1. Project Overview
The Solar PV for Low Income Households (Solar $avers) project will install up to 900 solar PV systems on low income and vulnerable households across participating Victorian municipalities. The project is a collaboration between Victorian greenhouse alliances, local government, the Victorian Government and the private sector and will run through to June 2019. The project will:
- test a model for scaling-up the use of council rates to provide individual loans to households and recover costs through the rates system
- catalyse private-sector investment within a community segment traditionally viewed as high risk to investors by establishing and evaluating partnership finance models with the banking sector; and
- establish a shared services approach to project implementation to enable access to dedicated capability and thereby reduce resource requirements and risks to councils. This approach is intended to leverage economies of scale in administration, procurement and governance, and (importantly) enable participation by councils not otherwise able to offer this service to their residents
The project will deliver immediate net savings of around $100 per year on electricity costs for large numbers of low-income households. In addition, the ability of solar PV to provide low cost energy throughout the day means vulnerable householders will be able to cool their homes during heatwaves without fear of ‘price shock’. The project also has the potential to materially reduce Victorian Government concession payments, and meet broader social and environmental policy objectives.
The Victorian Government is funding this project as a pilot to trail to the model for possible future implementation across the state of Victoria’s 74 000 households on rate relief and possible to other cohorts of financially constrained households.
The alliances in discussion with the state around option for recycling the substantial “Low Income Energy Subsidy” that will be made available through this project and subsequent roll-outs to feed back into future energy efficiency and renewable energy gains for this cohort either directly or through a Revolving energy fund mechanism.
2. Overview of project delivery
The greenhouse alliances will work across their networks, communities and partners to deliver regional mitigation and adaptation programs. This includes the implementation of joint initiatives that provide economies of scale and enable projects typically beyond the reach of individual councils.
This partnership recognises the importance of policy and government intervention in addressing market failures and overcoming the barriers to renewable energy technologies. These barriers are particularly prevalent within vulnerable sections of the community – specifically upfront costs and tenancy arrangements. To address these barriers, low risk finance models are required to unlock investment and stimulate uptake within these sectors of the community.
3. Project rationale: addressing a market failure
Low-income households do not have the same options regarding their energy resources as other Victorians, and this lack of choice locks them into an ongoing role of price taker for all their energy needs, even as retail energy and other living expenses rise in cost.
A preferred approach would see all Victorians participating in renewable energy investment when it makes sense for them to do so. Arguably, lower income Victorians should have the same abilities as others to pursue the least cost energy path available to them, given that energy is legislated as an essential service and given the health, welfare and social and economic participation that affordable energy services bring.
Experience shows that households suffering from ‘energy poverty’ are particularly vulnerable in heatwave events, creating morbidity and mortality risks, particularly for the aged. This was most clearly demonstrated in the summer of 2009 where heatwave related mortality significantly outnumbered the deaths due to the Black Saturday bush fires. This has significant implications for councils through increased demand for support services and increased pressure on council facilities. These risks have recently been identified through a regional climate change risk assessment conducted by the seven councils of EAGA.
There is mounting evidence to demonstrate that the installation of solar PV is an effective cooling strategy in households where energy costs represent a larger proportion of ongoing living costs. The ability of the technology to provide low cost energy throughout the day means these householders can cool their homes during heatwaves without fear of ‘price shock’. Furthermore, the performance and savings generated by PV panels is easily measurable, meaning this approach is preferable to other household interventions (such as insulation) where cost recovery models are not possible.
Councils have the capacity to apply charges to individual rates to recover expenses or debt where there is a special benefit to the household. In 2014, the Darebin Solar $aver program pioneered the use of the existing Special Charges Scheme (Sec 163) of the Local Government Act to apply a charge for 300 pensioner residential home owners to repay a solar system with ‘zero up front’ costs.
The Darebin experience demonstrated that councils can play a pivotal role using rates charges to underpin a stable finance model that encourages low interest lending and allows debt transfer to a new property owner to increase household and business confidence in investment. The model can support both households to invest more confidently in solar and energy efficiency and at the same time stimulate a competitive green economy with minimal need for incentives or council debt liability.
The benefits and outcomes of this approach were that:
- the household can access low fixed interest finance
- the debt can be transferred with property title to a new owner
- the lender has very low risk as debt collection through rates is a statutory charge
- the council provides community benefit with minimal investment or balance sheet liability to council
Our Solar $avers project aims to replicate the success of the Darebin model and test approaches, to deliver solar to low income vulnerable households at scale. The project will drive investment within Victoria’s regions and support jobs within local renewable energy providers and related service providers. It will assist communities to improve the housing stock and build the resilience and value of residential assets.
The project will address the goals and actions within of a range of state and local government plans and strategies including (but not limited to):
- Victorian Public Health and Wellbeing Plan 2011-2015 (p.65)
- municipal and community wellbeing plans within each council
- sustainability and environment strategies within each council
- the EAGA Climate Change Adaptation Roadmap
- the NAGA Adaptation in the North report
Two detailed business case studies have informed the project methodology and are available at: https://eaga.com.au/projects/solar-rates/.
4. Project Progress
The planning phase of the project is well underway:
- Draft project plans have been developed detailing timelines, analysis of risks and process for contracting the:
o installation provider
o website developer
o monitoring and evaluation consultant
o database developer
o finance provider
- Position descriptions have been drafted and the process for the recruitment of three Sustainable Energy Officers (SEOs) has been mapped out
o The three SEOs will be effectively case-managers for each of the installations. Though one will be hosted by three different alliances, they will be operational across the whole catchment of 20 councils and not just councils associated with the alliance that is hosting them (see the roll-out plan in Appendix 2). This structure has been adopted by the Project Control Group as the most efficient use of the funds appointed for this function.
o It is tentatively proposed that the second SEO be appointed by the CVGA and hosted in our office starting in October and working until the project closes in June 2019 (21 months). EFT will be dependent upon salary banding etc. (probably band 5), most probably 0.6 or 0.8 EFT.
- A project plan and community engagement plan have also been completed
The project is on track to meet the following time frames:
|Website development RFQ advertised|
Monitoring and evaluation consultant appointed
|RFT for Solar PV installations available for comment|
Sustainable Energy Officer (SEO) positions advertised (x3)
Database development RFQ advertised
Solar PV installer tender briefing
|Solar PV installation RFT advertised||3 April|
Household promotion and recruitment commences
Project website goes live
|Solar PV installer appointed|
Household Solar PV quotes commence
|Councils commence special rates charge process (where appropriate)||13 July|
|Solar PV installations commence||7 September|
Appendix 1 – Participating organisations
The following organisations have signed a participating organisation agreement with Maroondah City Council. Discussions with other councils about participating in the project will occur throughout the project.
|Participating Organisation||Alliance||Rates installs||Bank installs||Notes|
|Bendigo||CVGA||Observing for 2016/17|
|Macedon||CVGA||24||Exploring Rate Relief options|
|Bank Australia||N/A||Finance partner|
|Moreland Energy Foundation Limited (MEFL)||NAGA||Project Control Group and host of SEO|
|South East Council Climate Change Alliance (SECCA)||SECCA||Project Control Group and host of SEO|
|Central Victorian Greenhouse Alliance (CVGA)||CVGA||Project Control Group and host of SEO|
|Northern Alliance for Greenhouse Action (NAGA)||NAGA||Project Control Group and host of SEO|
Appendix 2. – Project Roll-out by Council