Transcript of SEFA event: Community Power Breakfast Forum – A Collaborative Impact Approach, 16th of March, 2015.
MC:
Alexandra de Blas – Marketing and Communications Manager, SEFA
Speakers:
Ben Gales –CEO, SEFA
Nicky Ison –Coordinator, Coalition for Community Energy (C4CE)
Swain Roberts –Special Counsel, McCullough Robertson Lawyers
Victoria Adams – Associate Director, Clean Energy Finance Cooperation
Tom Dawkins – CEO and Co-founder, StartSomeGood
Kylie Charlton – CIO, Australian Impact Investments
Glenn Murray – Client Manager, Accounting for Good
John McKinnon – Director, McKinnon Family Foundation
Alex Scriven – Head of act, act platform
Ellen Geraghty –Business Manager, Australian Earth Laws Alliance
Alexandra de Blas:Hello and Welcome to our Community Power Breakfast Forum – A Collaborative Impact Approach.Today’s event is co-hosted by The Coalition for Community Energy, C4CE and Social Enterprise Finance Australia, or SEFA for short.
I would like to begin by acknowledging the traditional owners of the land we are standing on today, the Gadigal People of the Eora Nation. And to pay respects to their elders past and Present.
I would like to thank McCullough Robertson for hosting us in their Board room and providing us with the wonderful refreshments.
I am Alexandra de Blas, your MC for today, I work part time for SEFA as Communications and Marketing Manager based in Melbourne. But my interest in Renewable Energy harks back to the early 90s when I interviewed Christopher Flavin, then Head of the World Watch Institute in Washington, at the Australian New Zealand Solar Energy Society Annual Conference.
He was saying that renewable energy would undergo a revolution like we had seen with the dot com boom, and renewable energy would become affordable to people globally. Now twenty years later that is really starting to happen.
Despite the market for large scale renewables in this country being at a standstill, Australiahas nearly two million homes with some sort of solar appliance – rooftop Pv or Solar hot water– and is probably leading the world in residential solar, with some 4,000MW of rooftop arrays. It is at the forefront of the rise of the so-called “energy prosumer”
Last year the CSIRO predicted that up to one-half of total electricity needs will be generated locally, either on households rooftops, by business, or in community-owned or sponsored arrays.
Now we are starting to see community energy begin to play a role in that transformation.
The vitality and buzz amongst the delegates at the Inaugural Community renewable energy congress in Canberra last June was palpable. You could feel a momentum in that group that had a life of its own.
This is reflected in the numerous towns around the nation that are now looking to make themselves either zero net carbon, zero net energy, or 100 per cent renewables; or to create community owned electricity retailers that focus on renewables.
As ABC’s environment specialist, running Earthbeat for 8 years, I had the good fortune to report closely on the industry’s development.And when I first met Ben Gales, the CEO of SEFA, in 2013 I said one of the things I would like to do if I come to work for SEFA is to facilitate the development of renewable energy and to help get new renewable projects off the ground.
So it makes me very happy today to stand in front of a full house this morning, and we are here to talk about making community renewable energy a reality. And this is one of the reasons I came to work for SEFA.
Now, for the first hour we are going to hear from a range of speakers, who will each speak for ten minutes each. I am going to be very strict with you all as we have a lot of fabulous experts with great things to say about the topic, so I am going to hold you to your times.
Then we’ll have a short break and come back with a series of four very short presentations before we move in to a Q & A Panel discussion with all of our speakers at the front here.
Ben Gales is the CEO of SEFA and has been with the organisation for two years.Ben was formerly a Director at the NSW Department of Family and Community Services and has also worked in NSW Treasury, in venture capital in the US and UK, and in the UK Treasury. Ben has extensive knowledge of social investment, having been involved in the development of Social Benefit Bonds in NSW and establishing the Phoenix Fund in the UK to support small enterprises in disadvantaged communities. He also has experience of small business equity investment from his time in venture capital in Silicon Valley in the US and Cambridge in the UK. Ben worked with small to medium size organisations and he is aware of the growth challenges and opportunities. This experience equips him well for understanding the needs of emerging social enterprises. Ben is a member of the Prime Minister’s Community Business Partnership.
Ben Gales:Good morning all. I always love these intros because I always think, god, I really wanna meet this guy, I have so much to learn from him!
So I’m the CEO of SEFA, so I’ll just give you a quick overview of SEFA and then why we’re interested in community renewables. So, SEFA is a social finance organisation. We’re a fund that backs social impact organisations. So these are organisations that have a positive social, environment, indigenous, cultural impact. And what we what to achieve is impact, but also commercial returns.
Which brings us nicely into the renewables sector, and I think over the last five to ten years, and perhaps in particular now we’re at that tipping point where the economics is such that it’s becoming incredibly compelling to push on renewables. So whether that’s solar, diesel replacement or rooftop solar. The economics are there now, so what are the barriers to rolling out more community renewable projects or renewable projects? Well that is what today is about. So we want to be helping people answer some of those fundamental questions around legal structures, about what is the state of the environment at the moment? Environment being regulatory environment, not the weather. And then thirdly, where do I get that early stage funding for feasibility studies?
So I think we’ve got some superb speakers lined up, so from a SEFA perspective, this is what we want to promote – this sector – but we also want to be making investments in this sector because we think it would be good for us as an investor, but also for the community. And all I’ll finally add, because I don’t want to speak for long because we’ve got so many good speakers, all I’ll finally add is it’s not just about environment. For us, when we back community projects and community renewable projects, it’s all about creating social fabric and social capital. So we do think it’s incredibly powerful on an environmental perspective, but also very powerful from a community connectivity perspective. So for us it’s a big win on environmental, a big win on social, but also a big win because we think it is viable commercially and we can get a return on our investment.
So with that I’ll say welcome, I hope you enjoy the next hour or two. Thank you.
Alexandra de Blas: Thanks very much Ben. Now we’re going to hear from Nicky Ison, Nicky is a Founding Director of the Community Power Agency, a Senior Research Consultant at the Institute for Sustainable Futures (ISF) and the Co-Coordinator of the Coalition for Community Energy. She is an expert in the field of community energy. During 2010, Nicky undertook a self-funded study tour of 30 community energy projects and organisations across Europe. She is lead author on the National Community Energy Strategy and helped organise the inaugural Community Energy Congress. Nicky along with ten others have founded the Coalition for Community Energy ( using a collective impact framework to grow a vibrant community energy sector in Australia. Nicky has spent the last decade as a researcher, advocate, facilitator and organiser in the community climate and energy sectors and was recently recognised for her work in the Australian Financial Review’s 100 Women of Influence list.
Nicky Ison: Hi. It’s wonderful to be here. SEFA is an amazing organisation and I really look forward to many future collaborations and seeing many community energy projects get off the ground through their support. So let’s talk about how we do that and what people in this room have and are doing, and the amazing work that still needs to happen.
But maybe we’ll start with this question: so what is community energy? I’m going to start with two definitions. The first is a pretty practical one. Community energy projects are those where communities come together to develop, deliver, benefit and own sustainable energy initiatives. Be it a renewal energy installation like a solar array on a rooftop, it could be a wind farm, but it could also a demand management project, or as Alexandra already said, a community energy retailer. And internationally we could even follow in the footsteps of Germany, where there are community owned network service providers.
Let’s put it another way. Community energy projects decarbonise, decentralise and democratise our energy system, and demonstrate that a renewable powered future is possible. I have to thank our esteemed Environment Minister in NSW, Rob Stokes, for coining that fourth D, which shows that we actually do have bipartisan support for community renewable energy in Australia, and I’ll come to that more shortly.
So community energy projects are what I’d call a social enterprise. Which is why they fit so well with SEFA. They have a financial value proposition, but they also have a social value proposition. And they go beyond that. It’s not just a win-win, community energy projects are a win-win-win-win-win. Five wins. Corresponding nicely to my five circles.
My colleague, Adam Blakester, at Farming the Sun in New England Wind, talks about community energy as the sweet spot. And that’s because they really are. Because it’s not just about providing a return to investors, which many projects do, or lower electricity bills. It’s not just about reducing our carbon emission. But as Ben said, it’s about creating the social fabric. It’s about increasing community resilience. It’s about empowering people. Increasing their energy literacy and their ability to take control of their energy future. It’s about growing a renewable energy sector in Australia. And finally, it’s about creating stakeholders in a renewable powered future. People who have both a financial but also a psychological stake in this energy transition that we have to create, that is upon us, and now we have the ability to set the terms of that transition. To engage and involve people who would otherwise be left out. To make sure that the new energy system benefits all Australians and all Australian communities.
And we’re, I have to say, lagging behind the rest of the world. Let’s just take one example. Scotland. Scotland has a 100% renewable energy target. They also now have five hundred operating community energy projects. That’s actually just a map of three hundred, it’s a couple of years old now so imagine another two hundred dots on that map now. So where are we at here in Australia? It’s a bit of a misnomer, that was back in 2009, when I first started getting involved in community energy projects and I have to say I’m pleased to have Martin May here, who was involved in Hepburn Wind, who’s been involved longer that I have. There were three community energy projects in development back in 2009. Now there are eleven operating community energy projects and fifty nine more groups developing projects. And not every group is just going to deliver one project, many community energy groups will deliver multiple projects. So there’s some real excitement and enthusiasm happening in this growing and emerging community energy sector.
I just want to talk about two examples, and I have to say that there are two people in this room who know more about these examples than I do. The first is Australia’s flagship, internationally award-winning first community-owned wind farm. Who here’s heard of Hepburn Wind? Glad to hear it. I’ll keep it short. Two two-megawatt turbines, almost two thousand member-owners, the majority of whom are local to the Daylesford/Hepburn Springs community in central Victoria, it’s won the International Wind Association’s Project of the Year, it’s pioneering, it’s an inspiration to us all. Alright. Who here has heard of Repower Shoalhaven? Less, but still more than half the room. Repower Shoalhaven is one of NSW’s first community energy projects. It’s a one hundred kilowatt solar array on the Shoalhaven Heads Bowling Club, pioneered by my very good friend, Chris Cooper, who founded Repower Shoalhaven. It’s got twenty member investor-owners who own 70% or seventy kilowatts of that solar array, and will over the next seven years get a very nice return on their investment. And it’s a model that we’re seeing community groups across Australia, and particularly here in NSW, start to adopt and take up and it’s thanks in part to one person in this room who helped facilitate and make that happen.
So how do we actually make these community energy projects happen? It’s about solving what I call a Rubik’s cube of factors. So it’s about first bringing together a group of people who have a shared vision, who are motivated by a range of the different benefits that I talked about. Then you’ve got to sort out your technology, your organisational structure and governance, your financing and funding, and then finally, you’ve got to sort out your community engagement. What is it about your community energy project that makes it a community project, not just a commercial energy project? And then finally, you’ve got to do all that within a rapidly changing and currently quite hostile external context.
So let me talk you through some of the challenges, because community energy projects in Australia are hard. They have such potential and when they’re achieved, do so much for communities, but I don't want to sell you a false story. Getting community energy projects off the ground is hard. Who here in the room is involved in developing a community energy project? Yeah. Who here would agree with me when I say it’s bloody hard? Yeah. Okay. So some of the challenges. I’m just going to talk about five very quickly.
First is the obvious one. The renewable energy target uncertainty is a problem. It’s particularly a problem for any projects greater than 100 kilowatts. And I want you to think about that divide between community projects that are less than 100 kilowatts and community projects that are greater than 100 kilowatts. Because it’s quite important.
In Australia we have some of the lowest wholesale electricity prices in the world and some of the highest retail electricity prices in the world. That makes it really challenging. Particularly if you’re doing a large-scale project, particularly withthe RET uncertainty, prices are low. If you’re doing a behind-the-meter project where you’re offsetting the retail price, that works well but you have to scale your project to the energy load for what the host site uses, and there are actually not that many host sites that work well. We have a set of financial regulations that means it’s very difficult to work out the right legal structure and financing structure. Because basically you either have less than twenty investors, which, let’s say is a pretty weak model of community when you want to have hundreds of people, if not thousands of people, engaged in the project, or if you want to go greater than twenty investors, then you have to work through a whole set of requirements around Australian Financial Services licences, prospectuses, and other compliance and audit measures, and you certainly can't do all that and deliver a profitable project. There wouldn’t be any return on investment. As my colleague, Tom Nockolds, says, there’s this valley of death we have in the community energy sector between community energy projects that are 100 kilowatts and community energy projects that are 400 kilowatts and up.
We did some research, a few years ago now, looking at what are the key challenges to community energy projects. Community energy projects don't have large reserves of capital. They have a huge amount of skill, volunteer effort, passion, that can be drawn on, but it still takes money to get a community energy project off the ground. And particularly that first 10% that takes a project from an idea to a point where it’s investment ready. How do we fund that? And I have to acknowledge both some philanthropists but also the NSW Office of Environment & Heritage for just releasing their second grant round and funding nineteen community energy projects to help address that first 10% issue.
And finally, negotiating with host sites. So I talked about the fact that you have to find a host site, particularly for community solar projects, that has a low profile that matches with when you can generate electricity from solar, they have to “get” community energy and be interested in the community energy approach as opposed to just a commercial energy approach, and then there’s all of the financial and legal negotiations, including the fact that they have to have really at least a ten year lease, which not all commercial enterprises have.