The current frustration with federal policy, soaring energy prices and an urge to tackle climate change is bringing some “unusual suspects” to the community energy table, according to Nicky Ison, founding director of the Community Energy Agency.
Banks, investment funds, energy retailers and network providers were all in attendance at this week’s Community Energy Congress in Melbourne, eager to learn more about the potential of this fast-growing sector. National Party member and newly appointed NSW parliamentary secretary for renewable energy Ben Franklin even made the trek down.
People are frustrated and tired of federal government lies
Ms Ison said there was a high level of focus, commitment and determination among the 600-strong attendees.
“People are so frustrated by the narrative at the moment,” she said.
“There are a lot of reasons people want to invest [in community renewables]. They want to take control of their energy and they are tired of the lying [from the federal government].”
Ms Ison told attendees community renewable energy was about making the transition to a low-carbon energy system “faster and fairer”.
“There was a really big focus on energy justice,” she told The Fifth Estate. This included the formation of the First Nations Renewable Energy Alliance.
There was also a strong focus on partnerships, for example a four-way partnership between a community, local government, a renewable company and an energy retailer.
These kinds of partnerships can provide “value for all” and speed up the transition, she said.
The NEM is failing us
Darius Salgo chief executive of peer-to-peer energy trading platform Nexergy, which is due to launch to market this year, said he was seeing strong momentum around community-led retail models like Enova and Powershop that “provide power value back to people”
Mr Salgo pointed to the current design and structure of the National Electricity Market as a cause of market failure.
The big generators that are also retailers – the “gentailers” – have an oligopoly, he said.
It is based on standard supply and demand economics.
“The NEM requires reform – that is one of the reasons for the Finkel Inquiry.
“The NEM was designed for centralised thermal coal and gas generation. And that worked until the world realised it needed to limit carbon emissions and needs the intermittent renewable sources.”
The question now is how to harness them effectively within the national energy market.
Demand-side is part of the equation, Mr Salgo said.
Energy efficiency is something most consumers understand is probably the most effective demand-side thing they can do.
But it also needs to be a “customer-friendly” proposition.
“We’re here at congress because communities have the ability to take charge and cover themselves,” he said.
He said from some of the conversations he’d been having, the current volatility in the wholesale energy market is hitting the community-led retailers.
“Market failures in the NEM are costing everyone more. The community retailers are less protected than the gentailers.”
While the gentailers have the financial backing to “hedge their bets”, the community-led retail models are “particularly vulnerable”.
Another topic swirling around congress was community-led microgrids being a big part of moving forward.
This can include communities looking to buy back part of the main grid and power it with renewables, Mr Salgo said.
“There is also a big focus on empowering regional and remote communities with renewable microgrids. This includes addressing inequalities such as indigenous communities being moved on because of the cost of supplying energy to them.
“That is really important.”
Economics are improving
Kane Thornton, chief executive of the Clean Energy Council, said in terms of the finance one thing was clear – the economics keep improving.
“If you want to build a new power station, the lowest cost power station is wind or solar.
“The business case for projects and getting finance or equity is getting easier and easier.”
Small projects still face challenges because of their smaller scale compared to large-scale renewable. The economics is somewhat more complex.
However, with the cost of the technology going down and energy bills going up, there is a solid proposition.
Grant reliance diminishing
Mr Thornton said the days where community energy projects need to draw on a “big bucket of grant money” are potentially behind us.
One of the topics of discussion was ways of aggregating small projects to make them more viable as investment propositions.
“There was a lot of discussion around that. And there were a lot of investors at congress looking at this space,” he said.
Anywhere there is a substantial number of projects together, there is an interest from the finance sector.
The ongoing task is to develop a model for sharing risk and building economies of scale.
Generally, investment is a space where there is a lot of innovation happening, Mr Thornton said. An example is the impact investment model.
There are also other initiatives emerging in the market like technology providers offering solar and storage with no up-front capital required.
Projects are finding finance in creative ways, he said.
Energy efficiency also important
Mr Thornton said the first place for any community project to start was looking at how to use less power and use power more productively.
“We haven’t made great progress on this in Australia over the past 10 years,” he said.
Community initiatives around energy efficiency are “part of the picture” of improving the energy profile before engaging in a renewable project.
“I think these community groups are engaged and aware enough to know this,” Mr Thornton said.
“There is a high level of awareness that it’s the first step.”
Technologies other than wind and solar were also a topic of interest. Mr Thornton said there are communities that may not have good wind resources, but have a facility locally that produces a bio-waste that can be used for biogeneration.
Small hydropower, such as run-of-the-river hydro, or working with the local water authority to develop a project are also being looking at by some communities, he said.
Mr Thornton said there was also a growing focus on partnerships and collaboration. That includes community and industry looking to work together, whether to develop projects, share learnings or collaborate on engagement.
“As we see more investment in all its forms, this will be a topic for ongoing discussion and evolution.”
Taking back control
Co-founder of Reposit Power Dean Spaccavento said the community groups at congress were “very progressive in being able to harness new ways of doing electrical infrastructure”.
They are “putting their hands up” to provide buying power around the retrofitting of particular locations with renewable energy, distributed microgrids and other innovations.
Unlike the expertise and sophistication required to get a large-scale project up and running, the small projects are “bite-sized things” people in the community can do.
“People want to take back control of their consumption, when they buy power and what they pay for it,” Mr Spaccavento said.
“Now they have the tools to make a decision, such as, ‘Do I want to buy from my peers or from a retailer?’”
This element of choice has been missing from the energy market for a long time, he said.
The other driver he saw at congress was people wanting to make a “real and positive contribution” to changing the energy system.
“People aren’t afraid of coal; they are afraid of the things coal does.”