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Author: Sara Howard
Contributors: Liz Hamilton, Prem Panickar, Alicia Webb

Securing government funding can make all the difference in the early stages of your project. In this article we look at current funding opportunities, and how to build your business case to local, state or federal government organisations.

The funding for your community energy project will come from a combination of capital, debt and grants. If you can secure government grants or funding, you'll have a better chance of proving the project’s feasibility to investors and the bank. It’s also the least expensive form of funding available – no interest payments, and no money tied up in dividends.

Main topics covered in this article include:

Funding opportunities

It's important to search for grants that apply to the various community benefits your project will bring. Rather than applying only for renewable energy grants, search for grants in the areas of:

  • Renewable energy
  • Education
  • Capacity-building
  • Regional resilience
  • Employment

Types of government funding

Government funding initiatives change frequently, so the following is a guide only. To find out more about grant requirements and application deadlines, visit the relevant government department website.

Local government

Local councils are taking a keen interest in sustainable initiatives, and also want to encourage local business development and growth. They may receive funding from state and federal agencies, which they can direct towards the feasibility stages of your project.

Local council involvement may also help with the planning and permits process, and with encouraging local community support. It's a good idea to discuss potential grants with your local council.

An example of a local Government funding program is the Victorian Local Government Sustainability Accord funding program aims to support projects that promote regional growth. This usually directs separate rounds of funding towards a specific activity, such as feasibility assessments or exploration costs. For example, in 2007 Maribyrnong Council in Victoria funded the pre-feasibility study for a local wind farm. Round 5 has closed to check in for round 6.

State government

Each state government will have grants programs under their various departments. It's generally a good idea to start by finding a directory of the state departments, and then searching the applicable ones for grants programs. Every state government has a department responsible for the environment and/or climate change, and it's worth searching for specific government agencies dedicated to education, economic development, and communities.

Queensland

The Queensland State Government has a generic grants search website which can be used to filter grants according to different criteria.

Over the past 10 years, the Queensland Sustainable Energy Innovation Fund (QSEIF) has committed over $8.9 million in funding to organisations who develop new technologies that reduce consumption of fossil fuels, water or greenhouse gas emissions. Round 17 opens early 2012.

Victoria

Victorian State Government Grants are best searched by Department. There is a list of Departments in the directory.

The Victorian Department of Planning and Community Development has a list of grants that may apply to your project.

Regional Development Victoria provides a search service on the website that allows you to stay up to date with the various grant programs available in categories like business, community and education, as well as environment and sustainability.

New South Wales

NSW State Government grants are best searched by Department, all of which are listed in the directory.

A couple of good places to start with include the Office of Environment and Heritage, and the Community Builders program.

Tasmania

A list of Tasmanian Government Departments is available on their directory. A good place to start is the grants directory for the Department of Economic Development, Tourism and the Arts.

Northern Territory

The Northern Territory government has several departments to search for grants. A good place to start is the Natural Resources, the Environment, Arts and Sport.

South Australia, Western Australia and the ACT

These State Governments have grants search pages.

SA
WA
ACT

Federal government

Various federal government departments have initiatives to assist in the uptake of renewable energy generation technologies. There is also a central grant searching service called grantlink.

The Australian Government's Department of Resources, Energy and Tourism (RET) has legislated the 20 per cent by 2020 expanded Renewable Energy Target and is supporting the Government's Clean Energy Initiative.

The Clean Energy Initiative (CEI) includes the Solar Flagships Program, the Australian Centre for Renewable Energy, and various other funds, listed on the website.

The Department of Sustainability, Environment, Water, Population and Communities has a range of grants programs including the Caring for our Country Community Action Grants 2011-12 and the Department of Climate Change and Energy Efficiency has a very useful A-Z of initiatives.

The Enterprise Connect initiative has state-based Innovation Centres that provide on-going support, and sometimes funding, to small and medium enterprises, including those involved in clean energy. For eligibility see their website.

See the information section below for more details.

How do you get government funding?

Start by researching the funding programs available in your local area and state. Make a note of the requirements and deadlines, and stick to them.

Ask other government agencies for advice – for example, your state's small business advisory department, such as the Department of State and Regional Development (DSRD) in NSW, or Business Victoria. They may be able to recommend the best people to talk to in the relevant environmental departments, as well as contacts to help you with planning and permits.

Government bodies look for as much information as a bank or investor would, so prepare your business case and make sure you include all your preliminary assessment data. You need to prove your project is economically feasible and your choice of energy resource makes sense. You should also be prepared for questions, such as:

  • Is the project too close to other similar projects? Concentration can be an issue
  • What's the delivery timeframe?
  • How does the community feel about the project?
  • Who else is funding the project, including private developers, equity or bank loans?
  • Will it create local employment and investment?
  • Will it help the government meet its renewable energy targets?

For Hepburn Wind Farm in Daylesford, Victoria, the early funding provided by Sustainability Victoria (SV) was crucial.

To calculate the amount it was willing to invest in the project, SV worked backwards. It decided how much money was needed to make the project attractive to investors, so the project could go ahead. This ended up being $1 million, or around 8% of the total capital requirements. In fact, it was more than the Hepburn Wind team had hoped for.

Tips for winning government grants

Answer the questions. This can be harder than you think when you're immersed in your project. Ask someone to read your proposal, to check it's clear, succinct and easy to understand.

Keep it simple

  • Don’t go into too much technical detail.
  • Keep it as brief as possible within the framework of the grant requirements.

Use pictures

  • Grant applications often have a word limit, but that doesn’t include diagrams.
  • Plus, a diagram is a great way to explain how your project works.

Prove your case

  • Grant assessors need to know who's behind the project, and that they have the skills and expertise to make it work.
  • You may also need to prove access to a certain level of funding, such as a line of credit, loan agreement, or shareholder commitments.

Show the figures

  • Use your financial model and cash flow projection to demonstrate the commercial viability of your project.

Be prepared to offer something in return

  • Government grants are not always ‘free’ money. In return, they may look for a seat on your board, a commitment to a local community fund, or contributions to local training and employment.
  • They may want to use you as a case study, which could require extra work documenting your processes.

Triple the benefits

Government grant assessors are interested in economic, environmental and social benefits, so discuss all of these.

  • Economic benefits: Keeping revenue from energy creation and RECs in the local economy, creating local employment and reducing dependence on fossil fuels.
  • Environmental benefits: Reducing greenhouse gas emissions and pollution related illness, no waste issues, low water consumption, and increased local awareness of energy use and impact.
  • Social benefits: Building community pride and identity, local employment and skills development, and allowing rural landowners an alternative source of income.

More information

Websites with information about State Government funding:

Sustainability Victoria - Climate Communities program
Department of Planning and Community Development
NSW Department of Energy, Climate Change and Water
Community Builders NSW
Qld Department of Employment, Economic Development and Innovation
WA Small Business Development Corporation
Tasmania Small Business Development
General Victorian State Government grants

Websites with information about Federal Government funding:

Clean Energy Council's guide to Federal funding
Department of Resources, Energy and Tourism
Department of Climate Change and Energy Efficiency
Department of Innovation, Industry, Science and Research (for renewable business development)
Department of Agriculture, Fisheries and Forestry
AusIndustry (for renewable energy businesses)
Department of Agriculture, Fisheries and Forestry (for bio-energy projects)

Funding the early stages of projects
Developing the financial model for the project 
Building the business case
Raising capital
Raising Debt - what banks look for
Developing the offer document, prospectus or PDS
Marketing to raise capital
Debt arrangements