The Intervention Options

The research and interviews performed in this research pointed to several policy options raised that would make the inception of community wind farms easier. Streamlining

6.3.2.1 Introducing Feed-In Tariff’s and Subsidies

Austria has offered attractive FITs for wind power since the mid-1990’s, these tariffs were set at 90% of the average nationwide retail rate. FITs have created a stable, profitable, and essentially unlimited market for wind power, and one that can be accessed with very low transactions costs. Wind markets in Austria and many other European nations have been heavily dependent on FITs, and their growth has been highly correlated to FIT availability. FITs have so far proved to be the most efficient, the most successful, and the most widely utilised support mechanism to promote wind energy.

There is little doubt from the interviews and research that a FIT combined with a subsidy to assist with start up costs would improve the development prospects of community scale wind farm in New Zealand immeasurably. However, the major issue which prevents policy makers in New Zealand from supporting such a mechanism is that wind energy, at the large scale, is already economical in many situations. Therefore, there is little incentive for the Government to provide significant amounts of capital to a concept which is considerably more expensive at the present time. The

170 Government does not consider the indirect benefits of CWE cost effective at the present time, this was confirmed earlier by the comment by NZWEA CEO Fraser Clark ‘If you have a price guarantee someone will find a way to make it work. But in my discussions with government it’s clear nobody is interested in offering a subsidy’ (Macdonald, 2008).

6.3.2.2 Developing Community Finance Structure

Company structures in New Zealand are not inclined towards community energy investment. In Austria, the limited liability company structure allows for community members to invest in projects without the hassle of rigid company requirements and without the concern that if the project fails they will be sought for the creditor costs. If CWE is to take place in New Zealand a form of limited liability company must be formed allowing communities access to a safe form of investment, the structure gives certainty and security for the small time investor. At the present time a form of limited liability company structure is making its way through the New Zealand legislative process and if it succeeds to become law an important barrier will be removed for local people to be able to safely invest in a community energy development.

6.3.2.3 Amending the Resource Management Act

Streamlining of RMA

Amendments to the RMA were discussed by several interviewees; these may result in the fast tracking (or streamlining) of the consent process for power generation projects. These amendments could make renewable energy developments easier to get consent, thus reducing time and money spent for the developer. In the case of CWE, streamlining would be likely to save community developers some investment capital and make community projects slightly more economic. However, because small scale farms have generally in the past had easier consent hearings (as they have not been appealed as often as larger farms) it is unlikely to make a huge difference to the overall feasibility of community wind farms.

Another factor to consider is that little has been mentioned about the potential costs of fast tracking projects, which is likely to increase energy supply priority over environmental outcomes and community values. Public participation and environmental security in resource management are vital and necessary components

171 of environmental protection, and should be retained in all environmental legislation, policies and regulations. Streamlining of the RMA would be of greater benefit to larger wind farm developments than smaller, therefore, I would not recommend overhaul of RMA to allow priority of wind developments over community views and environmental systems. This action would only lead to continued dominance of large scale development and greater alienation of community values.

Controlled activity status

“Consenting costs make up the greater proportion of the overall cost of a smaller wind farm than a larger one” (pers. comm. Cameron, 2007).

“The consent process has to be appropriate for an appropriate sized project, knowing what has to be done and how much it will cost is imperative for the small scale developer” (pers. comm. Moran, 2007).

There is one specific avenue of alteration in the RMA which would be of considerable benefit to community wind farms. The move to make small wind farms a controlled activity in the RMA under defined circumstances would remove significant consent processes and costs for community developers. This would involve regulating a certain number and/or height of turbines which are permissible subject to standards. For example, in Denmark there has been no consent required on wind farms containing three or less turbines under a certain height. In New Zealand, the three or less scenario could work well for community developers, but due to the New Zealand Government’s lack of small scale and wind energy financial support this could be increased to a maximum of ten to allow better economies of scale for the community developers. Having a controlled activity placed on smaller scale wind farms will ultimately decrease the start up costs for a community wind farm and increase the feasibility of development.

It is evident that SSW energy have fewer and less significant environmental effects than larger scale wind energy. Therefore the controlled activity status could help facilitate development by recognising and allowing for this.

Recognise community input and community benefits in the RMA

The benefits of community involvement and ownership in energy projects including wind has been discussed in Chapters 2 and 3. Some of the main benefits of

172 community developed projects such as effective local management, strong bonds with local community, deep understanding of local issues; the ability to promote and manage local energy diversification strategies, the ability to recognise opportunities specific to the region, anda sense of community ownership and pride regarding clean and secure energy use, are not considered in the assessment process in the RMA.

The 2004 amendment to the RMA required those exercising functions and powers under the Act to have particular regard to the benefits to be derived from the use and development of renewable energy. Just as with renewable energy, a clear signal that would help to encourage the development of CWE in New Zealand would be to encourage decision makers under the RMA to consider specific community involvement benefits in energy projects such as community wind farms. Positive discrimination in the RMA, in favour of community owned wind farms, may increase the acceptance of any adverse effects those wind farms have. However, the RMA’s effects-based philosophy may not support this approach.

Increased use of ‘call-in’ mechanism

Another avenue of RMA amendment which was raised in the interviews was the possibility for greater utilisation of the Government “call in” mechanism under the RMA. Under this mechanism projects which are deemed to be of national significance are able to be fast tracked by the Minister of the Environment directly to a board of inquiry. The ‘call in’ mechanism would do very little for the feasibility of community wind farm due to their smaller nature; the greater use of the call in mechanism would ultimately favour large scale developers and further limit community wind opportunities.

6.3.2.4 Emissions Trading Scheme

The Emissions Trading Scheme which is going through the parliamentary legislative processes at present is another mechanism which could assist the development of community wind farms. The ETS will mean that cleaner producing electricity projects will become more competitive with the ‘dirtier’ technologies (coal and gas). However, the ETS is unlikely to drive a huge increase in wind generation at any level. The ETS will make slightly uneconomic wind projects feasible, but in the end will not provide the push necessary to encourage community wind developments in New Zealand. However, because there is so much uncertainly around the price which carbon will be traded at, the ETS may prove to be more favourable towards wind energy in time. In

173 terms of development scale, the ETS will not change the status quo with regard to larger wind farms being more economically viable than the smaller.

6.3.2.5 Corporate-Community Partnerships

The most immediate and realistic option for a form of community ownership and involvement in wind energy in New Zealand would appear to be through public- private partnerships. These partnerships would consist of a wind farm developer forming a co-operative type agreement with community members who have the opportunity to jointly plan and invest in a local wind farm. This type of arrangement would offer the necessary risk mitigation required for community members to consider investment in a wind farm a safe and feasible option. The benefit of having a developer-led community wind farm is that the expertise needed to plan, site and consent the wind farm would already be available within the partnership. As a country with a small population and limited wind energy expertise this would benefit the New Zealand situation as there would not be the need for great capacity building in every community wind development conceived. Although developer-led wind farms are not the ‘ideal’ community grassroots development, they offer the most realistic opportunity at the present time.

In Austria, the era of the ‘true’ independent community-led wind farm has all but come to end with the reduction of government support. The option which most CWE advocates are now supporting are investment fund wind energy developers who are making partnerships with small urban and rural communities to develop wind farms. WEB and Windkraft Simonsfeld (Chapter 4) are two examples of such companies that are owned by local Austria stakeholders and also make partnerships with communities located near the wind farm; they are now among the largest wind energy companies in Austria. Although the possibility is much more difficult at present, there is strong feeling displayed among Austrian wind energy developers and local people that community input and ownership should remain a feature of the industry in the future, not just a playground for big business.

From the interviews with New Zealand wind energy stakeholders it became clear that many people believed that there was strong opportunity for the initiation of developer-led community wind farms. The most logical group which could be targeted for corporate-community partnership were Farmers. Farmers were the initiators of community wind farms in Denmark, Germany and Austria. Therefore, it

174 is also foreseeable that farmers in New Zealand could play a strong role in the development of community wind farms here, as they possess many of the best rural wind sites and as a result of recent favourable dairying returns are more likely to be able to raise investment capital. New Zealand farmers also have experience with working in cooperative type arrangement such as Fonterra, Federated Farmers and PPB, so the leap into a wind cooperative is not a completely unknown structure.

The New Zealand government has said in the past that they want to encourage public-private partnerships wherever possible in the New Zealand economy, and the community wind farm opportunity presents a good a chance as any. New Zealand farmers could take the lead with developer-led community wind farms as not only are they long term investments but they also provide electricity security which is becoming more essential on increasingly electricity hungry dairying farms. Security of electricity supply is under threat for many rural farming communities as by 2013 local lines companies do not have to provide for uneconomic lines. Without secure electricity supply farmers livelihoods are at stake and this should not only be of concern to farmers but to the farming cooperatives such as Fonterra. It is practical therefore that Fonterra, and others, should also have a strong interest in encouraging and supporting farmers to consider developing more local supplies of energy. To some extent this was conveyed by Fonterra Technical Manager Karl Rossiter “We are very open minded about creative solutions for our farming community and we want to support efficient, cleaner and renewable energy use, but until we see the economics of ventures such as SSW farms making returns as a business we cannot rightly invest in schemes that are unprofitable for our shareholders” (pers. comm. Rossiter, 2008). Farmers developing wind farms by themselves are unlikely to be profitable, however, with the planning and financial cooperation of an established wind farm developer, developer-led wind farms could become profitable venture for farmers in terms other than land-lease settlements.

A number of interviewees talked to during this research indicated that developer-led community wind farms are an idea that deserve further investigation. One concept which has been suggested and which could be facilitated in the present regulatory and economic situation is for developers to offer stock options in the output of wind farms to local people. This process still allows a financial connection of the local people to the wind farm without the arduous process of forming a company structure.

175 The inception of this financing process may be the most realistic for developers at the present time in light of legal and regulatory barriers.