This is the second in a series looking more deeply into issues which affect the development of the clean energy industry in Australia. The first was on the 2kms set-back rule imposed by the Victorian government and at least partially adopted in NSW.

For the past 12 months, a digital display located behind the counter of the newsagent in High Street in the Victorian town of Woodend has logged what Barry Mann describes as a major lost opportunity. Real time data from a wind mast located in an old timber mill a few kilometres out of town documents the amount of electricity that would have been produced if a proposal to install three wind turbines in a harvested pine forest 6kms from town had been allowed to go ahead.

Before the mast was taken down earlier this month: the data stood at this: 12.6 gigawatt hours of electricity generated over 12 months and four days (12.630 million kilowatt hours) – about enough electricity to satisfy the needs of 2,037 homes and generate $1.5 million in revenue from selling the electrons to the grid. (You can find the data on their website)

Mann is a director of WISE (Woodend Integrated Sustainable Energy) – a local not-for-profit group that says its goal is to ”assist communities to take responsibility for their energy and carbon future.” It is one of dozens of similar groups in Australia that are hoping to implement their own local plans, but don’t have so many electrons to show for it yet.

For the moment, Woodend’s own plans have been frustrated by the election of the Baillieu Conservative government, and the introduction of a 2km setback ruling and the declaration of a “no-go” zone through large slabs of the Mt Macedon ranges – two initiatives that local member Donna Petrovich is proud to take responsibility for. (See addendum below)

“I was gobsmacked by the decision,” Mann says. “The no-go zone is such at odds with what community thinks about community power. But good policy stands the test of time and this isn’t good policy. But it’s (the wind project’s) time will come.”

Community ownership is common in Europe and other countries. In Germany and Denmark, the countries with the most ambitious renewable policies, it is a fundamental part of their clean energy strategy. Even if the numbers in dollar terms are relatively small, it has granted the social licence to invest the hundreds of billions necessary for the clean energy transformation.

But in Australia, it is a resource that is largely untouched, even if Australians have the highest rate of household ownership of rooftop solar PV systems. And, by chance, the public debate over wind farms, in particular, and renewables in general, is wrenching. Only one community owned facility – the 2-turbine, 4.1MW Hepburn Community Wind Farm in Victoria is operating, while a second, in Denmark in Western Australia, is under construction.

That may be about to change. In the next few weeks, a NSW organization hopes to unveil plans for up to ten community-owned solar installations totalling 1MW of installed capacity across the state.

The idea is relatively simple – around 80-100kW of rooftop solar PV is installed on the roof of a commercial operator – be it a chicken farm, a manufacturer or an aged care centre – and is designed in such a way to ensure that all the electricity is used on site, rather than exported to the grid.

Adam Blakester, the co-ordinator of Starfish Enterprises, calls it the “socket parity” model, where the technology is competing with the higher retail price of electricity rather than the wholesale price. Blakester says it will be a win for all concerned. The landlord gets cheaper electricity, and the individuals who buy into the project get a sense of doing something good, and local, and get a return. The investment has a multiplier effect in the local economy, and even the utility will benefit, particularly if these installations are located at weak points in the grid – as these are planned to do. Blakester says the local utilities in the areas they have been investigating have been very supportive.

“When there is a real project on the table, community members get very engaged.” Blakester says. “It’s far more powerful than any other educational process that I have been engaged in. They become very sophisticated advocates for green energy.”

Andy Cavanagh-Downs, the executive director of Embark, a not-for-profit organization providing support for community groups to establish their own renewable energy plants, agrees that the community ownership model could be very powerful, and the “social licence” that such engagement generates could be a key leverage for the billions required in the future green energy investments.

“We need to have as many proponents for renewable energy around the country as possible,” he tells RenewEconomy. “The more voters that participate in and benefit from renewable energy projects, the better it will be. There is a fantastic story in regional development and investment – it makes rural and regional areas more robust and self reliant. It has social benefits in bringing people together with a common goal and achievement, and it has environmental and economic benefits.”

Embark was established, and is chaired, by Simon Holmes à Court on the heels of the success of the Hepburn Wind project, partly to address the high level of interest from other community groups. It sees its role as providing assistance and advice, and creating templates that can be used by communities to create their own renewable energy generation – be it from the wind, the sun, or other.

Embark is heavily involved with Blakester’s plans, and is looking at several other projects in Sydney and Victoria. “Community wind projects have the ability to engage literally thousands of people, but are long and complex projects with plenty of early risk,” Holmes à Court says. “We are really excited by community solar because the projects are likely to have much shorter timelines and lower development risks, however there are some significant hurdles that must be cleared first, including demonstrating sound economics.”

Commercial operators are also recognizing the potential and advantages of community ownership. Infigen Energy has become the first commercial developer in Australia to publicly declare that it may form a partnership with the local community, and has offered at least one turbine in its proposed 44-turbine Flyer’s Creek development near Orange in NSW to be purchased by local residents. “We though that having the community own (part of) the facility, there would be support for it and that would outweigh the resistance from the anti-wind minority,” George told RenewEconomy in a recent interview.

A group of 14 locals have formed the Central NSW Renewable Energy Cooperative (CENREC) to see if it can happen. CENREC’s model is to have a minimum investment of $1000, delivering a return on investment ranging from 8 per cent (with the carbon tax) to 6.5 per cent (without), as well as a vote in the co-op. CENREC chairman Pat Bradbury told ABC Radio recently that education about the “opportunity for and the reason for having renewable energy as a central part of our life” was a principal goal of the project. “I can’t promise it will work here,” George says. “But we’ll try and make it work.”

Embark’s Cavanagh-Downs says other commercial operators are also expressing interest in having a community ownership component, recognizing the influence that can play in bringing community support for projects. He said Embark is currently advising one operator on bringing in community ownership but can’t go into details. “It doesn’t matter what infrastructure comes to town, but unless communities can feel direct benefits there will be opposition to change. The opportunity for ownership provides a large number of stakeholders with a genuine sense of control in the changes in their community and helps break down an ‘us vs. them’ mentality.” he says. “We’ve spoken to the majority of active developers and all have expressed interest in this innovation. Some are beginning to see it as a necessary development in order to develop and maintain local support for their projects.”

To get a better understanding of the community-developer partnerships, Holmes à Court even became one of the few foreign investors in the Kilbraur Wind Energy Co-operative in Scotland (pictured right). The developer, Falck Renewables, has partnered with UK community energy pioneer Energy4All to create a model where community members can invest in large wind farms. While Falk have chosen to permit community investment voluntarily, the Danish government has recently implemented legislation requiring all developers of on-shore wind farms to offer shares to those living nearby.

Embark is considering other models too. This includes discussions with councils about the involvement of ratepayers. Crowd-funding – popular for solar projects in recent months in the UK and the US – is also a possibility, although Cavanagh-Downs suggests it would more likely be suitable for a “one-off” projects for proving a new technology. “It’s an interesting idea for proving something in a first-of-its-kind that is not necessary viable without that sort of funding,” he says. “But we are more focused on models that are economically viable and that can be replicated across the country.”

For the moment, Cavanagh-Downs says, community groups are proving to be the most resilient in the face of daunting policy environments, particularly in Victoria. “I’m not sure there are many other commercial developers looking to obtain approvals for new projects. The community groups may be the only ones to keep going under the Victoria planning environment.”

Like Mann, Blakester and his team at Starfish Enterprises Network have also been working for some time on a community wind project, although it is larger and more long term than others. His group plans to install between 8 and 10 wind turbines (16-20MW) on a site at Woodville East, about 20kms north east of Armidale, in the heart of independent Tony Windsor’s electorate of New England.

When Starfish first called for expressions of interest from landowners, it received 120 enquiries. The list was narrowed down to about 20 viable options before settling on their preferred site. Now, the team has to analyse wind data, connection costs, and possible financing options, as well as engaging the local community. “It’s back to blood, sweat and tears. We’ve got a big journey ahead, but we’re definitely proceeding.”.

Blakester says that in a way, the idea is to return to past practices, because the history of electricity in regional areas tells us that most facilities were owned by councils before they were absorbed into state owned electricity organisation. Indeed, he thinks it would be a nice idea to buy back some local hydro assets to complement the output from the wind turbines.

There is also the Fremantle Community wind farm, an ambitious project to build a community-owned wind energy facility within the boundaries of a large city, although in this case it is along the foreshores of the Port of Fremantle (see graph to the right). The six to eight- turbine facility – first mooted some seven years ago, when Pacific Hydro helped fund a feasibility study – would be built on North Mole and Rous Head Harbour, drawing on the resources from the “Fremantle Doctor” – the ever reliable sea breeze.

But it faces considerable opposition – not so much from the community, but because it needs access to land and the owners of the land, the Fremantle Port Authority, are not supportive. The FPA’s CEO was recently quoted in the local press rejecting the proposed wind farm because of “…risks associated with possible silent health impacts due to ambient noise…” (Perhaps someone should send him a copy of the Senate inquiry’s report.)

One community wind project that is nearing fruition, after nearly 10 years of work by a diligent group, is the Denmark Community Wind Farm, which will finally start producing energy within the next month. The two turbine, 1.6MW facility is being erected on crown land near the town on the south coast of Western Australia. Director Craig Shappelle says the turbines will be put into place in mid December and be completed by Christmas. The facility gained $2.48 million from a government remote energy grant, and the rest has been raised from 115 people. Denmark reportedly has the highest per capita Green vote of any town in the country.

“It has been a long haul,” Shappelle told RenewEconomy. The group had considered sun and wave energy, but wind was the obvious choice. “Distributed generation is the way of the future, so from purely practical point of view, it would be ideal for each community to generate as much power as they can but remain plugged into grid.” He noted, for instance, the difference in population density of southern WA to that of the country of Denmark, which crams some 5 million people into a small area. “The infrastructure costs sparsely populated WA are huge. There are feel-good factors about this – the sense of belonging and ownership – but they are not as important as working together for a common benefit.”

Woodend is one of a number of new community wind energy projects that are being pursued in Victoria. The digital display has been taken down now, and it and the laptop and the mast have been handed over to another community wind energy group in Castlemaine, known as the Mt Alexander Wind Group, or MACWind.

This group hopes to install between one and six turbines, and while their options have been narrowed by Petrovich’s “no-go” zone and the 2km set-back rule – background to which can be found in the first of our in-depth series – their options have not been eliminated. There are still several potential sites, and no shortage of land owners volunteering their land.

Indeed, some 60 land-owners have put their hand up to host the turbines, leading to a new term of TWIMBY (Turbines Wanted in My Backyard) to be coined, mostly to counter the NIMBY politics that have characterized the Baillieu government’s – and that of most other Conservative state governments – approach to renewable energy. Project co-ordinator Jarra Hicks, the principal of Community Power Agency, says the group is looking to finesse the land ownership model, and extend some of the benefits of hosting to those in the immediate vicinity.

Large scale commercial wind farm developments tend to reward (handsomely) the owners of the land on which the turbines are installed, but the industry “standard” for community help tends to be around$500-$2,000/turbine per year. MACWind is looking at extending the ‘Hepburn Model’, which rewarded not just the landowner, but also those in the near vicinity (with free shares and assistance on energy bills), and also contributes $15,000 per turbine per year to broader community projects (administered by an independent community board).

“Our concept is to have several layers of benefits – the landowners getting a lease payments, to those within a close footprint of 2ks or 3.5kms, to community organsiations in nearby towns, and then to shareholders,” Hicks says. “We are possibly going to be even more generous. But until we do the wind speed modeling and the actually business planning, we can’t finalise the details, and we want the community to help us define what sort of benefits they want.” The mast is due to be installed early next year. A meeting with potential landowners and nearby residents was held last Sunday, and with luck, the wind farm could be up and running within 4 years.

Hicks says there are around 30 community projects that she is aware of under various forms of development – some in wind, many in solar, and others in biogas. “There is a really strong will of people on the ground to make a significant difference, and invest in renewables in a big way that is not possible at a household level.”

The Hepburn Community Wind Farm, meanwhile, (pictured above during an open day) is producing electrons and has currently sent some 14.6GWh of electricity into the grid. The community co-operative raised nearly $10 million from the community and has nearly 2,000 members. It is now serving as a blueprint, and an inspiration, to other similarly minded groups. “We have shown that under the right conditions, wind energy can overwhelmingly be seen as an opportunity, and not a threat,” it said in a submission to the Climate Change Authority’s review of the Renewable Energy Target. And, it noted, the ‘Hepburn Model’ is inspiring many other communities to pursue their own dreams of harnessing green energy.

It argued in its submission to the CCA that smaller projects were often more palatable to local communities than the “mega” projects now favoured by large developers, and it noted premium tariffs – in the form of tariffs or other benefits – had been used in Denmark and Ontario to encourage community investment. (In response to the 70s oil shock, Denmark provided a tax exemption for income derived from locally owned wind turbines. As a result more than 200,000 Danish families are part-owners of a wind farm. Ontario provides a 1-2c/kWh “community adder” tariff bonus for community projects.)

It suggested a community “multiplier” to boost the growth of community renewable energy projects and engage more Australians in clean energy technologies. This would mean receiving 1.5 renewable energy certificates for every megawatt hour produced, instead of just one. “While the nascent community energy sector will likely remain a relatively small fraction of the Australian energy scene, it is hard to imagine many other sectors that can so effectively deliver the social licence required for the transition to a zero carbon future,” it wrote.

But the likes of Blakester and Cavanagh-Downs are not getting carried away just yet, despite the enthusiastic response of land-owners and the increasing number of local groups expressing interest. “We need to be realistic that this sector still has a vision to be built,” Blakester says. “Until the community energy sector has a “portfolio” of projects, that are paying dividends and are being well run, we have to keep our feet on the ground. But once these projects are up and running, we’ll find traction with traditional investors.”

Addendum: Petrovich, the Liberal member of the Victorian Legislative Council since 2006, representing Northern Victoria Region, has riled local green groups and many community members with her role in the Baillieu government’s restrictive wind farm rules

The principal issue is Petrovich’s assertion that the policy she claims to own was based on community consultation. Mann would like to know which community, and how did that place in the six week period between the policy announcements and the final sign-off. He says WISE and MACWind have both demonstrated strong community support for smaller scale community owned wind projects, yet the nearby Hepburn Wind project, which won Premier Baillieu’s Sustainability Award, would likely be banned under the new rules. RenewEconomy invited Petrovich to comment on these, but so far has not received a response. We will update you when we do.

Resources:

Embark

Hepburn Wind

Woodend Integrated Sustainable Energy

Mt Alexander Community Wind Farm

Denmark Community Wind Farm

Fremantle Community Wind Farm

Central NSW Renewable Energy Cooperative

Starfish Enterprises

New England wind Co-op