Victorian government submission to the parliamentary inquiry into community energy projects

Community Energy Projects Inquiry – Victorian Government Submission
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Parliamentary Inquiry into Community
Energy Projects
December 2016
Submission on behalf of the Victorian Government

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Contents
1 Executive summary.........................................................................................................................3
2 Introduction ....................................................................................................................................4
3 Victoria’s action on renewable energy ...........................................................................................6
3.1 Delivering a more flexible approach to grid connections.......................................................6
3.2 Exploring innovative smart grid, microgrid and storage models............................................7
3.3 Making changes and working towards a fair approach..........................................................7
3.4 Sharing and using data and knowledge ..................................................................................8
3.5 Releasing a Guide to Community-Owned Renewable Energy for Victorians .........................8
3.6 Delivering a PiLoR and planning issues discussion paper .......................................................8
3.7 Working collaboratively..........................................................................................................9
4 Response to the Terms of Reference..............................................................................................9
4.1 Look at the potential role of co-operatives, mutuals, social enterprises and community
ownership in the energy sector ..............................................................................................9
4.2 Investigate the benefits of community-owned energy programs........................................11
4.3 Investigate the best ways to encourage community energy project uptake .......................11
4.4 Investigate expanding community energy projects outside solar and wind........................12
4.5 Review Australian and international best practice models for supporting community
energy ownership .................................................................................................................13
4.6 Investigate the challenges to metropolitan community energy projects and ways to
support them to surmount these challenges .......................................................................14
5 Conclusion.....................................................................................................................................15

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1 Executive summary
This is a whole of Victorian Government (Government) submission to the Economic, Education, Jobs
and Skills Committee for their Inquiry into community energy projects. This submission has been
prepared in consultation with:
• Department of Environment, Land, Water and Planning
• Department of Health and Human Services
• Department of Education and Training
• Sustainability Victoria
• Regional Development Victoria
The submission covers the Inquiry’s Terms of Reference and:
• Offers a broad definition of community energy projects
• Considers the Government’s role in these projects
• Discusses the contribution community energy projects could make and are making in
Victoria
• Provides some examples of how the Government supports community energy projects
• Offers some relevant local and international case studies and examples.
Community energy projects create a number of benefits and advantages, aside from increasing the
amount of renewable energy generated in the state, and reducing our climate change impact. These
projects, when well-planned and efficiently and cost-effectively executed, can bring communities
together, give them more control of their energy use and costs, grow jobs, attract investment and
build local knowledge and capacity. Successful community energy projects can add to electricity
network stability and resilience, and in the best cases are scalable and replicable, making them
useful as templates for other communities.
The Government’s Renewable Energy Roadmap, released in 2015, identified supporting household
and community development of renewable energy generation projects, products and services as a
priority area. These projects, and the growth of renewable energy generally in our state, contribute
to reducing the impact of climate change and to us achieving our renewable energy generation
targets. Currently about 15 per cent of our energy is generated from renewable sources, and we will
lift this to 25 per cent by 2020 and 40 per cent by 2025. By 2050 our aim is for Victoria to have net
zero carbon emissions.
The Government is aware, however, that there are currently barriers to communities successfully
delivering their energy projects, and that we can support the community energy sector by removing
some of these barriers. This submission covers a number of Government initiatives underway to
address some of these issues, including:
• Consulting on and delivering significant plans, initiatives and discussion papers such as the:
o Renewable Energy Roadmap
o Guide to Community-Owned Renewable Energy for Victorians

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o Community Renewable Energy Projects Discussion Paper
o New Energy Technologies Sector Strategy
• Delivering a more practical and cost-effective approach to grid connections
• Working toward a fair approach by retailers and distributors to residential and small
business renewable energy consumers and generators
• Sharing data and knowledge and facilitating relationships
• Supporting metropolitan and regional community energy projects
• Improving processes for community renewable energy projects and removing
implementation barriers.
The Government sees our role in working with communities to deliver their energy projects as
largely one of facilitation and knowledge sharing across all stakeholders in the sector, including
industry, all levels of government, regulators and large and small businesses. Our role also includes:
• Providing assistance to communities to help them understand planning, licencing and
regulatory requirements
• Where appropriate, delivering policy and legislative change to ensure planning, licencing and
regulatory requirements are fit for purpose for community energy projects
• Consulting, listening to and investigating community concerns about current barriers to
community energy project delivery
• Sharing knowledge across communities and raising awareness about successful projects and
the challenges and opportunities the project teams faced
• Ensuring that as new technologies and innovations emerge, we work with stakeholders to
maximise the benefits for all consumers and the environment, while also protecting the
interests of vulnerable consumers
• Advocating on legislative and other matters on behalf of communities, and working
collaboratively with the energy industry, all levels of government, and other stakeholders
• Encouraging and incentivising communities with, for example, grants and awards for
community-owned energy projects and initiatives.
The Government welcomes the opportunity to put forward this submission to the Inquiry, and to
work with consumers and communities across Victoria to assist them where we can. Working
together we are confident of reaching our renewable energy targets and transitioning Victoria to a
clean energy future.
2 Introduction
The Government is committed to reducing Victoria’s greenhouse gas emissions to net zero by 2050,
while creating jobs, growing the economy and ensuring our energy supply remains reliable,
sustainable, renewable and affordable.
Our energy system is becoming increasingly decentralised. Technological advances and a more
extensive range of cost effective, efficient products and services are giving communities more

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understanding of, and control over, their energy supply. Communities and consumers are
increasingly proactive in establishing their own energy systems, in Australia and globally.
Energy production, particularly electricity generation, currently accounts for 84 per cent of Victoria’s
total greenhouse gas emissions, making a significant increase in renewable energy sources essential
for our state. The rise of the energy “prosumer” (consumers who produce and consume) continues
to positively influence the take-up of community energy technology, ideas and solutions.
A community renewable energy project is usually initiated, developed and operated by a community
organisation to derive and share the benefits from renewable energy resources (commonly sun or
wind but also including other renewable resources such as bioenergy, water and geothermal
energy), energy efficiency solutions or demand management initiatives. Peer-to-peer energy trading,
virtual power stations and other, similar technologies or models are excellent examples of the
emerging “sharing economy”, where financial returns are not the key project driver. A community is
most often a geographically-based group, but can also be a community of common interest.
While community energy projects will have characteristics unique to their community, it is usual for:
• A community organisation to lead the project, or partner with a developer or other
interested party, or both
• A community organisation to share decision-making responsibility for developing and
operating the project
• The project to share the social, economic and financial benefits with the local community
• The scale of the project to suit the community
• A community organisation to own a portion of the project and possibly control and manage
the investment vehicle.
If properly planned, executed and managed, community energy projects enable effective, combined
action and can unite a community’s response to climate change, grow social capital and deliver
communities a sense of empowerment and control over their collective energy use.
There are a number of different community energy models used locally and globally, which
incorporate innovative technology and business models, and successful projects which give
community members the chance to own and operate a clean energy system.
Interest in community energy projects continues to increase across Victoria. Of the 22 community
energy projects now operating around Australia, six are in Victoria. Nationally, about another 70
projects are at some stage of development and over 20 of these are in Victoria.1
Evidence from the Government’s New Energy Jobs Fund (NEJF) shows that public interest in
community energy projects has significantly increased in recent years and this trend is set to
continue. The NEJF has enabled Government to invest $20 million in supporting Victorian-based new
energy projects across several categories (including community projects). These projects must
increase the uptake of renewable energy generation, reduce greenhouse gas emissions and drive
new technology innovation.
1
Application and assessment data for round one of the Government’s New Energy Jobs Fund.

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Community groups tell us, in their submissions during consultation on our various policies, strategies
and initiatives, and in our day to day dialogue with them, that they want to minimise their carbon
emissions and take greater control over their energy use and costs. Further, they want to participate
in leading edge technology and innovation as part of the “sharing” and “knowledge” economies.
These new economies will see communities sharing in the benefits of their endeavours across
multiple levels – and taking control of their energy future.
3 Victoria’s action on renewable energy
When the Government released our New Energy Technologies Sector Strategy in March 2016, one of
our many commitments was to deliver a clear and focused renewable energy plan for the State. We
promised that this plan would set out a range of measures to help drive the use of sustainable
energy sources in Victoria. This included setting a renewable energy generation target for 2020 and
2025, and supporting actions to achieve this target, as well as establishing actions to support
households, businesses and communities to invest in renewable generation and storage at a local
level. The Government is in the final stages of developing this plan.
The Government is committed to increasing renewable energy generation in Victoria to 25 per cent
by 2020 and 40 per cent by 2025. We acknowledge these targets will be achieved primarily through
large scale generation projects, but community generation projects may also play a part.
The main mechanism proposed to achieve our targets will be a series of competitive reverse
auctions for new Victorian renewable energy generation projects, similar to successful processes
established in the Australian Capital Territory (ACT) and overseas. Reverse auctions are a
procurement mechanism in which vetted suppliers bid against each other (often in a secure online
platform) to provide the goods or services required. The first auction will be in 2017.
We are proposing that the supplier evaluation criteria for the auctions include a requirement for
project proponents to demonstrate best-practice community engagement. Further guidance on
community engagement expectations will be provided to participants before the first auction round.
The Victorian Government is currently engaged in a number of policy and program initiatives that
support community energy projects and are relevant to the Terms of Reference of this inquiry. These
are outlined below.
3.1 Delivering a more flexible approach to grid connections
Stakeholder engagement has identified that timely and cost-efficient grid access for all renewable
energy projects (commercial and community scale) is often raised as a challenge for projects. The
Government is creating a supportive, modern and flexible policy and regulatory framework to
streamline negotiations with network service providers and investors to ensure competitive and
timely grid connections in the state, without compromising the useful protections the existing
framework provides.
The grid connection process is a crucial and complex stage of any electricity generation project.
Community renewable energy and innovative distributed generation projects are often large enough

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to have grid connection impacts and small enough that grid connection costs can negatively impact
the economic viability of a project.
The Government is actively engaged with network operators to identify and resolve impediments to
grid connections and establish a robust framework, providing better information and a more
transparent, timely and efficient connection process, while maintaining appropriate levels of
regulation and governance.
3.2 Exploring innovative smart grid, microgrid and storage models
Microgrids provide a mechanism to reduce overall demand on traditional energy grids, while
stabilising the network. Microgrids are popular around the world and offer successful, network-
integrated local energy solutions. They operate as small, community level networks capable of
aggregating and optimising energy resources, using a combination of generation, storage and
communication and control technologies. Microgrids have the capability to manage local generation
and use appropriate tariff structures to benefit both the user and the network. These systems can
also benefit communities by providing them with supply reliability and energy resilience, in
particular for communities with low energy security such as those facing bushfire risk or network
constraints.
Microgrids generally operate while connected to the mainstream electricity grid, but can break off
and generate their own energy for local consumption if required, for example during power outages.
The Government is working with Monash University and the Clean Energy Finance Corporation to
help deliver Monash’s Transformative Energy Initiative. The Initiative will be a test bed used to
develop innovative solutions that enable optimised smart microgrids to be deployed. It will be the
first of its kind in Australia, and one of only a few in the world, to provide a working prototype of the
future energy grid on a university campus. Government has a Memorandum of Understanding with
Monash University for this project.
3.3 Making changes and working towards a fair approach
The Government has passed legislation so communities or individuals who generate their own
electricity are fairly treated by retailers. All Victorian retailers are now required to offer small
renewable energy consumers the same access to retail offers as any other customer.
The Government’s view is that current mechanisms, such as Victoria’s feed-in tariff framework, do
not recognise and reward the true value that distributed generation provides to the electricity grid
or broader market, and we referred this matter to the Essential Services Commission (ESC) to
investigate and make recommendations.
Working with the ESC, we are enabling renewable energy feed-in tariff rates to be set in a fairer way,
and to reflect the environmental benefits of distributed generation. We are implementing legislative
changes to ensure this occurs.
We have released a draft position paper as part of the General Exemption Order review, which
examines how single premises, community-owned renewable energy projects may be exempt from
obtaining an electricity generation licence to operate. This is intended to decrease the regulatory
burden for community renewable energy projects, and encourage their development in Victoria.

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Submissions to this paper closed in September 2016. The Government’s final position will be
released in January 2017, with implementation scheduled for July 2017.
As part of this work the Government has addressed reform of the alternative energy selling sector,
so Victorians can purchase solar power directly from solar businesses through flexible agreements
such as leasing. This approach means households can gain the benefit of distributed generation
without the costs involved in purchasing solar photovoltaic (PV) systems outright.
Consumers and communities will inevitably continue to have greater control over where their
energy is sourced from, what it costs, how they use it and their impact on the environment. These
changes will see Victoria’s future energy sector become a prosperous place – where energy is clean,
reliable, affordable and open to all to own, operate and share.
3.4 Sharing and using data and knowledge
Data analysis, through modelling and forecasting, underpins how renewable energy and storage will
most effectively integrate into existing energy systems, and play their role in transforming our
energy sector. Effective use of de-identified data, by industry, communities and other stakeholders,
will advance our understanding of Victoria’s energy needs and create the platform on which to build
innovation in the sector.
The Government’s forthcoming Centre for New Energy Technologies will include a program stream
focused on systems modelling and forecasting, which will assist in the emergence of renewable
energy technologies, business models, products and services by:
• Enabling sector transformation through research, de-identified data analysis and capability
building to support new jobs, community initiatives and industry growth
• Facilitating independent and evidence-based analysis on the future needs of the Victorian
and national electricity systems
• Establishing sophisticated links between industry and academia through shared data
modelling and forecasting projects to support new products, services and renewable energy
technologies.
3.5 Releasing a Guide to Community-Owned Renewable Energy for Victorians
A significant barrier to success for community energy projects is understanding and navigating
existing regulatory and planning processes. In consultation with community groups, we developed
and released the Guide to Community-Owned Renewable Energy for Victorians. The guide provides
practical information on the process involved in delivering a community energy project from initial
idea to successful implementation.
3.6 Delivering a PiLoR and planning issues discussion paper
As communities tell us about barriers to their success that fall within our control, we address them.
For example, we understand that the current rates framework (payment-in-lieu-of-rates or PiLoR)
for electricity generation facilities (part of the Electricity Industry Act 2000) may be an unintentional
barrier to the development of community-owned renewable energy projects in Victoria. In 2016 the
Government released a discussion paper – called Community Renewable Energy Projects, PiLoR and
Planning Issues, which is available at www.haveyoursay.delwp.vic.gov.au/community-energy – to
better understand specific views on these topics. The discussion paper also seeks comment on the

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planning scheme arrangements which currently prohibit community windfarms in some locations in
Victoria.
3.7 Working collaboratively
We are continuing to work at a local, state and federal government level to ensure a consistent,
practical approach to policy and regulatory matters which impact the success of community energy
projects. We do not believe the National Energy Objectives, contained with the National Electricity
Rules, meet the requirements of a modern energy system and we will advocate through the Council
of Australian Governments (COAG) Energy Council for a review of these objectives.
Case study – The New Energy Jobs Fund (NEJF)
The New Energy Jobs Fund (NEJF) is part of the Government’s $200 million Future Industries Fund
and provides $20 million to support priority initiatives and activities which align with our New Energy
Technologies Sector Strategy.
The 24 successful projects from round one of the NEJF have been awarded $5.8 million, and 18 of
these are community projects. The majority of applications in the community aligned categories
were for business case funding, demonstrating the level of interest communities have in developing
local energy projects.
Round two of the NEJF builds on the learnings from round one and will include separate streams
(and application forms) for new energy technology initiatives from communities and industry. The
industry stream will have an increased focus on jobs and economic development outcomes and the
community stream will have an increased focus on social and environmental outcomes. The
community stream of the NEJF will support projects under two categories:
1. Community renewable energy project business cases and feasibility studies – recognising that
some of the business cases submitted in round one would benefit from some development
assistance, and a readiness checklist
2. Community renewable energy projects – supporting projects which present as implementation
ready.
4 Response to the Terms of Reference
4.1 Look at the potential role of co-operatives, mutuals, social enterprises and
community ownership in the energy sector
Ownership and control models for community energy projects can include co-operatives, mutuals,
social enterprises, and partnerships between communities and developers, councils, or others such
as land holders or technology suppliers. Each of these models has different strengths and delivers
different benefits and opportunities for local communities. Co-operatives, mutuals and social
enterprises tend to be not-for-profit, but they don't have to be.
Co-operatives are amongst the earliest, most prominent and most successful community renewable
energy project types, in Australia and globally. Co-operatives are jointly owned by the people who
invest in them and use their services, and the profits are used as directed by their board and

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members. Membership is voluntary and open, and the co-operative runs autonomously under the
community's control, to meet the community's needs. In Australia, co-operatives are incorporated
and regulated under state and territory laws. A good, local example of a co-operative is Hepburn
Wind .
Case study – Hepburn Wind
A good local example of a co-operative is the Hepburn Community Wind Park Co-operative. Known
as Hepburn Wind, the co-operative owns and operates Australia’s first community windfarm at
Leonards Hill near Daylesford, about 100 km north-west of Melbourne.
The 4.1 megawatt wind farm has two turbines and produces enough electricity to power more than
2,000 homes. The community established the co-operative to build local support for the project,
manage the windfarm, allocate surpluses and fund local projects that address social, economic and
environmental sustainability. The co-operative has almost 2,000 members, most of whom are
Hepburn area locals, and it contributed $9.8 million to windfarm construction costs. The windfarm
also received a Government grant of $1.7 million and a $3.1 million loan from Bendigo Bank.
Profits from the project are returned as dividends to investors and to the broader local community
via a Community Fund. Hepburn Wind provides a model for co-operative electricity generation
projects, in terms of community engagement, regional economic benefits, local job creation,
community empowerment and capacity building.
Mutuals, like co-operatives, also operate to meet a group's shared interests, raising funds from
members to provide them with services. With mutuals, members don't own the business, but
participate as customers. The mutual pools funds and shares risk across a large group, with members
deciding how services are offered and profits are spent. In Australia, mutuals are incorporated and
regulated under federal law.
Social enterprises are businesses which operate with the deliberate aim of addressing social issues
or improving communities. They apply business solutions to social challenges with the goal of
supporting themselves financially and in innovative ways, and not relying on grants or donations.
Community-developer partnerships present significant opportunities for community energy project
development. These occur when either a community organisation or a renewable energy developer
initiates the project and the two deliver it in partnership. The partnership offers an investment
vehicle where the renewable energy developer and possibly other entities are joint owners. Often
the community organisation leads community engagement and consultations (using community
members) and the developer leads the technical studies. The degree of community ownership of a
community-developer partnership can vary. Windlab is one of the forerunners in this area, with its
innovative Coonooer Bridge wind generation project located north-west of Bendigo in Victoria. The
project is the first of its type with an ownership structure which includes the local farming
community in a unique equity consortium arrangement.
Critical to the success of community energy projects in developing local renewable energy systems is
attracting the necessary financing and skills required to take projects through from initial concept to
development and operation. A significant level of investment is required for project development
and construction, in addition to financial acumen, entrepreneurship and project planning capability.

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Community-led projects can struggle to attract the financial backing and skill sets required, meaning
projects can be slow to develop (or cease to develop) unless communities obtain a grant, seek pro
bono support or partner with professional organisations to fill skill shortfalls.
The Government supports community ownership models, and community-developer partnerships,
and sees these and other, innovative community-led models as an important part of our current and
future energy sector. Our role is to work with local communities and industry to facilitate
relationships, encourage and promote relevant knowledge transfer and help communities build the
skills and secure the investment they need to take local energy generation and storage projects from
concept to reality.
4.2 Investigate the benefits of community-owned energy programs
Community-owned energy projects develop local leadership and encourage involvement, inclusion
and accountability. Financial profit or gain, while a part of their make-up, is often not the key driver.
Those projects without direct ties to a particular commercial product or service provider also allow
for more technical options to be considered and trialled. The benefits of community energy projects
– whether financial, economic or social – are shared and reinvested within the community.
While energy prices are increasing, renewable energy generation and storage technology is
becoming significantly more affordable, both for companies to manufacture, and communities and
individuals to own and use. There can be genuine savings for communities who engage with local
energy projects, such as avoided network investment costs and lower energy prices. Individuals and
communities are also, almost invariably, looking for ways to make a positive impact on the
environment and reduce their greenhouse gas emissions.
Community energy projects can generate revenue, economic growth and jobs into a region by giving
communities power to make choices. For example, communities can make purchasing decisions such
as choosing local contractors or materials or paying local landholders for hosting equipment.
Community energy projects create a sense of ownership in communities, develop community
confidence in contributing to positive change, and give individuals a chance to invest in more
efficient technologies, and gain from and share in the resultant benefits.
As the number of community energy projects across Victoria increases, support for them gains
momentum. Successful developments grow financial and social support and as the number of
commissioned projects grows so does the broader understanding and social acceptance of their
positive impact and widespread benefits, including growth and support of the renewable energy
industry.
4.3 Investigate the best ways to encourage community energy project uptake
The path from enthusiastic group of supporters with a great idea, to idea implementation for
community energy projects, has a number of “gates”. These include significant requirements like
completing technical and financial feasibility studies and business cases. As a minimum these pieces
of work require collecting and analysing technical and economic data, project and financial
management, legal, negotiation, planning and other skills. Many communities are well equipped
with ideas and volunteer commitment, however, due to a shortage of technical skills, financial
resources and/or necessary abilities, lack the capacity to further develop their project.

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Other barriers to the successful take up of community energy projects are the complexity of the
National Electricity Rules and other legislation and frameworks at all levels of government, and the
lack of adaptability of many of these rules and frameworks to facilitate the development of
community scale energy projects.
There is also the challenge of maintaining momentum and enthusiasm, with community energy
projects driven by volunteers, who are required to dedicate substantial amounts of time, over long
periods, to see these projects through to fruition.
The Government understands these issues. We are committed to working with stakeholders to
provide tangible support and where appropriate and possible make changes to rules, frameworks,
policies and regulations which currently act as barriers to community energy project success. As
described in section three of this submission, we are demonstrating action on this commitment.
Further to addressing these issues, the Government recognises there are other areas we can work
on to facilitate the approval process for community energy projects. The Government has recently
reformed Victoria’s windfarm planning laws to encourage greater investment in Victoria’s strong
wind resource, including from communities:
• We have changed planning controls, halving (to one kilometre) the allowable distance for
which landowner’s consent is required to make an application for a turbine near a dwelling.
A landowner’s consent is still required to locate a turbine closer than one kilometre to a
dwelling.
• The Minister for Planning is now the decision-maker for all new windfarm planning permit
applications.
• The Government has committed to allow community windfarm development in the
Macedon Ranges, where they are currently not allowed, and is investigating the removal of
the current windfarm prohibitions that apply to this and other areas across Victoria.
The Victorian Government acknowledges that the Victorian Plantations Corporation Act 1993
currently restricts the use of Crown land, that is subject to the perpetual licence granted under that
Act, for a purpose other than a plantation. This represents a barrier to locating renewable energy
generation equipment on that land. The Victoria Government will investigate options to address this
restriction in consultation with relevant stakeholders.
4.4 Investigate expanding community energy projects outside solar and wind
As competitively priced, well established and understood renewable energy generation options,
solar and wind remain the preeminent technologies used for renewable energy generation in local
communities. Victoria is well placed to capitalise on wind and solar energy, however there are also a
number of projects now focusing on demand management, bioenergy, small-scale hydro and
geothermal energy.
The Government is supporting these energy solutions by investigating barriers to success across a
range of industrial sectors. For example, we are investigating the potential to expand solar thermal
(solar water heating in this instance) and bioenergy (biogas from organic waste) technology for
heating applications. The Waranga Green bioenergy project is one example which the Government
is supporting with a grant of $1 million as part of the NEJF. The Waranga project will see the

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construction and operation of a 200 tonne per day bioenergy (bio-digester) plant to use agricultural
waste and generate renewable heat and power. The power and heat generated will be use to power
a piggery, produce dry organic fertiliser for sale, heat horticultural greenhouses and export excess
energy to the grid.
The Government is also investigating expansion outside of solar and wind technology by supporting
a group of six councils, led by Hepburn Shire Council, in a proof-of-concept exercise for an organic
waste-to-energy network, potentially diverting their combined collected organic waste from landfill
to generate power for community facilities.
4.5 Review Australian and international best practice models for supporting
community energy ownership
The Government continues to engage with industry experts and community groups in Victoria,
across Australia, and internationally, to understand the opportunities and challenges involved with
delivering community energy projects, and look for the most effective ways we can offer support
across the state. This submission has already covered the policies and initiatives we have introduced,
or are introducing, and in many cases these are influenced by learnings from local and international
models.
Locally, a number of regional Victorian towns such as Newstead are planning a future energy supply
without reliance on fossil fuels. Newstead 2021, the local group driving the town’s ambition to
source all its power from renewable energy sources within the next few years, is working with its
energy distribution company to achieve its goals. The government is supporting Newstead’s
ambitions with $200,000 allocated towards their model which should be replicable for other
Victorian communities.
Case study – Mooroolbark microgrid trial
Green energy company GreenSync has partnered with the Mooroolbark community and electricity
distributor AusNet Services in Victoria on a microgrid trial. The trial consists of a group of 14
neighbouring houses, each with a standard connection to the mainstream electricity grid, which in
the future will generate and store their own electricity, and eventually share it with other
households in the microgrid.
AusNet Services will equip each of the 14 houses with a solar power system and a purpose-built
10 kilowatt per hour battery. GreenSync will provide the distributed energy platform for monitoring
and managing energy flows within the microgrid. GreenSync’s platform will enable the energy that is
generated and stored locally to be shared between households, based on their individual needs, and
those of the local grid network. Over the next 12 months, the partners will trial a variety of
configurations and objectives, including individual homes running on and off grid.
Ideas such as solar gardens are becoming increasingly popular overseas and have potential within
Victoria. In the United States, solar gardens have been implemented successfully across more than
57 community solar programs in 22 states. Solar gardens see communities installing a central bank
of solar panels, usually close to their population centre, in a local, unused field or on a large, nearby
roof. Community members then own or lease a share in the installation and the electricity
generated, or an agreed rate per kilowatt hour, is credited to their bill. They essentially invest in

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creating renewable energy, which they then benefit from. This model can be adapted for other
renewable energy generation technologies and can work effectively in rural and metropolitan areas.
Wind co-ops in the Danish energy system have led modern wind power sector development, with a
very high community participation rate. More than 40 per cent of Denmark’s electricity needs are
currently sourced from wind. Historically, government support for renewables via policies and
subsidies has helped establish Denmark as a leader in renewable energy, and while some of these
early initiatives have now changed, a clear grid connection policy still exists, something we are
working closely with industry on in Victoria.
Another model which we believe demonstrates a great deal of potential for Victoria, is community-
developer partnerships. Germany has had significant success with these, with community energy
project ownership often occurring in partnership with electricity utilities or wind developers. The
German government has established a supportive policy environment for wind and solar renewable
energy generation, encouraging a stable and safe investment market.
4.6 Investigate the challenges to metropolitan community energy projects and
ways to support them to surmount these challenges
Metropolitan community energy projects face many of the same challenges as regional and rural
projects, and can also enjoy the same benefits and opportunities. Government can support
metropolitan communities in many of the same ways we can support regional and rural
communities, with knowledge and information sharing, policy and legislation influence and change,
encouragement, incentivisation and local capacity building. For example, we work with and
encourage property developers to engage with energy distribution businesses to provide housing
developments with embedded energy precincts.
“Split incentives” occur where a building owner, tenant, and/or body corporate do not share the
same level of incentive to upgrade a building, or invest in ideas such as solar gardens or energy
efficiency initiatives. Split incentives can have a significant impact in rental accommodation
scenarios, and can be considered more of a metropolitan issue, given the high proportion of rental
accommodation in metropolitan areas. As outlined below, split incentives can be overcome by
Environmental Upgrade Agreements (EUAs).
Environmental Upgrade Agreements (EUAs)
EUAs have been available in Victoria since 2011. They provide council-based financing so businesses
can better access the capital required to upgrade existing non-residential buildings. EUAs address
several of the challenges which can occur as part of metropolitan building environmental upgrade
projects, by providing a secure lending mechanism at competitive interest rates that addresses split
incentive issues between landlords, body corporates and tenants. EUAs can be used for works which
improve the energy, water or environmental efficiency or sustainability of a non-residential building.
Since legislation changes introduced in 2015, all Victorian councils have the ability to offer EUAs.
Case studies are available at Sustainable Melbourne Fund's website.
Case study – City of Darebin’s Solar Savers Program

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Several metropolitan community energy projects have succeeded when local communities join with
council and work towards a shared outcome. The City of Darebin’s Solar Savers program has proven
innovative, successful and replicable. The program was initiated and is managed by council and the
Moreland Energy Foundation Ltd and enables pensioner home owners to install solar PV and reduce
their energy costs. Eligible households are provided with advice on energy efficiency and solar
installation and pay back the costs via an innovative rates-based finance model which reduces their
outlay.
The Government supported a group of seven councils to undertake a business case to expand the
scheme across eastern metropolitan Melbourne. Following the findings, a model is now being
piloted by about 20 councils across the state. The project, which is supported by a New Energy Jobs
Fund grant of about $764,000, will see up to 1,000 solar PV systems installed at low income and
vulnerable households. The project aims to overcome barriers to solar PV uptake and funding by
exploring rates-based and alternative funding models, achieving economies of scale and using a
shared services approach by municipalities.
Metropolitan community energy projects can also experience challenges unique to high density
urban areas, including finding space to install renewable energy generation options, rooftops facing
the right direction, and the impact of overshadowing from other, nearby buildings. Moreland City
Council now considers the potential impact of overshadowing by new developments on existing
solar installations as part of their planning process.
Households and communities across all regions, including metropolitan, may not be able to afford
renewable energy generation installation. For example, solar PV installation is generally limited to
owner occupied freestanding or semi-detached homes. Also, public housing residents and those who
live in apartments or rental properties are often unable to access the benefits of a PV or other
renewable energy system.
Local communities who join together to develop their own energy solutions, but may not have the
physical or environmental attributes to generate their own renewable energy, are finding success
with other energy sharing solutions, for example, metropolitan areas “twinning” with rural-based
community energy groups and sharing the benefits from community-driven projects located outside
their metropolitan area.
5 Conclusion
The Government supports community energy projects both in principle and practice, as evidenced
by the delivery of a suite of initiatives, strategies, policies, funding and other support mechanisms
for community energy projects.
The Government is also keenly focused on helping communities achieve their energy priorities by
facilitating relationships and sharing knowledge and data across the energy supply chain. We do this
by listening, developing clear positions, policies and plans, delivering initiatives, consulting with
relevant stakeholders, looking for ways to share learnings and removing barriers to success. Much of
the Government’s role in supporting Victoria’s communities to have a greater say in where their

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energy is sourced from, and what it costs, is one of facilitation. The Government also acknowledges
we have a significant role to play in initiating or influencing appropriate changes to planning,
licencing, regulatory requirements, frameworks and rules which will enable community energy
projects, while still maintaining important consumer protections.
We see an increase in renewable community energy projects as having an important role to play as
we move towards Victoria’s clean energy future, with ambitious and achievable renewable energy
generation targets.
The Government will work with all our stakeholders – including communities – to ensure we achieve
our overriding objectives of an energy supply which remains reliable, sustainable, renewable and
affordable, and a strong energy sector in Victoria, delivering the best outcomes for consumers and
the environment. We look forward to the Inquiry’s recommendations.

Victorian government submission to the parliamentary inquiry into community energy projects

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Victorian government submission to the parliamentary inquiry into community energy projects