Community solar at grid prices, no subsidies required – here’s how

With shifting sands for large-scale renewables undermining investor confidence, the Renewable Newstead project is developing at the right time for the Victorian renewable energy industry, and Australia more broadly.

The plan is to install up to 10MW of solar in the local distribution grid, ensuring Newstead itself can transition to 100% renewables, with excess generation to be available for local C&I offtake agreements.

But what makes Renewable Newstead different from other community renewables aspirants?

And what can the market learn from the project so far?

The Renewable Newstead project has three critically important elements that combine to de-risk investment in renewables, forming a template for replicability in spite of an uncertain outlook for energy policy and market regulation.

Key One: Renewable Newstead has always had the goal to supply 100% renewable energy at a price competitive with grid retail prices, without the need for subsidies – this has provided commercial discipline over the community aspiration, and ensured a solution designed to scale.

While many community projects have resorted to higher cost rooftop solar or battery storage being underwritten by rebates, or community investment underwriting solar or wind farm risk, Renewable Newstead has prioritised the development of a solar farm of up to 10MW that works on commercial terms.

With the lower installed cost per kW and higher yield, this leads to a capital cost saving of 30-50%, relative to rooftop solar, and “on paper” the goal can be delivered without subsidy (more on that later).

Key Two: Renewable Newstead has always aimed to deliver community benefit as an outcome, while staying agnostic to technology and commercial models.

This approach has led to an openness to partnerships with commercial enterprises, and a mutual understanding and respect for commercial realities.

In practice, this has led Newstead to explore a 10-year retail contract model (which would be unique for residential consumers), ensuring households can benefit in the same way businesses can, from long term PPA contracts.

While there will always be important differences between residential and C&I contracts, and challenges to its delivery remain, the important principles are that1) long term contracts help to reduce investment risk, and 2) with the right approach, risk and benefits can be shared between consumers, solar farm investors and retailers, for mutual benefit.

Key Three: Renewable Newstead has put its relationship with local network authority Powercor, at the front of the project’s ambition.

This has meant partnering with Powercor up front on the design of the solution, as opposed to a transactional relationship seeking an efficient network connection process, or a subsidised one.

Where many community-led projects have been left frustrated by engagement on network connection issues, Newstead has clear visibility on network constraints, and access to a first-of-a-kind network tariff trial, that seeks to put rooftop solar and front of meter solar farms on an equal investment footing, being $1/day, $2/kW/mth and $0/ckWh.

The unique tariff also strongly encourages fuel switching away from wood and gas to electricity, and when combined with a low cost daytime solar rate, load shifting to better match with supply.

Combining One, Two and Three, on paper, energy from a local solar farm (embedded in a distribution grid) can supply day-time energy to local consumers at less than 10c/kWh, including a retail margin.

On paper, a 10-year retail contract with those local customers would underwrite the necessary investment in the solar farm and overcome market uncertainties.

On paper, consumers can save 30% or more on their whole-of-home energy costs. On paper, the model will lead to better network utilisation and engage consumers in solving the duck curve “problem” by shifting discretionary loads to daytime.

On paper, the model makes transitioning to 100% renewables compelling, with the option of adding local battery storage or simply using contracts with centralised generation and storage for the balance of supply as required.

But Renewable Newstead is under no illusion. A project that works on paper is a project half-baked. With support from the Victorian government, Renewable Newstead aims to deliver on the project’s promise in 2020, starting with the process of land assessment, acquisition, and the finalisation of delivery partners via competitive tender (as required by government funding).

By Christmas 2020, we should know if Renewable Newstead will be able to deliver on it’s long-held promise of a viable, scalable model for transitioning regional communities to 100% renewables.

If Renewable Newstead does deliver on that promise it will go a long way to circumventing the policy and market uncertainty that plagues investment in large-scale renewables, and open the door to a more efficient, low-risk transition of our market – one that works for all energy consumers, and not just the lucky few.