Referral of the Bills
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On 22 February 2021, Dr Helen Haines MP, the Member for Indi, introduced the Australian Local Power Agency Bill 2021 (the substantive Bill) and the Australian Local Power Agency (Consequential Amendments) Bill 2021 (the consequential Bill) in the House of Representatives.
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On 24 February 2021, the House of Representatives (via its Selection Committee) referred both Bills to the House of Representatives Standing Committee on the Environment and Energy (the Committee) for inquiry and report.
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On 23 June 2021, the Committee resolved to open the inquiry for public submissions. The Committee published details of the inquiry on its website and issued a media release announcing the inquiry.
Conduct of the inquiry
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The Committee received 71 written submissions, and 13 supplementary submissions, as listed in Appendix A.
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The Committee’s inquiry was the subject of email campaigns utilising two online platforms: 636 emails were received via ‘Action Network’ and 365 via ‘123 Form Builder’. The Committee understands that several interested parties invited members of the public to make contributions to the inquiry via the Action Network platform, including Dr Helen Haines MP, the Repowering our Communities campaign, and the Community Power Agency. The Committee was unable to ascertain the origin of the campaign or campaigns that utilised the Form Builder platform.
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The Committee considered how best to treat these contributions, and consistent with its previous practice, decided to accept and publish a sample from each campaign platform under a single submission number.
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One public hearing was held for the inquiry, on 27 August 2021, during which 30 witnesses, representing three Commonwealth agencies, four local government bodies and 18 other organisations, gave evidence via video conference or teleconference. Public hearing details are listed in Appendix B.
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The Committee is grateful to all the individuals and organisations who contributed to the inquiry.
Purpose and overview of the Bills
Australian Local Power Plan
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The Bills are intended to give effect to the Australian Local Power Plan (ALPP), a national plan developed by Dr Haines in consultation with experts and community groups to promote renewable energy generation and community power projects in regional, rural and remote Australia.
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The ALPP is comprised of three schemes which would be delivered by the Bills:
1
The Local Power Scheme, to support local power hubs which would assist communities to develop their own energy projects;
2
The Underwriting New Community Investment scheme, which would underwrite locally-owned mid-scale projects;
3
The Community Renewable Investment Scheme, which would enable local communities to co-invest in large-scale projects.
Objects of the Bills
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The Explanatory Memorandum for the substantive Bill states that the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC) ‘have proven remarkably successful and Australia now enjoys a high rate of deployment of renewable energy technologies’, but that ‘the benefits of this investment are not always apparent in regional communities’.
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The Bills would establish the Australian Local Power Agency (ALPA) as a new corporate Commonwealth entity. The ALPA would be responsible for driving investment in community energy projects and supporting regional communities in sharing in the benefits of renewable energy.
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The ALPA would have three key functions:
financial support and assistance for the development of community energy projects;
investment to underwrite locally-owned mid-scale projects and to allow local communities to co-invest in large-scale projects; and
technical assistance in the creation of renewable energy projects.
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The specific objects of the substantive Bill, set out in its Clause 3, are to increase the number of community energy projects in Australia, increase the competitiveness of renewable energy supplied by community energy projects, and ensure that regional communities share in the benefits of renewable energy. The proposed framework contains measures to establish and implement:
the ALPA Board and the offices of its Chief Executive Officer and Chief Financial Officer;
a requirement for large renewable energy projects to offer the rights to at least 20 per cent of the profits of a project to local individuals living within 30 kilometres of that project;
investment and underwriting capability of the ALPA for mid-scale renewable energy community projects; and
a requirement that from 1 July 2023, renewable energy projects above 10MW receive approval from the Minister.
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The object of the consequential Bill is to amend existing legislation to facilitate ALPA operating as a sister agency alongside ARENA and CEFC.
Key provisions of the Bills
Australian Local Power Agency Bill 2021
Part 1: Preliminary
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Part 1 contains the preliminary provisions of the Bill, including its objects and definitions.
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Under Clause 2, the Bill can only commence (after passage into law) once the necessary appropriation is made from the Consolidated Revenue Fund for the ALPA to operate. The total administered expenses for the ALPA have been costed by the Parliamentary Budget Office at $220.8 million over the (four year) forward estimates. According to the Australian Local Power Plan, the total cost of the scheme would be $483 million over ten years.
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Clause 3 specifies the objects of the Bill, as set out above.
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Clause 4 defines key terms used in the Bill.
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Clause 5 of the Bill defines the meaning of a ‘community energy project’ and a ‘community organisation’ as used within the Bill. Under Clause 5, a project is a ‘community energy project’ if the main activity of the project is: generating renewable energy, storing energy, or increasing energy efficiency in a local community in Australia; the project is carried out mainly by the community or by community organisations and for their benefit; and, the community has a significant role in decision-making on the project.
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Subclause 5(2) defines ‘community organisations’ to include the following:
a not-for-profit body corporate or unincorporated association;
a for-profit body corporate or unincorporated association if the main purpose of the body or association is to profit:
one or more other community organisations; or
a wide membership consisting exclusively or predominantly of other community organisations or members of the community; or
any entity or business arrangement (including a partnership or joint venture) controlled (whether directly or indirectly) by:
one or more other community organisations; or
a large number of persons, all or most of whom are other community organisations or members of the community.
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Clause 5 also requires that the ALPA make and publish guidelines elaborating on matters it will consider in determining whether projects and organisations fall within these definitions.
Part 2: Australian Local Power Agency
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Part 2 of the Bill establishes the ALPA.
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Within Division 1, Clause 7 establishes the ALPA as a body corporate. Clause 8 sets out its functions, particularly the three key functions noted above, along with a number of additional functions. (Detailed provisions relating to the three key functions are set out in Divisions 2, 3 and 4 of this Part, as discussed below.)
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Clause 9 requires that in performing its functions, the ALPA must act in a proper, efficient and effective manner, and work collaboratively with other agencies.
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Under Clause 10, the Minister may direct the ALPA to provide advice in relation to community energy projects, including increasing the number and competitiveness of such projects, and ensuring that regional communities share in the benefits of renewable energy.
Division 2: ALPA’s financial assistance function
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Clause 15 provides that the ALPA’s financial assistance function is to provide financial assistance for:
research into community energy projects;
the development, commercialisation or deployment of community energy projects; and
the storage and sharing of information and knowledge about community energy projects.
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Clauses 16-19 set rules about the ALPA’s financial assistance. Decisions about providing financial assistance must be made based on merit (Clause 16) and in accordance with a ‘general strategy’ in force under the Bill (Clause 17). Under Clause 18, the Minister may request that the ALPA consider funding specific projects, and the ALPA must consider the request; while grants totalling more than $50 million for a particular project may not be made without the written approval of the Minister (Clause 19).
Division 3: ALPA’s investment function
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Clause 20 provides that the ALPA’s investment function is to invest, directly and indirectly, in community energy projects.
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The ALPA’s investment function may include (but is not limited to) any or all of:
investing in businesses or projects for the development or commercialisation of community energy projects; and
investing in businesses that supply goods or services needed to develop or commercialise, or needed for use in, community energy projects.
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The ALPA may perform its investment function by making investments itself, participating in mechanisms such as partnerships, trusts and joint ventures, or investing through subsidiaries or other vehicles.
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Clauses 21-23 set out requirements and procedures for the ALPA Board to ensure that its investments are in community energy projects (as defined in Clause 5, above); solely or mainly Australian based; and not in a ‘prohibited technology’.
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Clause 23 provides that an investment in a prohibited technology is one involving:
carbon capture and storage (within the meaning of the National Greenhouse and Energy Reporting Act 2007); or
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Clause 25 states that the responsible Ministers may, by legislative instrument, give the ALPA Board directions about the performance of ALPA’s investment function, which constitute ALPA’s ‘Investment Mandate’. The Investment Mandate may provide policies in relation to any or all of:
a.
Matters of risk and return;
b.
Technologies, projects and businesses that are eligible for investment;
c.
The allocation of investments between the various classes of community energy projects;
d.
Making investments on concessional terms;
e.
The types of financial instruments in which ALPA may invest;
f.
The types of derivatives which ALPA may acquire;
g.
The nature of the guarantees ALPA may give and the circumstances in which they may be given;
h.
Broad operational matters relating to ALPA’s investment function;
i.
Other matters the responsible Ministers consider appropriate to deal with in a direction under subsection (1).
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The Minister must consult with the Board on the Investment Mandate, and must not give a direction that would directly or indirectly require the Board to make or not to make a particular investment.
Division 4: Community investment in large renewable energy projects
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Division 4 of Part 2 of the Substantive Bill creates a scheme for community investment in large renewable energy projects. (This is described in materials supporting the Bill, and in Chapter 2 of this report, as the ‘Community Renewable Investment Scheme’, or CRIS.)
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Clause 30 requires that regulations be made under which a project involving the construction, modification or expansion of a large renewable energy generation facility in Australia will require the approval of the relevant Minister from 1 July 2023. Such approval may only be granted on the basis that all individuals living within 30 kilometres of the facility (‘the locals’) have been given a reasonable opportunity to invest in the project.
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A large renewable energy generation facility is defined as one that has a maximum capacity of 10 MW or more.
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Under subclause 30(3), the opportunity granted must involve:
(a) rights to at least 20% of the profits from the project being offered to the locals; and
(b) the locals having been given a reasonable opportunity to consider and respond to the offer; and
(c) the consideration (if any) payable in exchange for the rights being reasonable, having regard to the market value of the rights; and
(d) the offer being structured in a way that is intended to ensure that the rights are acquired by a large number of locals rather than by just a few individuals.
Part 3: Board of ALPA
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Clauses 32 and 33 establish the ALPA Board and outline its role and functions.
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Clauses 34-44 provide for the development, publication and use of various documents by the Board:
a general strategy for the 2021-2022 financial year and each subsequent financial year;
guidelines for the provision of financial assistance, which would be mandatory for grants programs under which more than $15 million may be given to any particular project;
investment policies to govern the performance of the ALPA’s investment function.
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Clause 45 states that the Board is to consist of up to six appointed members and the Secretary [of the relevant Department].
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Clause 46 requires that Board members other than the Secretary are to be appointed by the Minister by written instrument and on a part-time basis. The Minister appoints one member as the Chair.
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Under subclause 46(2), the Minister must ensure that the Board (taken as a whole) has experience or knowledge of the following:
a.
community energy projects;
c.
Indigenous community development;
d.
development or commercialisation of renewable energy businesses;
e.
environmental and natural resource management.
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Under Clause 48, appointed Board members hold office for a specified period of no more than two years, and a person must not hold office as an appointed member for a continuous period of more than six years.
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Clauses 50-55 set out terms and conditions applying to Board members including remuneration, disclosure of interests, leave of absence, resignation and termination for cause.
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Clauses 56-63 set out provisions for the Board’s meetings and making decisions.
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Clause 64 specifies that the Board may establish committees to advise or assist in the performance of ALPA or the Board’s functions. Such committees may be comprised of Board members, people who are not Board members, or a combination of Board members and other persons.
Part 4: Chief Executive Officer, staff and consultants
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Clause 66 requires that the ALPA have a Chief Executive Officer (CEO). Clauses 67 and 68 outline the role of the CEO and that the CEO is to be appointed by the Minister on the recommendation of the Board, on a full-time basis and for a specified period not exceeding three years.
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Clauses 70-76 set out terms and conditions for the CEO including remuneration, disclosure of interests, leave, resignation and termination for cause.
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Clauses 77-79 provide for the ALPA to employ a Chief Financial Officer and other staff (to be employed under the Public Service Act 1999), and to engage consultants, as necessary.
Part 5: Miscellaneous
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Part 5 of the Bill sets out various miscellaneous provisions including in relation to subsidiaries, reporting, information sharing, and legislative review.
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Clause 81 specifies that the ALPA must, within one month after the end of each quarter, publish a report on its website summarising its investments during the quarter, and setting out any other matters it considers appropriate.
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Clause 82 provides for responsible Ministers to publish reports, documents or information given to them by the ALPA in accordance with paragraph 19(1)(b) of the Public Governance, Performance and Accountability Act 2013.
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Clause 83 details a range of extra matters that must be included in the ALPA’s annual report. These include:
the particulars of each request and direction given to the ALPA by the Minister during the period;
the name of each person to whom financial assistance has been provided or committed, the nature and amount of the financial assistance, and the clean energy projects to which the assistance relates;
an assessment of the effectiveness of the ALPA’s financial assistance toward achieving its objectives;
the value and classification of the ALPA’s community energy investments, and information about investment performance; and
a benchmark of the ALPA’s operating costs and expenses for the period against those of comparable entities.
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Clause 87 provides for the ALPA to disclose information to ARENA and the CEFC where this will enable or assist those organisations to exercise any of their functions or powers.
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Under Clause 88, the substantive Bill includes a requirement for an independent review three years into its operation, should it become law. The review is to be undertaken as soon as practicable after 1 July 2025 by an appropriately qualified person or persons. It must include review of the effectiveness of the ALPA in facilitating flows of finance into the community energy sector, and it must make provision for public consultation. The Minister must table the review report in Parliament within 15 sitting days of receiving it.
Australian Local Power Agency (Consequential Amendments)
Bill 2021
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The consequential Bill makes amendments to Commonwealth laws to establish the operational framework in which ALPA would sit alongside ARENA and the CEFC as sister-agencies.
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The Bill would amend the Australian Renewable Energy Act 2011, the Clean Energy Finance Corporation Act 2012 and the Clean Energy Regulator Act 2011; inserting references to the ALPA in relevant provisions of each Act in order to enable those bodies to liaise and share information with the ALPA in the same manner as they currently do with each other.
Existing frameworks
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The Bills propose the creation of an Australian Local Power Agency (ALPA) to promote and support renewable energy investment with strong links to local communities. This section broadly outlines Australia’s existing Commonwealth renewable energy investment frameworks. Evidence received by the Committee regarding how these agencies and their programs engage with and support local communities, is further discussed in Chapter 2.
The Department of Industry, Science, Energy and Resources
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The Department of Industry, Science, Energy and Resources (DISER) develops and administers the Australian Government’s domestic actions to reduce Australia’s greenhouse emissions, which includes overseeing policies and programs to promote the growth of the renewable energy sector in regional Australia. Key programs include:
the Renewable Energy Target and in particular, the Large-scale Renewable Energy Target, administered by the CEFC, which drives investment in renewable energy generation, particularly in regional areas where many renewable resources are located;
the Regional and Remote Communities Reliability Fund, which supports feasibility studies for microgrid technologies in communities located in regional and remote areas; and
the Regional Australia Microgrid Pilots Program, delivered through ARENA, which aims to improve the resilience and reliability of electricity supplies in regional communities and demonstrate solutions to the barriers to deployment of microgrid technologies.
Australian Renewable Energy Agency
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ARENA is established under the Australian Renewable Energy Agency Act 2011. It independently administers Australian Government programs to provide a pathway to commercialisation for new technologies, including renewable energy technologies. It also works to develop solutions for technological and commercial issues, regulatory and market barriers.
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Past and current ARENA grants programs include:
the Advancing Renewables Program, which supports a range of development, demonstration and pre-commercial deployment projects including opportunities to optimise the transition to renewable electricity, commercialise clean hydrogen and support the transition to low emissions metals;
the Industrial Energy Transformation Studies Program, which aims to assist large energy users to undertake studies to identify opportunities to lower energy costs and reduce emissions;
the Regional Australia Microgrid Pilots Program, as discussed above, which supports pilot projects for microgrids in regional Australia;
the Large-Scale Solar Round, which provided funding for projects to make larger-scale solar more competitive. Working alongside CEFC, 12 new solar farms were funded in 2016;
the Regional Australian Renewables Initiative, which ARENA inherited, that focused on supporting hybrid and integrated systems in off-grid and fringe-of-grid-communities; and
the NT Solar Energy Transformation Program, which deployed medium and high penetration renewable energy systems to 26 remote communities in the Northern Territory.
The Clean Energy Finance Corporation
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The CEFC was established by the Clean Energy Finance Corporation Act 2012. It works with business and institutional investors to accelerate Australia’s transition to a low emissions economy.
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The CEFC investment programs and policies include:
the Clean Innovation Fund, which aims to support emerging Australian technologies and businesses that can accelerate Australia’s transition to a renewable energy economy;
the Large-Scale Solar Round, discussed above, which saw funding for projects to make larger-scale solar more competitive. The CEFC also invested in eight projects that did not require ARENA funding; and
Renewable Energy Investment which, since the CEFC’s inception in 2012, has included funding for national and state-based solar, energy storage, bioenergy and wind projects. According to the CEFC, its lifetime national commitments totalled almost $2.8 billion at 30 June 2020, with a total investment value of $11.2 billion. Lifetime state-based commitments reached $5.4 billion at 30 June 2020, with a total investment value of $16.7 billion.
State and territory frameworks
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Complementing the Commonwealth architecture are legislation and programs in Australia’s states and territories to promote renewable energy generation within those jurisdictions.
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State and territory governments play a significant role in promoting renewable energy through planning laws and investments in public infrastructure. They also ensure appropriate regulatory and market frameworks are in place.
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Relevant state and territory legislation includes:
New South Wales’ Energy and Utilities Administration Act 1987 and Electricity Infrastructure Investment Act 2020;
Victoria’s Victorian Renewable Energy Act 2006;
Queensland’s Clean Energy Act 2008;
Tasmania’s Energy Co-ordination and Planning Amendment (Tasmanian Renewable Energy Target) Act 2020; and
the Australian Capital Territory’s Electricity Feed-in (Large-scale Renewable Energy Generation) Act 2011.
Victorian Community Power Hubs Program
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The Victorian Community Power Hubs Program is a state government initiative to support the creation of community renewable energy hubs. It is funded by grants from Sustainability Victoria, a statutory authority established by the Victorian Government in 2005 with the objective of facilitating and promoting environmental sustainability in the use of resources.
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The Community Power Hubs Program aims to bring together locals to develop and operate community owned renewable energy projects. The hubs provide services including building local knowledge and participation in community energy, increasing local capacity and skills and ensuring the benefits remain local and are realised.
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The program also funded the delivery of implementation-ready community energy projects that will be delivered by their respective regional community energy hub.
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In 2021, funding from the Victorian Government of $428,500 to $857,000 was available for the establishment and operation of each community hub and applicants were required to make a co-contribution of $1 for every $5 in government funding. The program has further funded community renewable energy projects at 16 sites to be delivered by their respective regional Community Power Hubs. In total, $800,000 of funding was made available across the implementation-ready projects.
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This program follows on from the Community Power Hubs Pilot program which created hubs in Ballarat, Bendigo and the Latrobe Valley between 2017 and 2019.