Generating renewable energy
The Australian Capital Territory (ACT) Government was recognized at the 2017 Institute of Public Administration Australia (IPAA) Public Sector Innovation Awards for its use of reverse auctions. Here, the Federal Government & Public Sector Leader for EY in Australia, Andrew Metcalfe, who was on the awards judging panel, speaks with Jon Sibley, the ACT’s director of energy markets and renewables.
Andrew Metcalfe: The ACT was the first jurisdiction in Australia to use a reverse auction process to award a large-scale feed-in tariff, but reverse auctions aren’t new to government. What makes this approach innovative?
Jon Sibley: We provided a legislative backing to give renewable energy developers investment certainty around recovering costs through energy distribution charges.
The reverse auction process delivered renewable energy at the lowest possible cost through a new “contract for difference” approach. This means the Territory pays the difference between the feed-in tariff (FiT) price and prevailing wholesale electricity prices, giving renewable energy investors certainty and bringing down overall costs.
AM: What are the results to date?
JS: A number of independent reviews of the auction process have been conducted, confirming that it had been highly successful. It effectively achieved all of its targeted outcomes, resulting in a competitive process that provided the ACT Government with a large number of high-quality proposals to select from that offered low FiT rates.
More specifically, the ACT has secured 640MW of large-scale renewable energy generation. When combined with rooftop solar, GreenPower purchases and the ACT’s share of the national renewable energy target, this will ensure the state is powered by 100% renewable electricity by 2020.
AM: Renewable energy remains controversial in Australia. But the ACT Government hasn’t received any complaints in relation to its FiT-supported wind farms. How have you avoided a negative community reaction?
JS: A key part of our evaluation process is looking at how developers have positively engaged with local communities. With a lack of guidelines existing on good community engagement for such projects, the ACT developed a best-practice guide to benchmark projects against.
This has created a benchmark for wind customer expectation that is driving many in the industry to go well beyond compliance-only approaches to community engagement.
It goes to show that good engagement practices, which empower rather than subjugate local communities, can make all the difference in gaining acceptance for renewable energy projects in regional areas.