Capacity Investment Scheme needs to set high bar for communities hosting renewables

With social licence now acknowledged as one of the largest challenges for our shift to clean energy, attention can now turn to the nuts and bolts of how it can be earned. The framework that the government sets for how industry works to build renewable generation and storage is a key factor.

The federal Capacity Investment Scheme (CIS) will deliver a massive 23 GW of new renewable energy generation and 9 GW of storage in the regions – which could amount to 40 new wind and solar farms and a dozen battery projects by 2030.

This is an unparalleled opportunity to set a high bar for community outcomes in every community that will host these projects. Without exception, it should encourage and incentivise good projects: projects that do good community engagement, with good environmental plans and good local content outcomes. 

In other words, government funds should only be awarded to projects that are in a race to the top for better practice renewables development. If host communities know that a proposed project has cleared this high bar, the reassurance will go a long way to building community support for that project. 

RE-Alliance and the Community Power Agency have been bringing communities, industry and governments together for more than a decade to deliver real benefits for the communities hosting energy infrastructure.

We both lead these organisations while living in rural communities at the centre of the renewable energy transformation. We both know that when you listen and put the needs of local communities first, great things can happen. 

The Australian Energy Infrastructure Commissioner didn’t beat around the bush in his recent review of community engagement practices when he said “the [energy] transition cannot succeed without community participation and effective engagement over a long and sustained period of time.”

The consultation that has recently closed around the government’s proposal to expand the CIS is the perfect opportunity – if it modifies elements in the project tender process – to respond to the recommendations from the Australian Energy Infrastructure Commissioner’s review, which made very clear that the social performance of every individual project is crucial.

Winning support from communities that host CIS projects is critical to the scheme’s success, and the wider energy transition. But, to have any chance:

• The CIS tender design needs stronger reference to social factors. It needs stronger social assessment processes and a clear set of weighted criteria where projects are selected because they demonstrate excellent social practice and positive impact.

• The CIS should encourage ongoing evaluation to make sure that projects deliver the social outcomes they commit to when contracts are awarded.

• And, the CIS must place strong social criteria at the core of the tender process. By this we mean best practice community engagement, benefit sharing, local procurement and a focus on earning community trust.

If the CIS can do this – if it can support industry to continue to mature and improve all facets of community engagement and benefit sharing practices through the design of the expanded scheme – state and federal governments will have a much stronger chance of achieving a supportive social context for ambitious renewable energy goals. 

Ultimately, better social practice and outcomes builds social licence for projects, the sector and governments.

It also saves money. Industry experience shows that quality engagement and benefit sharing can save $5 per MWh on the cost of generation for a project via smoother and faster planning processes, reduced project delays and fewer ongoing complaints and unforeseen compliance requirements. 

Of course, there is an interplay between the CIS and state planning requirements. The CIS will be evaluating projects approved across different state jurisdictions, with a variety of assessment provisions.

The improvements we propose seek to establish a threshold that projects can work towards, regardless of the planning framework they have worked through, but with care not work at cross-purposes with those frameworks.

In addition to making sure that the expanded CIS is as strong on social criteria as it can be, governments could immediately support communities by funding Local Energy Hubs across the nation.

These drop in centres can make sure that communities are supported to understand and be involved in the shift to renewable energy. They can create an important touch point for developers when starting the process of building social licence for their projects, which should be front and centre for all developers winning CIS contracts.

We also see the need for a strong federal government role in communicating what the energy transition means for everyday Australians and the creation of a new research centre within CSIRO to respond to the information needs of regional communities and address misinformation and disinformation.

You can read our full submission to the government’s expanded CIS consultation, including specific recommendations and changes here. 

Andrew Bray is national director, RE-Alliance. Jarra Hicks is director, Community Power Agency

RE-Alliance is working to secure an energy transformation that delivers long-term benefits and prosperity for regional and rural Australia. We do this by listening to the needs of communities most impacted by the transition, facilitating collaboration across the renewables industry to deliver social outcomes and advocating for meaningful engagement and benefits for regions.

Community Power Agency is an industry leader in understanding the social aspects of renewable energy development, and particularly the impact of different practices of community engagement, benefit sharing and local procurement on social outcomes and social licence. We advocate for a transition to renewable energy that is fast and fair, and which places communities at the centre.