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Author: Amy Wise
Contributors: Nicky Ison, Simon Holmes à Court

Community energy projects are a relatively new concept in Australia. In other parts of the world, particularly Denmark, they have been around for decades. Community-owned and financed renewable energy infrastructure is growing fast in the UK, the US and Canada. Here we look at why it's increasingly popular and the many benefits to communities and the environment.

Main topics covered in this article include:

What is community energy?

What does 'community energy' actually mean? Internationally, community energy can refer to any energy project where:

  • primarily local people have a financial stake
  • projects have little or no commercial interests
  • community buildings, sites and people are involved.

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Typically, community energy projects have significant community involvement in the development process, and provide significant community benefits once they're up and running.

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The best-practice community energy arrangement is when a project is initiated, developed and either fully or partly owned by local community organisations. This isn't always possible, as community energy projects often employ different legal entities, have different ownership and financing arrangements and technologies, and are different sizes.

Most importantly, they all have economic, environmental and social benefits for the local community that commercial renewable energy developments don't offer. In particular, there is often strong community support for them — they are more than a simple investment of time and money for those involved.

Benefits

The benefits of renewable energy are clear. Environmentally, it's a big winner, as it reduces greenhouse gas emissions and helps reduce global warming and its effects on the planet. And when the community gets involved in renewable energy, the advantages are even greater.

Here are several reasons why community energy is important:

Public acceptance

Public involvement in wind energy projects in Denmark, for example, shows how co-ownership increases public acceptance of the project. This is paramount in Denmark, where almost 20% of electricity is generated by wind. In Australia, many wind projects have been abandoned due to lack of public support.

The financial benefits stay in the community

Most community energy projects commit a specific proportion of profits to the community as financial support. An example of this is the Hepburn Wind project near Daylesford, in Victoria. On top of dividends to investors, revenues will be poured into the Community Sustainability Fund. This fund will provide $15,000 per turbine per annum (increasing annually with inflation) for local projects that address social, economic and environmental sustainability.

The fund is projected to distribute more than $1 million over the first 25 years of the wind farm's operation. Compare this with a typical commercial wind farm, that might give back $500 to the community per turbine, per annum.

Community empowerment

Community energy projects offer people the chance to make a significant, collective contribution to reducing climate change — way over and above what they can achieve by installing fluorescent light bulbs, using public transport, improving home insulation or other energy savings measures. It offers communities a chance to do something when governments aren't doing enough - showing it's possible to effect real changes at the community level.

Educational benefits

There are still considerable misconceptions about wind farms and other renewable technologies - and their benefits. For more on this, see Wind myths and facts. If wind farms and other forms of renewable energy are to be commissioned to meet the Government’s renewable energy targets, local communities must get on board. Community projects will have a role in allowing local people to see for themselves how they work and the benefits they offer.

Bridging the gap between individual and utility-scale responses

Community energy projects can have many technical advantages, particularly when it comes to scale. Currently, there's a huge gap in the size of household and centralised energy projects promoted in Australian energy policy.

Centralised energy projects are large-scale power plants which require significant upfront capital. As a result, they are usually developed and owned by utilities or large corporations.

Meanwhile, individuals or households can undertake household energy projects, for example installing solar panels or solar hot water systems. These are micro-technologies in the 1kW range. The gap between utility and household-scale energy projects is where community energy projects and many renewable energy technologies come in.

Small projects often lead to larger ones

In Denmark, the co-operative model has driven wind energy forward significantly. Co-operatives there still own 26% of all the country's wind farms, and have been instrumental in making wind energy so popular and nurturing its commercial development. Denmark is now the world’s largest producer of wind turbines.

More information

Community wind energy
Commission for Environmental Co-operation
Community Energy Scotland
Danish Wind Turbine Owners' Association

History of community energy
Community energy in Japan
Community energy in Australia
Community energy in Europe
Community energy in North America
Community energy in the developing world

Footnotes

Footnotes
Ref Notes
1 Walker, G. and Cass, N. (2007) ‘Carbon reduction , ‘the public’ and renewable energy: engaging with socio-technical configurations’, Area, Vol 39, Issue 4, p458-469
2 Walker, G. and Devine-Wright, P. (2008) ‘Community Renewable Energy: What should it mean?’ Energy Policy, Vol 36, p497-500