Submission Consultation Paper on the Second VRET Auction

October 2020, 2020

The Australian Wind Alliance (AWA) is a community based organisation of around 500 financial members, with an extensive online and social media following. Our members include landholders, farmers, small businesses, and members of the community, including many neighbours to existing wind farms. The Wind Alliance encourages best practice community engagement and benefit sharing as keys to maximising benefits to regional Australia and lowering Australia’s carbon emissions.

Key points

  • Enhanced level community benefit-sharing and community engagement
  • Updated Community Engagement and Benefit Sharing Guide
  • Need for community co-ownership/co-investment as part of VRET2 
  • Coordination of community funds and benefit sharing in Renewable Energy Zones
  • Local manufacturing and opportunities for apprenticeships
  • A “Renewable Energy Guarantee” to maintain a constant flow of projects to support jobs related to construction and manufacturing 
  • Role for community energy in social licence of large scale wind, solar and battery projects

 

Thank you for the opportunity to participate in the process of designing the Second VRET Auction. This is a response to the Consultation Paper on the Second VRET Auction. The Consultation Paper invites comment by community groups and others to shape the final auction design. 

The purpose of the market sounding process is to obtain industry and community insights on key auction design issues for VRET II. Feedback from the market sounding will inform the final auction design. 

We have responded predominantly to Section 6 on Social licence and community engagement and included general observations below on other sections. 

Social licence and community engagement

6.4 What are the current trends in community expectations and social licence for renewable energy projects? How have they changed since VRET I?

One trend we are seeing is the normalisation of VRET 1 guidelines in industry practice. VRET 1 had an impact beyond the initial projects to normalise a standard of projects and expectations from regional communities. For example Kentbruck, the Delburn and Hexham Wind Farm projects have outlined generous benefit sharing models that continue in the spirit of the Victorian Government's guidance around community engagement in the VRET 1. This suggests that the VRET 1 guidelines are having a continued and welcomed benefit beyond the VRET projects that VRET 2 can build on and enhance.

As renewable projects and their associated assets are gathered in Renewable Energy Zones we see a need for greater coordination between previously discrete projects. Greater coordination will maximise cumulative benefits and reduce impacts. We recommend that the CEBS Guide address how projects gathered in a limited geographic region interact to deliver the best outcomes for communities. One example of this is shared infrastructure, such as the arrangement between the Dundonnell and Mount Fyans Wind Farms to share transmission infrastructure. In these cases, projects will be interacting with the same communities and these communities will expect parity of outcomes across projects. It is also reasonable to expect that communities will see community outcomes commensurate to the impacts they experience. The Australian Wind Alliance has been working with wind proponents in Moyne Shire on a model to coordinate Community Enhancement Funds across multiple projects that we hope can be replicated in other areas. Such interaction could be incorporated into the design of the auction. 

Establishment of Renewable Energy Zones should keep community outcomes at the centre. Our recent submission to the Energy Security Board’s draft rule change on Renewable Energy Zone Planning argued for community issues to be addressed much earlier in the REZ design process. 

As the Consultation Paper on the Second VRET Auction outlines, there is a difference between large scale wind and solar’s approach to community engagement and social licence with wind being more mature in this regard. The Australian Wind Alliance will shortly be broadening its remit beyond wind to other renewable technologies. Our aim is to apply lessons learnt from wind’s experience working with regional communities to large scale solar and other developments. This would be a worthwhile consideration in VRET 2.

6.5 What are leading examples of positive community engagement and benefits sharing?

There are many examples of positive community engagement and benefits sharing throughout Australia. 

The Hornsdale Wind Farm demonstrated proactive engagement with local Traditional Owners, the Ngadjuri and Nukunu people. Trust was built through engagement conducting the Cultural Heritage Management Plans resulting in the first wind farm towers featuring Indigenous art as outlined in the Clean Energy Council’s Guide to Benefit Sharing Options for Renewable Energy Projects. The Chair of the Ngadjuri Nations Aboriginal Corporation Quentin Argus said

"Recognition towards our people and to the both groups — the Ngadjuri and Nukunu — it's been a long process but a good one,"

"Anything to do with renewable energy which leaves a lesser footprint on the land is good for us all, so we welcome the development."

A relationship between the Traditional Owners and renewable energy projects is essential to the success of VRET 2. 

The VRET 1 wind projects had positive community engagement and benefit sharing which we have previously outlined and explored how they can be enhanced. In particular, Dundonnell Wind Farm’s support for ambitious projects, such as crisis accommodation, was an innovative response to the social needs of the local community.


6.6 What are your thoughts on allowing some level of community ownership or co- investment in the project as part of a project’s CEBS?

The next step in community benefits is thinking about how communities can be involved through community co-ownership, co-investment and community ownership. We have outlined case studies in the Building Stronger Communities report and would be happy to expand on these. These modes of investment provide a valuable mechanism to align the interests of industry and community members and strengthen social licence.

Sapphire Wind Farm is the biggest wind farm to make investment available via a public offer. The investment model was co-designed with the community and its public offer saw almost 100 investors take up approximately $1.8m in community shares. “At a time when we are in such severe drought, keeping the money local is extremely important,” one investor Adam Blakester who is the Executive Director of the not-for-profit Starfish Foundation. This case is explored further in the Australian Wind Alliance’s Building Stronger Communities report.

The first example of co-ownership came with Eurus/Windlab’s Coonooer Bridge Wind Farm. It is jointly owned with local community members, who had a seat at the table during planning. Here is an extract from a case study in our report: 

As well as delivering these families a regular return on their shares, it gave them a seat at the table in decisions during the development process and a say in how the wind farm turned out. Altogether, a total of 33 local landholders own around 4% of the total project, which is worth over $20 million. “I think it’s a really good way to do it,” says June Williams, resident of nearby St Arnaud and owner of a neighbouring farm at Coonooer Bridge.

There is a lot more scope for community ownership or co-investment in Australia and embedding it into VRET2 will be a good way of sending signals to the industry to move in that direction while ensuring the social licence to operate is maintained. 

6.7 Please provide any other comments or insights regarding the proposed approach for VRET II, including the eligibility and evaluation criteria.

The government could consider increasing the weighting for social licence and community engagement in project assessment. For example the Australian Capital Territory allocated a 20% weighting to projects based on their community benefit-sharing and community engagement outcomes, whereas VRET 1 had a weighing of 15%

We agree that an updated Community Engagement and Benefit Sharing (CEBS) Guide would:

further enhance developers’ understanding of the Victorian Government’s expectations and help ensure that successful projects provide valuable contributions to their host communities. 

An updated CEBS guide could move public participation from “involve” to “collaborate” or ideally “empower” on the International Association of Public Participation (IAP2) engagement spectrum. It could include innovative types of benefit sharing outlined in the Clean Energy Council’s Guide to Benefit Sharing Options for Renewable Energy Projects and the Australian Wind Alliance’s Building Stronger Communities report


Additional points

These additional comments pertain to a number of the remaining sections.

  • We support the 600+ MW option. There are significantly more than 600MW proposed and approved wind and solar projects in Victoria. Victoria also has an urgent need to ensure adequate capacity is in place as soon as possible to be ready for early retirement of coal plants. We would also encourage a similar approach to VRET 1 where capacity of supported projects exceeded the requested capacity. 
  • A staggered pipeline of projects would allow value-adding industries, such as tower manufacture, a steady stream of work they can use as a basis for ongoing employment.
  • VRET 2 can set Victoria up for an expeditious and orderly coal retirement by maximising both dispatchability and system service provision in supported renewable energy projects. Batteries should be a key part of VRET 2’s deliverables, either as part of wind and solar projects, or as stand-alone installations. We also recommend that VRET 2 seek to build on innovative trials undertaken in recent years by the Australian Renewable Energy Agency in collaboration with wind energy generators to explore the capacity of wind turbines to provide synthetic inertia and fast frequency response. These trials have delivered promising results that would seem to be ready to apply more widely. Implementation could either through an auction criteria or, if necessary, with government support.
  • The evaluation criteria for local content is welcomed. We support making sure contracts embed local capacity building and employment. Local upskilling through apprenticeships can be a great way to make sure there’s a skill transfer to local regions. Regional facilities, such as the Asia Pacific Renewable Energy Tech-Transition Centre (APRETCentre), could be used to support apprenticeships and skills transfer.
  • We see social licence benefits through the encouragement of community energy projects in VRET 2. Mechanisms such as a carve-out for small and medium scale community projects could be beneficial.

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