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To connect or not connect to the grid? That is the question developers face

Energy for the People's Tosh Szatow (left) and Alex Houlston

They may not know it yet, but developers are facing a stark choice – to connect, or not to connect their next development to the grid. Like it or not, the risk of housing becoming outdated prior to completion, particularly in developments on the urban growth boundary, has never been higher.

Imagine the scenario – you start building a greenfield development (a precinct which may span hundreds, if not thousands of hectares, and take a decade to build). Two years in, and you find you’re competing with developments which aren’t connected to the grid, offering home-buyers 100 per cent renewable communities, with fixed energy costs for 20 years, and support for the local economy (in-perpetuity).

It all happens via a municipal and/or community-owned clean energy services company, which reinvests profit into an annual community dividend, supporting initiatives chosen by the community.

The time has come for developers to generate a clear competitive advantage, through a genuinely innovative approach to greenfield developments. The opportunity includes the creation of new revenue streams, local jobs, and a greater sense of community spirit.

In greenfield developments, the ability to create additional employment opportunities, and support the local economy for a generation, would be supported by stakeholders across government and community sectors, enhancing brand value of the developer, and potentially land value in the process. It would be a welcome change from the pattern of slice and dice development, that too often leaves households and communities vulnerable to converging threats of mortgage stress, energy hardship, and social isolation.

Energy for the People is currently working on three new build projects – all of which will test, refine and develop business models that enable 100 per cent renewable, off-grid communities as they evolve. However existing townships may beat them to it.

Energy for the People is also working with two regional towns – Tyalgum in NSW and Newstead in Victoria – on plans to transition to 100 per cent renewable energy. In Tyalgum, simple paybacks of 6-7 years are possible today for behind the meter solar plus battery storage, while going off the grid completely appears just as compelling by 2020. In Newstead, the focus is on first developing a collaborative partnership with local network business, Powercor, before working through a more detailed feasibility. In both projects, the key question is, will the electricity networks embrace the energy version of the sharing economy? Or will they try to fight it and risk their kodak moment?

In new build developments, renewable micro-grids such as these are inevitably more favourable financially, and without the complications of negotiating with incumbent network companies or community stakeholders.

The community initiatives in Tyalgum and Newstead are predicated on a strong sense of community within the area, and ensuring nobody is disadvantaged by the move to clean energy. In Tyalgum, residents who have lived in the area for a generation describe a natural split in the community, between the majority who wish to see the town develop – by becoming a beacon for sustainable energy, and thereby bringing new jobs and opportunities for local people – and those who moved to Tyalgum seeking seclusion. However, one narrative is beginning to unite the community – the possibility of increased reliability, and consistently lower energy costs, compared with business as usual.

The Tyalgum project, alongside Renewable Newstead, and the”ZNET Blueprint” (to be released shortly by Starfish Ventures and co), are likely to provide the demonstrations required for the implementation of community-scale, clean energy projects. However, that blueprint will inevitably evolve, so what does the “ideal” solution look like (assuming there is such a thing)?

Well, ensuring every consumer is protected from the outset, through the design and commercial structure of the energy services company, is a good place to start. For example, prices paid for energy and dividends returned to investors and the local community could be fixed for long periods (20+ years), thus enabling institutional investors with a long-term view, the ability to underwrite communities. Tailored, local responses to energy hardship can be designed, including community-based energy efficiency advice and retrofit services.

Developers of greenfield communities have an opportunity to create the optimal conditions for new energy supply models, by tapping into knowledge being created by demonstration projects and facilitating solutions in newbuild projects. They can also create a market for institutional investors to become involved through the evolving green bonds market, and creating standardised approaches which reduce the risks for the whole industry.

The transition to a fully-fledged, shared-economy version of the energy market has only just begun. 100 per cent renewable communities are already emerging, and the greenfield development of the future is evolving right before our eyes. There’s even still time for developers to ensure their precinct developments don’t become outdated before their (completion) time.

Rooftop power stations today, community-owned energy grids tomorrow.

Alex Houlston is director at Energy for the People.

  • Download the plan for transitioning Tyalgum to 100 per cent renewables, including the potential to go off grid.
  • See a video about the project.

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