional barrier of negotiating a grid

connection agreement, however the large cost of grid connection remains. However, in

some countries, such as Germany and Denmark, the cost of grid connection is shared by

turbine owners (who pay to connect to the nearest technically suitable point of the grid) and

utilities (who pay if the grid needs to be reinforced to take the extra load) (BMU, 2007;

DWTOA 2009).


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3. REFERNECESAEMO (2011)Average Price Tables. Australian Energy Market Operator. Available at

www.aemo.com.au/data/avg_price/averageprice_main.shtml , accessed June 2011.

BMU (2007) EEG The Renewable Energy Sources Act, the story of sustainable policies for

Germany. German Federal Ministry for the Environment, Nature Conservation and Nuclear

Safety (BMU). Available atwww.gtai.com/uploads/media/EEG_Brochure_01.pdf, accessed

June 2011.

CES (2010) The Scottish Governments Community and Renewable Energy Scheme (CARES).

Community Energy Scotland. Available atwww.communityenergyscotland.org.uk/cares.asp,

accessed December 2010

CES (2011) Our Aims. Community Energy Scotland. Available at

www.communityenergyscotland.org.uk/cares.asp, accessed June 2011

DECC (n.d.) Feed-in Tariffs (FITS). Department of Energy and Climate Change, UK. Available

at

www.decc.gov.uk/en/content/cms/meeting_energy/renewable_ener/feedin_tariff/feedin_t

ariff.aspx, accessed June 2011.

DWTOA (2009) Past and Present: successful developments followed by stalemate. Danish

Wind Turbine Owners Association. Available atwww.dkvind.dk/eng/index.htm, accessed

May 2010.

Energy Savings Trust (2010) Yrrin Fro. Available at

www.energysavingtrust.org.uk/Wales/Ynni-r-Fro, accessed December 2010.

Gipe, P. (2010) Get f.i.t! Provincial Feed-in-Tariffs spurring community power. Grist

Magazine, 4 November 2010. Accessed 10 June 2011:http://www.grist.org/article/2010-11-

04-provincial-feed-in-tariffs-spurring-community-power

Hicks, J. and Ison, N. (in press) Community Owned Renewable Energy: Opportunities for

Rural Australia, Rural Society Journal.

Ison, N. (2010) From command and control to local democracy: the governance ofcommunity energy projects, Conference Paper, Berlin Conference: Human Dimensions of

Environmental Change, October 2010.

MEI, Ministry of Energy (2009) Community Energy Partnerships Program. Tonronto, Ontario

State Government. Accessed 10 June 2011:http://www.mei.gov.on.ca/en/energy/gea/

MEI, Ministry of Energy (2010) Feed-in Tariff Program. Tonronto, Ontario State Government.

Accessed 10 June 2011: http://www.mei.gov.on.ca/en/energy/index.php?page=fit
http://www.aemo.com.au/data/avg_price/averageprice_main.shtmlhttp://www.aemo.com.au/data/avg_price/averageprice_main.shtmlhttp://www.gtai.com/uploads/media/EEG_Brochure_01.pdfhttp://www.gtai.com/uploads/media/EEG_Brochure_01.pdfhttp://www.gtai.com/uploads/media/EEG_Brochure_01.pdfhttp://www.communityenergyscotland.org.uk/cares.asphttp://www.communityenergyscotland.org.uk/cares.asphttp://www.communityenergyscotland.org.uk/cares.asphttp://www.communityenergyscotland.org.uk/cares.asphttp://www.communityenergyscotland.org.uk/cares.asphttp://www.decc.gov.uk/en/content/cms/meeting_energy/renewable_ener/feedin_tariff/feedin_tariff.aspxhttp://www.decc.gov.uk/en/content/cms/meeting_energy/renewable_ener/feedin_tariff/feedin_tariff.aspxhttp://www.decc.gov.uk/en/content/cms/meeting_energy/renewable_ener/feedin_tariff/feedin_tariff.aspxhttp://www.dkvind.dk/eng/index.htmhttp://www.dkvind.dk/eng/index.htmhttp://www.dkvind.dk/eng/index.htmhttp://www.energysavingtrust.org.uk/Wales/Ynni-r-Frohttp://www.energysavingtrust.org.uk/Wales/Ynni-r-Frohttp://www.grist.org/article/2010-11-04-provincial-feed-in-tariffs-spurring-community-powerhttp://www.grist.org/article/2010-11-04-provincial-feed-in-tariffs-spurring-community-powerhttp://www.grist.org/article/2010-11-04-provincial-feed-in-tariffs-spurring-community-powerhttp://www.grist.org/article/2010-11-04-provincial-feed-in-tariffs-spurring-community-powerhttp://www.mei.gov.on.ca/en/energy/gea/http://www.mei.gov.on.ca/en/energy/gea/http://www.mei.gov.on.ca/en/energy/gea/http://www.grist.org/article/2010-11-04-provincial-feed-in-tariffs-spurring-community-powerhttp://www.grist.org/article/2010-11-04-provincial-feed-in-tariffs-spurring-community-powerhttp://www.energysavingtrust.org.uk/Wales/Ynni-r-Frohttp://www.dkvind.dk/eng/index.htmhttp://www.decc.gov.uk/en/content/cms/meeting_energy/renewable_ener/feedin_tariff/feedin_tariff.aspxhttp://www.decc.gov.uk/en/content/cms/meeting_energy/renewable_ener/feedin_tariff/feedin_tariff.aspxhttp://www.communityenergyscotland.org.uk/cares.asphttp://www.communityenergyscotland.org.uk/cares.asphttp://www.gtai.com/uploads/media/EEG_Brochure_01.pdfhttp://www.aemo.com.au/data/avg_price/averageprice_main.shtml


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MEI, Ministry of Energy (2011) Ontarios Green Energy Act: our path to a green economy and

a cleaner environment. Tonronto, Ontario State Government. Accessed 10 June 2011:

http://www.mei.gov.on.ca/en/energy/gea/

ORER (2011) Increasing Australias Renewable Energy Generation. Office of the Renewable

Energy Regulator, Australian Government. Available atwww.orer.gov.au/publications/lret-

sres-basics.html, accessed June 2011.
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APPENDIX 1: RELEVANT LEGISLATION

Table 1 provides a non-exhaustive list of the legislation that New England Wind will likely

need to comply with or take into consideration in the development of a community wind

farm.

Table 1: Legislation relevant to the development of New England Wind

Category Level Legislation

Organisational Legislation State The Corporations Act

The Co-operatives Act.

Tax Legislation Federal GST

Income Tax

Capital Gains

State Land TaxFringe Benefits

Local Council Rates

Electricity Legislation State/Federal National Electricity Law

National Electricity Rules

State IPART

Planning Legislation State Environmental Planning and

Assessment Act

Local Local planning policy

Property Legislation Real Property Act

Conveyance Act

Community Renewable Energy Policy Brief, Community Power Agency

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