BY SEBASTIAN THOMAS AND ISOBEL GRAHAM
Electricity has been a hot topic of conversation recently in Australia. We’ve had state wide blackouts in South Australia, record breaking price spikes and seemingly unending political disagreement about climate policy.
Australia’s electricity system faces many challenges. It needs to drastically reduce emissions while maintaining secure and affordable electricity supply.
The vulnerability of our current interconnected electricity system has become increasingly apparent. This is a particularly pertinent problem for the community of Tamborine Mountain in South East Queensland. The entire community lost power for more than seven days following Cyclone Oswald in 2013. The fragile electricity market has resulted in calls to increase the resilience of the electricity system. The need to change the way the system operates is especially dire considering climate change will likely increase the incidence of extreme events.
So how do we address the issues while moving away from polluting fossil fuel energy sources, increasing resilience to extreme events and keeping prices affordable for consumers?
Community renewable energy is becoming popular worldwide as communities seek to take energy into their own hands. There are increasing calls for it to be an important part of how we meet our renewable energy goals. Community energy can take many forms. At its core, it describes the process communities raising funds together to invest in renewable energy. It is a movement that has been hugely successful in Europe. Germany for example has over 850 community energy cooperatives.
The concept is relatively new in Australia however there are some pioneering success stories.
Hepburn wind was Australia’s first community owned wind farm and a promising example of the benefits community energy can bring. These benefits include increased financial independence, increased energy system resilience, independence, community pride and a sense of empowerment.
Hybrid Renewable Energy Systems
Communities are increasingly turning to hybrid renewable energy systems to supply their energy, especially in isolated or island communities. These systems can serve as an alternative to expensive and polluting diesel or costly and sometimes unreliable connections to the national grid.
These systems need not be reserved for the most isolated of communities however.
University of Melbourne researchers have studied how renewable energy could be used to make the South East Queensland community of Tamborine Mountain net 100% renewable.
This exercise involved matching demand and supply of renewable sources to find the optimal combination that could supply the energy needs of the community at least cost.
The optimal system (with lowest net present cost) found by the modelling is shown below.
Most of the electricity is from solar photovoltaic (PV), just over 45%. The second largest share is from wind power at 20%. Grid electricity still provides 20% of the power needed by the community. However, the system feeds back more electricity to the grid than it purchases. This makes it, in net terms more than 100% renewable.
Renewable energy funding
Funding of renewable energy can be a challenge in its development. The optimal system which is shown above requires a capital investment of $79.3M.
The beauty of community energy cooperatives is that funding can come from the community. Any profits made from the project also stay in the community.
The renewable energy system found by researchers had good financial statistics. The cost of electricity was just 6 cents/kWh, compared to 23 cents/kWh that community members pay to retailers currently. The payback period was just 6 years with an 18% return on investment. All these factors make investment in an energy cooperative more attractive.
This led researchers to engage with the community and ask the question: what are you willing to pay for renewable energy? Researchers, shown below on a visit to Tamborine Mountain, engaged with the community to find out about their willingness to pay for different forms of renewable energy.
To see what the community thought of renewable energy and what they would pay for it, a survey asked just this. The survey was distributed online and asked respondents questions about their interaction with the electricity system, their views on climate change and community as well as what they would pay for different renewable energy models.
The models investigated were:
- A community funded energy cooperative powered by local renewable energy
- Becoming an independent off-grid household
- Buying 'green power' from a community owned energy company
To get a better idea of the amount the community would be willing to pay, questions were asked in two phases.
An initial amount was proposed. If the respondent said they would be willing to pay this amount, a higher amount was proposed as a follow up question. If the respondent said they would not be willing to pay the initial amount, a lower amount was proposed.
Community energy is a popular concept
Responses were overwhelmingly positive for a community owned renewable energy system.
“Over 80% of people said they would be willing to invest $5,000 to create a community owned energy cooperative.”
The breakdown of responses for the community energy cooperative is shown below. The most common response was ‘yes-no’. This means community members said yes to paying $5,000 to invest in a cooperative but no to the higher follow up amount of $10,000.
The average willingness to pay was calculated to be $8,091. If the 10,000 residents who are supplied with electricity by the Tamborine Mountain substation were to contribute this much to a cooperative, the required $79.3M capital investment could be raised entirely from the community.
Going off grid
The idea of ‘going off grid’ is becoming increasingly popular in Australia. Australia is already the world leader in residential rooftop PV per capita. The continuing decrease in solar PV prices, combined with falling battery prices and increasing electricity costs have given people cause to want to disconnect from the grid altogether and become energy independent.
Researchers asked community members what they would be willing to pay to become an independent household. Costs were based on estimates of required investment to become an independent household. The initial amount proposed was $35,000. Responses are shown below.
Willingness to invest in an off-grid household is much lower than for a community energy cooperative. There were a lot of ‘no-no’ answers, meaning there was no willingness to pay based on current estimated prices.
Many retailers now offer customers the option of paying a premium for ‘green power’ on top of their normal electricity charges. The model investigated by researchers was the option of purchasing green power from a community owned energy company. The company that this was based on is a NSW based energy company, ENOVA. This energy company is owned by community members and offers both 50% and 100% renewable options.
Survey respondents were asked if they would be willing to pay more on their bills to receive green power from ENOVA. Responses were much less positive than for the community energy cooperative. As shown below, 57% of respondents were not willing to pay the initial or follow up amount for green power.
The difference between the willingness to pay for a community cooperative and two other forms of renewable energy is an important result. It demonstrates the community’s preference for a system where benefits are kept within the community, strengthening community bonds at the same time.
The results indicate that the community of Tamborine Mountain could band together and build a hybrid renewable system which would power their community with 100% net renewable energy. This system would keep profits in the community and increase the energy resilience in the face of climate related events.
Policy must be able to support the community power transition which is already occurring around the world at a rapid rate.
Hopefully with the implementation of projects such as the one investigated here, Australia’s energy system can move away from fossil fuel based electricity while maintaining stable electricity supply all the while returning benefits to local communities.