Introduction
The Standing Committee on the Environment and Energy was tasked with inquiring into the Australian Local Power Agency Bill 2021 and the Australian Local Power Agency (Consequential Amendments) Bill 2021.
The Committee heard compelling evidence from both the submissions and witnesses that under current Government policy, many regional Australians are not seeing the full potential benefits of renewable energy through economic indicators like local jobs, new industries, and new sources of income, and through social indicators like increased community self-determination, and improved energy security.
Independent Review
The Committee report acknowledges that evidence provided by several submitters illustrates that existing grant and investment mechanisms do not adequately support projects in regional Australia due to a range of reasons including project size, technical capacity, geography, or commercial viability.
Committee report clause 2.119 notes that the “Australian Government may wish to consider conducting a review of the adequacy of ARENA and the CEFC’s programs”. Given the clear evidence provided to the Committee, this language fails to capture the urgency with which an independent review of existing agencies is clearly warranted, to outline a timeframe for the delivery of that review, and to identify key terms of reference.
Recommendation 1: That the Government conduct an independent review of the ARENA and the CEFC to identify opportunities to better support to regional community energy projects. That independent review should consider the nature of technical, financial, and other support needed to adequately address the needs and aspirations of regional communities and should provide its final report to the Minister by 1st August 2022. The Minister should publish the Government’s response to that review by 1st October 2022.
Dedicated Grant Funding
The Committee heard strong evidence that current grant programs offered through existing agencies like ARENA provide insufficient support to community energy groups. It also heard evidence that existing grant programs are aimed primarily at large-scale commercial technology developers and project developers and are ill-suited to the unique needs and aspirations of community energy groups.
However, the Committee report fails to outline practical steps to address the demonstrated failure of ARENA to properly support community energy projects. Clause 2.122 notes that “community projects should continue to be diligently considered by ARENA and the CEFC”. This observation fails to acknowledge that in most instances, community energy projects are not being considered by ARENA and the CEFC and that in the rare cases they are, those funding programs are not suited to the needs of community energy groups.
Clause 2.126 notes that “The Committee is of the view that the Australian Government may wish to explore funding options within ARENA to support community energy projects, noting concerns raised by the community that existing funding streams are ill-suited to their needs”. This recommendation acknowledges the need for additional funding opportunities within ARENA but neither formally recommends further funding nor offers details about the size or design of those funding opportunities.
Recommendation 2: That the Government substantially increase the financial support available to community energy groups by establishing a dedicated $300 million Local Power Fund within ARENA focussed exclusively on supporting regional community energy projects. That funding should be administered by ARENA over four years and should be additional to ARENA’s existing allocation.
Technical Assistance Program
The Committee heard consistent and compelling evidence, especially from community energy groups themselves, that in addition to further funding, they need direct technical support to assist in the development of project proposals, engineering studies, business case development, regulatory approvals, community engagement, communication and myriad other highly specialised skills required to deliver energy projects.
However, the Committee report fails to outline a policy response that could address this need. Clause 2.119 notes that “the Australian Government could also consider whether technical or other support is also needed to adequately address the needs and aspirations of rural, regional and remote communities”. Clause 2.122 notes that “the Australian Government should consider how ARENA and the CEFC can better assist smaller community organisations seeking to develop energy projects with managing their regulatory, financial, governance and technical frameworks”. Neither of these observations constitute a specific commitment or proposal to deliver on-the-ground technical support to community groups to develop their own energy projects.
Clause 2.127 notes that “it is the Committee’s view that the Australian Government should consider providing properly resourced technical assistance, delivered through ARENA, for community groups in regional Australia that wish to develop their own community energy projects. In considering such assistance, the Australian Government could be informed by existing assistance programs including the Victorian Power Hub”. This recommendation accurately notes that the Victorian Power Hub model is a demonstrated and successful model for the delivery of technical assistance that was endorsed by many witnesses and submissions, however, it stops short of recommending the establishment of a similar Federal technical assistance program.
Recommendation 3: that the Government establish a properly resourced technical assistance program, to be delivered by ARENA, to provide direct on-the-ground support to community groups in regional Australia to develop their own community energy projects. That technical assistance program should be based on the successful Victorian Power Hub program and should seek to establish properly funded community energy hubs in regional centres nation-wide.
Dedicated Investment Mechanism
The Committee report notes that there is strong support for mid-scale community energy projects to proceed. The Committee report declines to endorse the proposed Underwriting New Community Investment (UNCI) scheme and proposes an unspecified alternative mechanism for supporting mid-scale community energy projects to reach financial viability but omits to detail how an alternative mechanism might operate or might be developed.
Clause 2.125 suggests the Government “may wish to, through ARENA and the CEFC, establish a dedicated mechanism for small communities and community energy organisations to better engage with energy companies, project developers and financiers to attract development and to develop more optimal solutions for their needs”. This language mischaracterises the nature of community aspirations: many regional communities are seeking financial investment in their own locally developed energy projects, not simply seeking to engage with energy companies in relation to large-scale commercial projects. Further, the purpose of the desired mechanism is specifically to attract investment, not simply to facilitate community engagement.
Recommendation 4: That the Government should establish a dedicated investment mechanism to attract private financial investment into locally owned community energy projects. The independent review into ARENA and the CEFC should consider how the remits of the existing agencies can be designed to ensure that the new investment mechanism can deliver realistic project opportunities at the community level.
Benefits-Sharing from Large-Scale Renewables
The Committee heard clear evidence that communities are seeking enhanced opportunities to share in the benefits of large-scale renewable energy projects.
Many witnesses and submissions to the inquiry expressed the view that the proposed Community Renewable Investment Scheme would be of significant benefit to regional communities within proximity to large-scale renewable energy projects. Reasons for this support included that:
the Scheme would assist project developers to build community acceptance and social licence;
community co-investments will reduce and spread project risk and require limited government intervention; and
the Scheme would significantly boost economic activity within the regions through investment.
However, while the Committee report recommends that the proposed Community Renewable Investment Scheme should not proceed, it omits to propose any alternative model for local benefits-sharing from large-scale renewable energy projects, and further, omits to recommend any actions to Government to develop such proposals.
Recommendation 5: that the Government develop a proposal to enhance local benefits-sharing from large-scale renewable energy projects including transmission projects by December 2022.
Parliamentary Debate
Allowing debate in the House of Representatives, on Bills of this complexity, importance, and with such a substantial and compelling response from regional Australian communities, would be an appropriate response to the content of these Bills.
The commendably constructive contributions from all Members of the Committee illustrate that these are issues of fundamental importance to regional Australians, and they deserve to be documented and debated through the formal process of bringing the Bill forwards for a debate in the House.
Especially those MPs who represent rural and regional Australia deserve the opportunity to respond to the policy proposals contained in this Bill, and their constituents deserve the opportunity to hear the views of their representatives on these issues.
Recommendation 6: that the Government allow 2 hours to debate the Australian Local Power Agency Bills in the House of Representatives. That debate should occur before 30th March 2022.
Dr Helen Haines MPZali Steggall OAM MP
Member for IndiMember for Warringah