On April 5, the ABC reported that Solar Reserve had failed to achieve the necessary financial backing for its proposed solar thermal plant at Port Augusta.
CORENA Open Letter re Aurora
Dear Minister, citizens and proponents who care about building a solar thermal plant near Port Augusta,
Citizens Own Renewable Energy Network Australia (CORENA) has been a long-term supporter of the Solar Thermal project Aurora and we hope that the latest Solar Reserve announcement does not doom the project. In 2012 we walked from Port Augusta to Adelaide to call for a faster energy transition and support for this project. We believe, as do the Port Augusta community, that solar thermal represents an important investment for our energy transition – with dispatchable renewable electricity and the possibility of manufacturing and operational employment beyond the initial investment. South Australia’s energy security and resilience would benefit greatly from this project.
CORENA was established on the 2012 Walk-for-Solar. We found that many Australians around the country shared our optimism and support for the solar thermal project and wondered if we could offer a practical way forward. Thus, an organisation based on a revolving fund was born and we started fundraising. Our efforts showed that many people believe this big, long-term vision should happen and were prepared to donate regularly. CORENA developed the concept of “Quick Win” projects and started investing immediately in rooftop solar and energy efficiency that could reduce greenhouse gas emissions. The fact that our projects also reduce the electricity bills of community organisations and allow them to deliver extra benefits into their communities was an added bonus.
Despite CORENA’s efforts, community finance has not been taken seriously by those developing Aurora, but now is the right time to ask the question again.
Community finance has been used successfully in energy projects in Australia and around the world and it comes with a different set of conditions.
• Communities are interested in sustained community benefits,
• They can offer patient capital and
• They know that our transition toward renewable energy is urgent and worth investing in.
In Denmark all major projects must open 20% of the capital investment to small community investors. In the UK, community shares attract light-handed regulation to encourage projects that give dividends directly to communities alongside lower dividends to community investors. In Germany and the USA, communities have asserted the rights of energy customers and brought control of energy purchasing decisions back into local government hands. Indeed, Germany’s renewable energy capacity is 42% owned by individuals and farmers.
Australian community energy projects provide local examples.
• Hepburn Wind was built in 2011 with $9.8m from 2,000 local investors.
• ClearSky Solar develops renewable projects with 20 investors per project and sees investment slots regularly snapped up hours after release.
• Enova Energy is Australia’s first community-owned retailer. Its commitment to community is embedded in its constitution, sharing the voting power with all investors, large and small, and creating a dividend to fund Enova Community, its not-for-profit arm.
• DC Power provides a final example, last year raising $2.5m from 15,000 investors under the new legislation that allows equity crowdfunding.
These examples are all about equity. CORENA’s model offers debt. Our loans to community groups attract zero-interest and outperform grants because the finance keeps working long after the project has recovered its initial investment. Long-term power purchasing arrangements, like the one signed by the State Government can also be used to support renewable energy projects.
Major projects are generally financed by a combination of debt and equity, supported by long-term contractual arrangements with purchasers. Conventional commercial arrangements have fallen short in the ability to finance the Aurora project.
The questions to be asked now are whether community arrangements might provide a better outcome and an important support for getting this project over the line?.
At CORENA we would be willing to work in partnership with governments, proponents and the community at large, together developing financial support for this project.
• If we can bring widespread support, can you bring the key decision makers and a pathway to financial close?
• We believe the energy transition will require novel approaches from all parts of society – are you willing to give community finance an opportunity to make this project work?