scroll

Energy: The Social Utility

The challenge

The ‘E’ word has toppled Prime Ministers, caused nation-wide jokes about state-wide blackouts and drawn some grandiose tweets about small towns in South Australia from Elon Musk. This is all newsworthy material, but it can confuse our understanding of the energy system and market and is making it difficult for consumers to find reliable, sustainable, reasonably priced energy.

In this article

• Our take on regional electricity infrastructure, supply, demand and economics in Australia  

• How smaller communities might insulate themselves from future uncertainty in the electricity market and politics by generating and using their own power.

Last year, we were hunting for a regional community who wanted to try generating and using their own power, at a scale somewhere between installing solar panels on a factory (about 100kW system) and generating full blown power through gas or coal (>100MW system).  After working on pumped hydro projects, solar farms, and various distributed energy projects, we wanted to test how these systems at smaller scale could help communities increase their resilience to changes in the energy market. Some communities are already testing alternative energy options locally.

In researching this issue, Jonathan Anderson, an energy-focused engineer, spoke to the City of Greater Bendigo and learned that the locals—frustrated by rising prices and policy uncertainty—had already thought of using the elevation difference in nearby local gold mines for energy storage. We wanted to see if we could work together to create an economic and engineering model that could be replicated more widely.

Regional centres like Bendigo can sometimes be overlooked by government and industry. They have significant populations, but not as many voters or consumers as the urban centres. They have economic clout but not always enough to attract national attention. In some ways they have more pressure to solve their own problems, but arguably also more ability to do so. Solving energy issues in a community this size could be a proving ground for scalable strategies that could work across Australia and around the world.

To understand power supply at the community scale like Bendigo, first you need to understand power supply and its history in Australia. 

Australia’s early electricity network was designed as a centralised system, with large government-owned assets that generated electricity at the source (nodes), transmitted it through high voltage power lines across huge distances (poles and wires), then turned it into low-voltage power to be distributed to people in their homes and businesses. Over time, various aspects of the generation, transmission, distribution and retail have shifted from government to private ownership, regulated by independent bodies and participating in the National Electricity Market. 

Energy can be a confusing topic. We've prepared some five minute guides on various aspects of the global energy system, including the Energy TrilemmaElectricity StorageMicrogridsFossil Fuels in TransitionHydrogen, 

Rooftop Solar PV and Energy in Cities.

As we develop new technologies – both in energy generation, such as solar and wind, but also in storage and distribution, such as batteries and virtual power plants – we have an opportunity to take some of the pressure off the centralised systems. This will help us create energy at the place we need it. The catch is, these new generation methods and technologies place different demands on the old system. We need to design for them to keep everything balanced.

After working on several sustainable and distributed energy products, from solar to pumped hydro, we wanted to test how these systems could work at smaller scale while also helping communities increase their resilience to changes in the energy market.

But what are we balancing? The media often refers to Australian business and political leaders having to solve an energy trilemma – energy reliability/security, cost and environmental impact. 

Meeting these three factors involve critical trade-offs, but there are other important socio-political factors we might consider. First, partisanship and identity politics – people have strong personal views on energy, particularly due to its inherent link with environmental issues. Second, governance – many energy markets are regulated, and the role of government and markets in providing energy to Australia and overseas needs to be consider. And third, workforce – making sure people with jobs in older energy assets can adapt to new industries.

As Australia works to address these challenges, we have seen higher power electricity prices, energy security concerns with rolling outages and blackouts, job insecurity, and financial uncertainty for energy business investment. The drama is heightened with rumblings of fractured political and social commentary on the appropriate response.

Jonathan is now working with the City of Greater Bendigo to work through these issues at their scale, with an energy model that’s owned and run locally.

There are two parts to their proposed model: A community owned sustainable power generator, and a community facing retailer.

Each would be owned by the communities they serve, which has several immediate advantages: consumers would see any profits come back to them in lower energy prices or rebates, the energy provider would benefit from a more stable user base, and there would be no need for expensive marketing campaigns.

One of the big issues energy providers face is spikes in demand. Since energy consumers would be co-owners of the company, they would be incentivised to use power in a way that works well for their company and their community. At the same time, localised power production from renewable sources reduces the wastage of long distance electricity transmission. Excess power could potentially be sold back to the grid, generating revenue for the local community. 

The City of Greater Bendigo is just one of the regional centres in Australia interested in exploring home-grown energy options. Areas like Bendigo, which have neither the voter or consumer base of Australia's major urban centres, often struggle to gain the attention of national government.

There are some technical and economic challenges in creating a smaller scale energy generator, but Jonathan sees the social challenges as being more interesting and challenging.

“We’re confident we can make the system work, but the key is getting everyone on board, and doing it all without too much risk to the stakeholders” says Jonathan.

Getting a community of thousands of people to agree on something can be difficult in any circumstance and convincing a community to take ownership of their energy future means a degree of commitment and risk. On the other hand, high energy prices are universally unpopular, and the potential benefits of reliable, sustainable, and affordable energy have already proven to be attractive. One precedent being studied by the team is a community owned project, the Hepburn Community Wind Park Co-operative—a small but impressive project where two wind turbines serve about 2,000 homes, funded largely by residents, government grants, and private sector loans.

Jonathan hopes the benefits of such projects can extend beyond energy issues. “Regional economies often need jobs, and aside from the energy related jobs, we could attract other business as well.”

A community with cheap and reliable power might attract more industry, business and residents. The investment required to operate the power supply would stay within the community, helping to create jobs directly and indirectly. Ultimately this model may help to bring communities closer together and tap latent energy and ability locally. The Hepburn Wind project now runs community events, funds local sustainability initiatives, enhances the skills of local participants, and has made the community feel empowered to tackle big issues.

Energy companies and government might solve the energy trilemma some day, but in the meantime Jonathan hopes that by providing engineering and economic support to regional communities, his research can help people tackle big problems in a local way, that makes their world more reliable and sustainable and lead our society by example.

Findings

  • This project has just recently started so watch this space. We'll be testing and reporting back on the following points
  • Community power supply as a feasible alternative for medium sized cities or regional centres
  • The challenge associated with ownership, financing and governance models  
  • Potential indirect benefits including secondary economic growth and increased citizen engagement

This story was written by Keith Little, as part of the Research Review. This series is produced by the Arup Australasia Research team; Alex Sinickas, Bree Trevena and Jeff McAllister with contributions from Sheda and Noel Smyth.

Lead Arup Researcher

Jonathan Anderson
Jonathan is an industrial and process engineer based in our Melbourne office.

Ask Jonathan about:

  • Examples of community power.
  • The technical, economic and social challenges of developing energy projects.
  • New renewable energy and storage technologies.

LEAD Partner RESEARCHER

Glenn Pomeroy
Glenn leads Innovation and Transformation at City of Greater Bendigo.

Research TEAM

Paul
Rasmussen
Paul leads our agribusiness and energy teams in Melbourne and Adelaide.
David
Dawson
David is our Australasia Energy Skills Leader based in Melbourne.
Matt
Dunn
Matt is a consultant working in our Infrastructure Advisory team in Melbourne.
Jim
Chesterfield
Jim is a project manager working in our advisory services team in Sydney.

Have a problem or a project?

We work with industry partners, governments, universities, startups and community organisations. We do this through research partnerships, and as consultants and facilitators for foresight, research, storytelling and technical writing workshops.

research with us