Supporting solar PV roll out across the residential sector through utilisation of Council rates scheme to support financing and community sector capacity to provide trusted brokering. The program has supported 300 pensioners in the City of Darebin to install solar PV, with no upfront cost and match repayments with savings on electricity bills. The model is similar to the Property Assessed Clean Energy (PACE) schemes that have operated successfully in USA.
What it is
Aims/values/purpose that underpin this model (strengths and benefits)
- The model establishes a structure to better support residents invest in solar PV by engagement through trusted stakeholders and low interest finance to offset upfront cost.
Technology (which one/scale/other technical details)
- Standard small scale residential PV systems.
Finances (where does the money come from, where does the money go)
- Council finance capital cost through bulk purchase from supplier/installer and recover cost through rates charge over 10 years.
Community (what makes this a community energy project?)
- The project is delivered by Local Council in partnership with Positive Charge (a Social Enterprise of not-for-profit community organisation Moreland Energy Foundation ltd.).
Organisation (legal structure, decision making)
- Council provide promotion and finance mechanism. Positive Charge provides project management, household advice, solar assessment and brokers specifications and contracts on behalf of the solar PV supplier and Council.
What it isn’t
While similar to environmental upgrade agreements (EUA), utilising the Special Charges requires Council to directly bear the cost of capital (debt), where as EUA requires the Council to collect the debt though does not have direct financial liability.
What is this model most fit for purpose for?
Large scale roll out of residential and small business solar utilising Council rates scheme to build participant trust, access low cost finance and manage ownership transfer.
Essential requirements for viability
To deliver the model effectively there needs to be a strong partnership between Council, a community interface (broker) and the equipment supplier. Council needs to be proactive in promoting the project, willing to undertake upfront investment and able to manage administrative requirements to utilise the rates scheme to recover investment.
A broker is essential to provide a clear and straightforward process for participating households and businesses and reduce administration for Councils and lending institutions. The broker is able bring together the participant’s needs, supplier specifications, lending conditions and Council requirements. MEFL through its Positive Charge initiative delivered the Solar $aver program for Darebin City Council as a broker, providing independent assessment of viability, quotation on behalf of a supplier and contract issuing on behalf of the Council.
The benefits of this model allow a technically qualified team to engage with participants, provide independent advice and make arrangements on their behalf to streamline the process. Given the additional requirements to liaise with tenant and landlord in the majority of business arrangements a clear brokering functionality is critical for rates based schemes to genuinely realise the potential environmental benefits. The cost of the role can be integrated into the end cost for the service.
Legal and political uncertainty
- The Darebin Council’s Solar $aver program pioneers the approach for residential buildings. Further legal advice and regional pilots in early 2015 will further clarify legal and political support for this approach. This is becoming increasingly certain for the business sector due to current utilisation of EUAs in the City of Melbourne, NSW and South Australia and bipartisan support for EUA legislation to be extended to the Victorian Local Government Act. To utilise the Local Government Act in Victoria currently requires Council to directly finance the projects which may limit capacity depending on Council’s other finance commitments. It is unclear whether the NSW Local Government Act is able to support such a scheme due to a narrow definition of Special Charges.
- Implementing rates based schemes will require administrative support to establish a scheme and process rates charges over time. For the scheme to be both effective for participants and efficient for Councils, there needs to be a clear process for establishing participant eligibility, lender and supplier accreditation, and routine collection and processing of payments.
How to utilise this model
- Engaging participants effectively and efficiently is key to the impact and viability of the model. Managing recruitment, screening eligibility and issuing contracts are critical stages that need to be coordinated.
Figure 1. Engagement process for Darebin Solar Savers Model
Having recruited participants, Council must declare its intention to utilise the Special Charges mechanism through public notice, allow 28 days for concerns to be lodged and considered and then a Council resolution to implement the Special Charge. As part of the process, Council is required to keep participants up to date and informed of the process.
Council bulk purchases solar PV equipment for all participants from a supplier and then recovers the cost through individual rates charges for each participant. Council could itself borrow funds or finance from internal reserves.
Figure 2. Finance model underpinning Darebin Solar Savers
What not to do
See constraints above.
Key lessons from other groups using this model
Not yet applicable. Darebin is planning to undertake another round and Moreland also intends to trial the program in 2015.
Getting Assistance and Finding out More
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