The federal government is setting aside 500 megawatts (MW) in each of the next Capacity Investment Scheme (CIS) tenders for projects that bake-in equity or revenue sharing deals with First Nations groups.
The new Set Aside pilot was introduced in May as a way to bolster energy partnerships with First Nations people, with 500 MW carved out of the 5 gigawatt (GW) generation tender 9, and 500 MW, 2 gigawatt-hours (GWh) of battery storage allocated in tender 10 for 16 GWh of dispatchable power.
To qualify, developers will need to partner with First Nations groups with either a minimum five per cent equity stake, revenue sharing equal to five per cent equity, or both that equals to five per cent equity.
The bids will still be assessed against the usual CIS merit criteria.
The new model aims to increase First Nations ownership and revenue “participation” in large energy projects, the Department of Climate Change, Energy, the Environment and Water (DCCEEW) said on LinkedIn.
“The pilot supports co-ownership and revenue-sharing arrangements tailored to the needs of communities and projects,” the DCCEEW post says.
“The initiative is designed to help deliver lasting economic and social benefits for Traditional Owners and First Nations communities.”
While the terms of the CIS terms have encouraged proponents to offer equity stakes or revenue sharing alongside the usual suite of employment opportunities, but until August last year no proponent had actually done it.
“Many successful projects have done this, however, feedback showed that more targeted action was needed so more communities can participate in these clean energy projects,” a statement on the DCCEEW website notes.
The first First Nations co-ownership model was struck last year between Ampyr Australia, a new battery storage developer backed by Singapore-based AGP, and the Wambal Bila indigenous community corporation.
Wambal Bila (a Wiradjuri word for mountain-river) has an option, through an equity right, to take a 5 per cent equity stake in the 300 MW, 600 MWh Wellington battery, now called Bulbul, which is being built next to two existing solar farms owned by other parties.
It’s believed to be the first co-ownership deal in the sector that does not involve Native Title or other legal rights.
Ampyr CEO Alex Wonhas estimated that it could be worth $20-30 million to Wambal Bila over the two decade life of the project.
Wambal Bila’s Gavin Brown told a First Nations Clean Energy Network webinar last week that the arrangement came about because there aren’t many jobs that come out of battery development and they were both looking for a “commercial win-win” that wasn’t just benefit or revenue sharing.
“It wasn’t entirely by design. We had to move pretty quickly, and we got it done in six months. That’s not recommended…we had [to build up] trust quickly and that was done through a really transparent operating style of the proponent,” he said.
Will Story, Ampyr’s head of First Nations and community Partnerships, says including actual commercial benefits in a portion of the next CIS tenders is a “clear signal” that it’s time for developers to seriously look at this.
“It’s a clear signal from government that the energy transition needs to include First Nations communiities, it’s as simple as that,” Story told Renew Economy.
“I don’t pretend that every community wants the same thing or that every partnership should look the same, but this is a clear signal that long term economic empowerment is an opportunity that we need to look at seriously.”
He says there is a real chance for developers and First Nations people to evolve from a transactional relationship to real, commercial, partnerships, citing the Wambal Bila model that delivers both benefits for the community and is consistent with their commercial values.
“It’s a huge opportunity for the clean energy transition that can not only ensure reliable energy supply for Australia, but also empower First Nations communities with long term revenue that they can invest in their own future.”
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