Read our discussion paper: Regional Benefit Sharing – Creating strategic impacts for regions that host multiple renewable energy projects

Australia’s changing from fossil fuels to renewable energy isn’t just a technological shift, but also a spatial shift. As states ramp up renewable energy deployment, there has been an influx of infrastructure proposals in regional communities, most notably for those in state-designated ‘renewable energy zones’ (REZs).

Community benefit sharing 101

Amid the energy shift, community benefit sharing (CBS) has emerged as a crucial strategy to support regions hosting new renewable energy infrastructure. CBS involves sharing the benefits of renewable energy projects with the communities hosting them. The aim is to integrate these projects into local communities, contributing to their long-term vitality and success of the region.

Community benefit sharing typically involves financial support for community benefit programs, reaching not only immediate neighbours but also nearby towns and villages. These benefits can take various forms, including grants, partnerships, scholarships, or opportunities for community co-ownership. Crucially, the community plays a role in deciding what the benefits should be as without genuine community engagement, project proponents run the risk of CBS being perceived as an attempt to “buy out” or “bribe” the community. 

Why regional coordination of benefit sharing is needed

While Australia’s renewable energy sector has made strides in individual project-level benefit sharing, the challenge now is to efficiently and thoughtfully deliver multiple projects within designated regions. To maximise benefits and minimise adverse impacts, strategic planning is essential. Regions, governments, and industry must coordinate benefit sharing programs to empower communities and avoid duplicating efforts. 

Regional benefit sharing is defined as the strategic aggregation of community benefit sharing programs associated with energy projects that are located in a common geographic region. Whilst a current working model has not yet emerged in Australia there are 6 key reasons why it should:

1. Reducing engagement fatigue: Streamlining local engagement avoids overburdening communities and ensures effective solutions both in the set up and ongoing management of programs.
2. Changing community expectations: Evolving community expectations demand informed involvement and strategic outcomes from energy projects that address local concerns.
3. Diminishing small community projects to fund: Small community grant programs run out of suitable projects over time, limiting their impact. Coordination enables larger, more impactful initiatives.
4. Big picture legacy: Pooled funding can tackle long-term challenges, like climate resilience, public health issues and the shift in our energy system.
5. Leverage: Pooled funding opens doors to larger grants and funding streams.
6. Expanding Reach: Coordinated benefit sharing offers innovative ways to distribute benefits, reaching disadvantaged communities.

Watch our webinar on Regional Benefit Sharing featuring a presentation by CPA authors Kim Mallee and Dr Jarra Hicks, followed by insights and Q&A with fellow leading experts: Lisa Lumsden, The Next Economy; Kate Hook, RE-Alliance; and Luke Osborne, Stride Renewables.

How does regional benefit sharing work? 

Typically a developer of an energy infrastructure project will allocate funds towards community benefit sharing within a certain geographic area that hosts the project. When done well the community co-designs the benefit sharing program and its reach with the developer. This could create a positive impact for direct neighbours, nearby towns and villages or even the region at large. This practice has been fit for purpose where there has been only one of very few projects in a single region.

Regional benefit sharing works to coordinate multiple projects benefit sharing efforts at the neighbourhood and local community level whilst also pool and enable benefit sharing initiatives at a regional level. It is critical that regional benefit sharing models do not supersede or inhibit a project’s ability to deliver benefit sharing programs at the neighbourhood and local level and build trusted relationships with the host community. The split of funds between local or regional benefit sharing programs can be flexible over time and designed with the host community. 

Clarification Needed on Local Government Contributions

Victoria is the first jurisdiction to have a formalised statewide and consistent approach to calculating and collecting infrastructure contributions to Council from renewable energy developments. For remaining jurisdictions this is a lost opportunity to ensure that the economic prosperity and development in a local government area also contributes to the ongoing renewal of public infrastructure and services of that area.

NSW Councils for example, have the opportunity to negotiate voluntary planning agreements with developers when they are assessed as Major Projects. However this has led to varying outcomes ranging from receiving nothing to Councils receiving all of the potential community benefit sharing funds in place of the funds going directly to community. This scenario can inadvertently pit Council against the community in negotiations with the developer in the middle. The Victorian model of Payment in Lieu of Rates should be explored for delivery in other states as the number of projects and quantity of community benefit sharing funds per project are testament to its viability. 

Key recommendations 

Community Power Agency has been at the forefront of understanding and developing better practice community benefit sharing, through authoring multiple community benefit sharing guides delivering industry training, and working in Northern Tasmania, Gippsland in Victoria, and New England NSW REZ regions. We have compiled our insights into the Regional Benefit Sharing discussion paper which synthesises CBS experiences and models and provides key recommendations for government and industry stakeholders.

Strategic coordination is essential for benefit sharing to cultivate a social licence, a crucial component in achieving a fair and fast energy shift in regions hosting multiple energy infrastructure projects. 

Community Power Agency recommends:

1. All state governments co-design with communities regional benefit sharing programs, ensuring local community members are embedded in the governance structures.
2. Regional benefit sharing models are designed in a way that enables energy project developers to deliver both regional benefits as well as neighbourhood and local benefit sharing programs.
3. If REZ Access Fees are charged, they serve as a safety net or coordination of benefit sharing, rather than a substitute for individual project level benefit sharing initiatives.
4. Federal Government dedicates resources to the various entities involved in designing regional benefit sharing in order to contribute to nation-wide social licence for the energy shift.
5. State governments legislate the amount project proponents must contribute to the local government where their project is located, in lieu of rates or as infrastructure contributions. This payment should be separate and additional to the project’s community benefit sharing funds.

The election of an Albanese Government and a raft of climate-focused Greens and independent MPs heralds a new chapter in Australia’s story of becoming a renewable energy superpower. But there are some blank pages to fill in Labor’s Power Australia plan before community energy initiatives like solar banks and neighbourhood batteries can be deployed to assist more Australians to benefit from cheaper, cleaner power.

Over the weekend we saw that Australians in cities and regions around the country overwhelmingly voted for climate action. With the doubling of the crossbench, the public have made it clear that the major parties have not been delivering effective climate policy that will have tangible outcomes.

“Labor’s Powering Australia plan brings some welcome community energy initiatives that have potential to assist everyday Australians to transition to a lower carbon energy system and provide savings on their power bills if designed and delivered appropriately” says Community Power Agency’s project manager Kim Mallee.

The 2022 federal election result indicates broad social acceptance for the large-scale build out of renewable energy, however it should be remembered that social licence is an active process which can be revoked.

The Powering Australia Plan commits 85 solar banks and 400 neighbourhood batteries which could enable everyday Australians to be active participants in and beneficiaries of the renewable energy transition – but only if they are well designed and adequately supported.

While the design of these community energy policies is yet to be clarified, we suggest a roll-out of Community Power Hubs across regional Australia bolstered with a capacity building network behind it. 

“Community energy is not just an electricity project at a local scale – it’s the community having agency and participation in energy projects to determine their own vision” says Mallee.

Solar Gardens (Banks)

Solar Gardens (as we prefer to call Solar Banks) provide a solution for the 30% of Australians that are still locked out of the rooftop solar revolution because they rent, live in an apartment or have an inappropriate roof due to shading or other reasons. Solar Gardens offer plots in an off-site solar array with the electricity generated from their solar garden plots credited onto participants’ electricity bills. 

Community energy projects such as Solar Gardens play a critical role in the transition to renewable energy not just in terms of megawatt capacity but also in a way that is socially inclusive, creates social licence and stimulates meaningful regional economic development.

Community Power Agency has been pioneering the Solar Garden model in Australia since 2018 with an ARENA funded research project in partnership with University of Technology Sydney, that found the model is viable and desirable in Australia. 

Labor’s ‘Solar Banks’ initiative commits $100Million to deliver an initial 85 solar banks assisting with 50% of the capital costs and importantly also covers the project’s feasibility and development costs. 

After our Solar for All advocacy campaign, Community Power Agency was successful in receiving grant support from the NSW Regional Community Energy Fund for Australia’s first large-scale Solar Garden along with Sydney based community energy group Pingala, solar developer Komo Energy and community-owned electricity retailer Enova Energy. The Haystacks Solar Garden will be a 1MW solar array in the NSW Riverina and allow 333 people to purchase 3kW solar garden plots and receive credits on their electricity bill. It is in the final stages of network and construction approvals.  

From the previous two years experience developing Haystacks Solar Garden we know that to roll out an effective Solar Banks/Garden program of the size Labor are proposing will require tailored expertise, support and coordination – such that could be provided via a Community Power Hubs & Network model. 

Neighbourhood Batteries

The ‘Community Batteries for Household Solar’ initiative also outlined in the Powering Australia Plan shows some promising potential if developed effectively with communities at its heart. The initiative commits $200 million towards developing 400 neighbourhood batteries to help store rooftop solar energy at peak generation times and then make it available for the community at peak demand times.

There is a lot of buzz right now about the potential for neighbourhood batteries to assist in the transition to a clean energy future in a way that is nimble and equitable for everyday people. Developing business models and partnerships that suit the Australian electricity system and deliver meaningful participation for communities will be a key first step in developing this initiative effectively.

Whilst there are a number of neighbourhood battery trials underway in Australia there is a critical balancing act in making a project successful which requires careful consideration of network location, metering technology, tariff design and community engagement. Lessons learnt from existing trials will be critical in ensuring the roll out of an Australian wide community battery program of this scale is effective. 

For more analysis and insight on neighbourhood batteries see this Renew Economy article by ANU researchers.

Community Power Hubs

Community Power Hubs are on-the-ground support organisations with the expertise and resources to enable community energy projects like solar banks and neighbourhood batteries to thrive. 

To date in Australia there have been three regional pilot Community Power Hubs programs (currently expanded to 7 locations) funded by the Victoria Government with existing non-profit organisations resourced to deliver this program. 

A key feature that has enabled the success of the Victorian Community Power Hubs is the background facilitation role played by Sustainability Victoria – a government agency – to enable collaboration, capacity building and knowledge sharing.  

The roll out of solar banks and neighbourhood batteries will need on the ground support like Hubs adequately bolstered with a capacity building network. Our policy brief – Smart Energy Communities Program – details how 50 Community Power Hubs with grant resources and a Smart Energy Communities Network for capacity building can be delivered and scaled up over 10 years.

*This blog was edited on 26/5/22 to update our language about community batteries – we agree with the ANU Battery Storage and Grid Integration Program team that they should be referred to as “neighbourhood” batteries as a catch-all, except where community members have explicit participation and/or control over their planning and operation.