In an Australian first, a small renewable energy company has turned to crowdfunding to build a new solar farm in southern New South Wales.
Most important points:
- A solar farm in southern NSW uses a crowdsourced funding model for what is believed to be Australia’s first
- It sees small investors contribute as little as $250 to become a shareholder of the company
- The company hopes the model can be applied to other renewable energy projects in Australia
On the day the Australian Energy Market Operator suspended the spot market amid rising electricity coststhe Grong Grong solar park, west of Wagga Wagga, launched its crowd equity funding.
Investors can contribute as little as $250 to become a shareholder of Grong Grong Solar Farm, which will sell electricity to the grid.
About 200 investors have already contributed $385,000, reaching the minimum target of $250,000 in just 80 minutes.
The financing model is widely used in the United States. Local company Komo Energy, which runs the drive, says it’s a tangible way for people to contribute to the transition to renewable energy.
“I think a lot of ordinary Australians are very interested in transitioning the Australian energy system to renewable energy, but feel it’s a little limited in how they can play a role,” said company director Jonathan Prendergast.
Retired electrical engineer Chris Dahlitz lives in Narrandera, near the solar park, and has invested $750 in the project.
“What appealed to me was the opportunity to invest in solar on a small scale,” Dahlitz said.
“A lot of people don’t get that opportunity. They may be in rented housing or may not have a home that’s suitable for solar on the roof, so the idea of a community-owned solar park that people can invest in is a bull’s eye. “
Grong Grong Solar Farm’s offering document mentions several risks when investing in the project, including: that the company is a single-project company; it may entail price increases; and its success depends on the sustainability of the market.
With larger power generators currently facing huge supply challenges, the company hopes this project can help counter those with small investors who put money into the project.
“You can put in a very small amount, but still have an interest. And if thousands of people all invest $250, that’s a significant amount to invest in these types of projects,” Dahlitz said.
The company has a $1.3 million grant for the project from the NSW government, but plans to raise an additional $750,000 through crowdsourcing.
Similar models for community-owned solar projects are used in Australia, some as cooperatives.
“Cooperatives see individual investors investing different amounts, but it’s one vote per shareholder,” said Mr. Prendergast.
“Crowdsourced finance is a bit different. It’s relatively new legislation compared to co-ops, which have a different structure and are quite old.”
Crowdsourced financing of projects became possible in 2017 with an amendment to the Corporations Act† The sector is regulated by the Australian Securities and Investments Commission (ASIC).
“We have a very vibrant rooftop solar sector in Australia and quite a vibrant large-scale wind and solar sector that uses institutional financing and large-scale bank lending, so this could create a new sector using crowdsourced funding,” he said. Mr Prendergast.
Richie Merzian, director of the Australia Institute’s climate and energy program, said the crowdsourcing model showed promise for the broader energy sector, if successful.
“It is a clear sign to governments and businesses that there is a serious market for communities to invest directly in sustainable projects.
“We have had a market failure when it comes to the national grid.
“It really helps to see communities taking action, even though they may not be able to change the rules around the national electricity market.”
The company Grong Grong Solar Farm said it hopes the project can supply power to the grid as early as December.
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