Sick of waiting for broader policy to change, the Australian city helped finance a massive wind farm by making a commitment to 10 years of renewable purchases. The city’s manager of urban sustainability explains how your city can do it, too.
Photo: Denise Jans /Unsplash
BY DEB CAILES
As a local government in Australia, Melbourne, has no policy control or ownership of our electricity generation assets or grid. Globally, we are seeing the lack of national and international action kick city governments into action. This is a good thing. We’re already leading, despite the obstacles. In Melbourne, where I’m the manager of urban sustainability, we’re tired of waiting for state and federal policy to move. So, we set out to find a new way for the city and other large energy users in Melbourne to take voluntary action to accelerate the removal of carbon from the grid.
This gave rise to an Australian “first”: We decided to bring together a group of local governments, cultural institutions, universities, and corporations and collectively purchase renewable energy from a newly built facility. It’s a pretty simple concept, but revolutionary for the industry. And others should try it. We called it the first-ever Melbourne Renewable Energy Project.
Here’s how and why we did it: Since renewable energy developers often face barriers in securing financing, especially in uncertain regulatory environments, we needed to give them some assurance. To secure financing, developers usually require a “bankable” long-term stream of income from an offtaker (or buyer) to underwrite the debt, known as Power Purchase Agreements (PPAs). This is a potential obstacle everywhere around the world.
The City of Melbourne and its MREP partners, in response, realized that we could use our purchasing power and credit strength to provide sufficient certainty to enable the construction of a large-scale renewable energy project. That’s why the collective approach is so critical—and why cities elsewhere should consider the same approach.
Collaborating with 14 partners from a wide range of sectors—banks and universities, alongside local governments and state government bodies—and after locking in governance and decision-making processes, we rolled out a model never before tested in the Australian market.
But once you get the group dynamics figured out, the renewables can start rolling out. We did, and now they are. The MREP purchased 88 GWh of electricity per year from a growing wind farm in Crowlands (a three-hour drive from the city), as part of a 10-year PPA. So that you have a sense of how much energy that is, that’s enough electricity to power more than 12,000 homes in Australia.
Beginning in early 2019, the Crowlands wind farm began supplying power to town halls, bank branches, universities, and street lights across Melbourne, and all municipal infrastructure is now powered by 100% renewable energy.
Because of our wind purchase, we’re enabling the build out of a new 80 MW wind farm at Crowlands, a farm that is owned and operated by Melbourne-based clean energy company Pacific Hydro. As the wind farm will generate significantly more wind power than we need, it will bring additional renewable energy into the market. The whole purpose of this project is to enable customers to have reliable electricity costs over a 10-year time span, while creating more renewable energy. It offers competitive costs and budget certainty.
That’s what people want. Yes, it significantly reduces greenhouse gas emissions. Yes, it creates around 140 construction jobs, along with eight ongoing operational jobs locally. And yes, it spurred Pacific Hydro, through their community fund, to provide a long-term funding stream to the local Crowlands community as well as a solar and battery storage system. These are all great things.
But the overarching lesson here is this: Communities everywhere can take an active role in securing their own renewable electricity supply by taking power into their own hands. Want long-term price certainty? Want to mitigate the risk of increased energy costs in an increasingly volatile market? Want to speed up the transition to a renewable energy supplied-grid for increased energy security?
Then try a similar model. It’s been a game-changing procurement model for us and the project team has actively encouraged replication of the model to other locales.
Not only did the MREP secure low-cost renewable energy for our city, it appears to have catalyzed substantial sector-wide change. Since the rollout of the Crowlands wind farm deal, a host of other corporate PPAs have been announced in the Australian market. Large multinationals, universities, and other local governments are all recognizing the opportunity and stimulating billions of dollars of investment in renewable energy in Australia.
Deb Cailes is the manager of urban sustainability for the city of Melbourne .
Melbourne is a member of the Carbon Neutral Cities Alliance, a collaboration of leading global cities cutting greenhouse gas emissions by 80% to 100% by 2050 or sooner. This is a seven-part series featuring bold actions by cities to accelerate progress toward carbon neutrality, based on CNCA’s Game Changers Report.