SHARING THE BENEFITS OF WIND PROJECTS: DISCUSSION PAPER

ALICIA WEBB 2015

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TABLE OF CONTENTS

INTRODUCTION 3

1. WHY SHARE THE BENEFITS 3 1.1 Securing public support 4 1.2 Community empowerment 4

2. THE BEST WAY TO SHARE THE BENEFITS 4

3. TYPES OF BENEFIT SHARING 4 3.1 Local ownership 5 3.1.1. Full community ownership 5 3.1.2 Partial community ownership 5 3.2 Direct benefits 6 3.3 Prioritised local employment and business contracts 6 3.4 Community enhancement funds 6 3.5 Neighbour remuneration schemes 7 3.6 Education and training 7

4. INTERNATIONAL EXAMPLES 7 4.1 Energy price reductions for the local community 7

5. REFERENCES AND MORE INFORMATION 8 ______

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As Australia approaches the 2020 deadline on the Renewable Energy Target (RET), the wind industry is working to ensure that the maximum possible benefits are delivered to the community from new projects.

The wind energy industry in Australia is absolutely committed to positive community engagement and participation. The Clean Energy Council (CEC) has worked closely with its wind industry members over the past three years to fund, develop and implement a set of best practice community engagement guidelines and raise the bar for strong engagement methodologies across the industry. These guidelines, launched in mid-2013, describe several methods for effectively interacting with members of the community as well as some models for sharing the financial benefits of the project through such mechanisms as the establishment of community funds.

While strong community engagement is an essential part of any large-scale infrastructure project, the wind industry is now trialling innovative new models for benefit sharing.

This discussion paper outlines approaches that are being applied at individual projects in Australia and some international case studies, where developers seek to include members of the community as beneficiaries of a project.

Every operating in Australia has mechanisms in place to provide benefits to the local community that go beyond what is required by State and Federal Governments.

______1. Why share the benefits

The concept of benefit-sharing is based on establishing an ongoing, mutually beneficial relationship between the developer and the local community. Sharing the financial and other benefits of a project can ensure social and economic outcomes for the local community. Well executed benefit sharing mechanisms aim to earn the trust and respect of the host community and set an example for other power infrastructure projects to follow.

Benefit sharing also acknowledges that the siting of large facilities – such as wind farms and other energy infrastructure – may result in some amenity impacts on the local community.

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1.1 Securing public support

Securing local public support is a key component for developers in gaining planning approvals for wind energy projects. Reducing the time it takes to secure project approvals is an important concern for developers in terms of their project budgets, and will be vital in meeting the Renewable Energy Target by 2020.

1.2 Community empowerment

There are a range of reasons why community members may want to play a role in wind energy projects, be it making decisions on siting, or selecting local projects to receive grants from a community fund. Some may see the potential benefits to their community and wish to participate in the decision-making. Others will see participation as a way to take part in reducing climate change over and above what they can achieve through domestic-scale energy savings measures.

2. The best way to share the benefits

Sharing the benefits of a wind energy project with the wider community can be undertaken in a vast number of ways and using any of a number of mechanisms. Which benefit sharing mechanism or combination of mechanisms is best for any particular project is a decision that should be made on a case-by-case basis, and in discussion with the community.

The options that are available or suitable for each project is dependent on a number of external and internal factors – such as the jurisdictional planning regime, the expectations of local authorities, anticipated and actual planning conditions required by the planning authority, commercial terms with host landholders, demographics of the local area, and issues raised during public consultation prior to lodgment of the planning application.

The CEC does not support mandating benefit sharing or any policy that imposes a ‘one size fits all’ approach. Instead, we recognise that the needs of individual communities will vary, and wind farm developers need to take this into account when introducing any benefit sharing approaches. This discussion paper outlines some options and case studies applied in Australia and other locations for wind energy projects.

3. Types of benefit sharing

This paper will concentrate on those types of benefit sharing that are being used or trialled in the Australian wind industry, but are not applied to each and every project. Benefit sharing approaches that we consider provide the best opportunities for Australian communities include:

 local ownership  benefits in-kind  prioritised local employment and business contracts  indirect social benefits  community enhancement funds

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3.1 Local ownership

Local ownership of wind farms is a way for locals to benefit financially from energy infrastructure in their area, and to take an active role in the transformation of Australia’s energy sector. The idea is gaining momentum in Australia and there are a few different models being implemented.

In the United Kingdom and Europe, locally-owned projects are commonplace. In the United States and Canada, the community renewables sector is strong and growing, with an installed capacity similar to Australia’s entire renewables sector. Local ownership and investment have developed organically in some jurisdictions, driven by communities. In other areas it has been driven by regulatory requirements, or by a mix of the two.

Both full ownership and partial ownership models have been used extensively in the United Kingdom by Energy4All, which operates several wind and solar farms. Their 13 co-ops have well over 10,000 members and many other schemes are in development1.

3.1.1 Full community ownership

Full community ownership refers to a renewable energy project that is entirely owned by small investors, usually in the form of a community cooperative. In Australia there is currently one operational example, the two-turbine in Victoria2. Hepburn Wind is owned by a cooperative with more than 2000 members who own a minimum share of $100 each.

Wind energy projects that are fully owned by the community are likely to encounter similar development challenges and costs to large-scale projects, as well as unique barriers not seen in the commercial-scale industry. It can be challenging to find and access technical skills, knowledge and capital required to navigate complex processes like writing a planning application, finding a technology supplier, and negotiating an offtake agreement with an electricity retailer.

3.1.2. Partial community ownership

Since 2011, Infigen Energy has been working with the Central NSW Renewable Energy Cooperative (CENREC) to develop a co-ownership model as part of its proposed 43-turbine Flyers Creek Wind Farm in NSW3. CENREC will raise funds from local community members and in turn invest in the wind farm as a part owner. Aside from Flyers Creek, CENREC also plans to foster community investment in other renewable energy projects.

The six-turbine Coonooer Bridge wind farm in North West Victoria also involves a partial community ownership model4. It is jointly owned by the developer Windlab and landholders neighbouring the project.

The partial ownership approach can take advantage of developer expertise, capital, and economies of scale to be more financially competitive with traditional commercial-scale projects.

1 Energy4All website: http://energy4all.co.uk/community-ownership/ 2 Hepburn Wind website http://hepburnwind.com.au/ 3 CENREC website http://www.cenrec.com.au 4 Coonooer Bridge Wind Farm website: http://coonooerbridgewindfarm.com.au/

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3.2 Direct benefits

Direct benefits are improvements to the community, usually during the construction phase. One example is to work with project landowners and neighbours to design roads with dual purposes where possible.

The owner of Victoria’s , AGL, donated $14,000 towards the purchase of a new Light Fire Tanker for the local Country Fire Authority (CFA). As a part of its , Hydro Tasmania built a visitor centre where people can learn about the wind farm and the Aboriginal history of north-east Tasmania. There are many examples around Australia of such community enhancing activities.

3.3 Prioritised local employment and business contracts

This type of benefit sharing is already undertaken by a majority of Australian wind energy companies. There is enormous value in the local and political goodwill created by generating jobs and employment for the local area and this is well recognised by the industry.

One way to facilitate the engagement of local businesses is to create a local business network or group to allow the wind farm developer, major contractors and local businesses to build an increased mutual understanding of project requirements and business capabilities. This model has been successfully trialed by the NSW Regional Clean Energy Program with their South East Region of Renewable Energy Excellence (SERREE) network.

Local contracts for work can include the usual civil and electrical work as well as catering, administration, cleaning and others. Wind turbine tower manufacturing is one example of a good news story for Australia, and has had significant benefits to date for the steel industry. Major tower supply businesses include Victoria’s Keppel Prince, South Australia’s E&A Contractors, and Tasmania’s Haywards.

3.4 Community enhancement funds

Community enhancement funds are already commonly in use in Australia as a way to share the benefits of renewable energy projects. Such funds are usually distributed by an independent board that includes community members, local council members and the developer. In some cases the community enhancement funds are paid directly to the council to distribute on local projects.

The Hepburn Wind community fund has assisted local child care centres, sporting clubs, environmental initiatives and more. The Pacific Hydro Sustainable Community Fund5 has contributed to new footpaths, play grounds, the restoration of memorials, and community

5 Pacific Hydro Sustainable Communities Fund http://www.pacifichydro.com.au/english/sustainability/sustainable- communities-funds/

SHARING THE VALUE IN WIND ENERGY PROJECTS 6 festivals, among other things. TrustPower’s Lend a Hand Foundation6 is another successful example, currently working at the in South Australia.

3.5 Neighbour remuneration schemes

This type of benefit sharing acknowledges that while wind farm landholders are remunerated for hosting assets on their property, project neighbours may also experience amenity impacts. This type of scheme aims to spread the typical landholder remuneration across more recipients, with the support and agreement of host landholders.

TrustPower’s Palmer wind farm in South Australia is a project which has directly entered into financial agreements with project neighbours. The model includes “sliding scale” payments to property owners near its proposed $700 million wind project in the Mt Lofty ranges east of Adelaide in South Australia.

3.6 Education and training

Wind farms provide the opportunity to bring training and skills development opportunities to local communities.

For example, Australia is working with the TafeSA indigenous access unit to set up a pre-vocational program for the Narrunga indigenous community to assist young people from the community to get qualifications and jobs on the Ceres renewable energy project.

In addition, as a result of the development of the wind industry in South Australia, and the demand for skilled personnel, a renewable energy training centre has been established at Mt Gambier TAFE.

4. International examples

4.1 Energy price reductions for the local community

While not yet pursued in Australia (due to strict regulation), this approach could be delivered locally. Electricity discounts can be structured in various ways depending on how the developer wants to distribute the discount, whether the developer is also licenced to retail electricity or can develop a product with their off-taker, and whether regulations allow retailers to provide these discounts.

Discounts can be allocated at various frequencies, (like an annual lump discount or a cheaper per unit price that discounts every bill), and to various parts of the community (such as project neighbours within a specified distance). Rather than a discount, the developer could offer a fixed energy price for some defined period, as a hedge against rising utility prices.

In May 2013, United Kingdom developer RES announced a scheme for homes and businesses near its new wind farms that will provide cash discounts for energy bills regardless of the

6 Lend a Hand Foundation https://www.trustpower.co.nz/getting-to-know-us/community-involvement/lend-a- hand-foundation

SHARING THE VALUE IN WIND ENERGY PROJECTS 7 customer’s supplier7. The area and number of properties that will qualify for the scheme will vary from site to site, depending on factors such as the number and capacity of wind turbines, and the density of houses in the vicinity. Neighbours of the first projects will receive at least a £100 reduction from their annual bills, paid directly to the electricity supplier.

5. References and more information

CSIRO study “Exploring the acceptance of rural wind farms in Australia: a snapshot” http://www.csiro.au/Organisation-Structure/Flagships/Energy-Transformed-Flagship/Exploring- community-acceptance-of-rural-wind-farms-in-Australia.aspx

Rebelgroup, “Benefit Sharing Mechanisms for Renewable Energy Sources” (RESHARE), final report 2011 http://www.reshare.nu/athena/site/file_database/Reshare_outlinenewFINAL.pdf

Clean Energy Council Community Engagement Guidelines http://www.cleanenergycouncil.org.au/technologies/wind-energy/community-engagement- guidelines.html

7 RES Limited UK http://www.res-leds.com/faqs.aspx

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