The people of Denmark are given the opportunity to invest in the renewable energy that powers their homes.
The concept is still in its infancy in Australia - one industry expert, Kim Mallee, describes it as “novel” - but over time it is expected to play a key role in the nation’s shift to renewables.
Mallee is Director at Community Power Agency, an organisation supporting local communities in developing their own renewable energy projects.
She said there are three broad ways everyday people can get involved.
🤝 Buy a share in a community cooperative: This is essentially owning a small piece of a solar farm or wind project. If the project makes money selling electricity, shareholders receive a dividend.
Unlike traditional share structures, every investor gets one vote on major decisions, regardless of how much they've put in.
The Goulburn Community Solar Farm in NSW, which connected to the grid earlier this year, operates on this model.
🏘️ Pool money with a community group: Community groups can also pool their money together and loan it to a renewable energy developer to build a project. The group is then paid back with interest, and the return is fixed, regardless of whether the project is profitable or the size of that profit.
The Sapphire Wind Farm in northern NSW was among the first large-scale renewable energy projects in Australia to open up this kind of public investment.
🏦 Buy into a large developer's project: A third option is buying shares in a project being developed by a large company. Rather than selling stock exclusively to institutional investors, some developers make a small portion available to everyday investors at a low minimum buy-in. The Delburn Wind Farm being developed in Victoria’s Gippsland region will be constructed under this model.
🌎 Abroad: In countries like Germany, Scotland and the Netherlands, everyday investment in large renewable energy projects is more formalised than in Australia. Denmark goes a step further, requiring by law for new wind farms to offer at least 20 per cent of ownership to residents in the surrounding area.
Mallee visited a German town about a decade ago where residents used their own superannuation to fund community wind turbines, which then generated enough returns to fund a childcare facility, aged care and local infrastructure.
"Right now, it's novel in Australia. There’s a handful of models which are tried and tested and we need more of them so that we can actually grow a capital market that's used to seeing blended finance like this," Mallee said.
👋 Following along: In May, the federal government unveiled a new component of an incentive scheme that guarantees renewable energy companies a minimum price for the energy they produce. To qualify for the latest round, projects must work with First Nations partners on equity or revenue sharing arrangements.
Mallee said this sets a precedent for expanding community investment more broadly, and that building trust with local communities is central to how renewable energy projects succeed.
"We have social science evidence that shows categorically if communities have agency and participate in energy projects, they’re made better, delivered faster and approved quicker."
Watch the National Account’s Archie Milligan below:
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