In an Australian first, a small renewable energy company has turned to crowdfunding to build a new solar farm in southern New South Wales.
On the day the Australian Energy Market Operator suspended the spot market amid soaring electricity costs, the Grong Grong solar farm, west of Wagga Wagga, launched its crowd-equity funding drive.
Investors can contribute as little as $250 to become a shareholder in Grong Grong Solar Farm, which will sell electricity to the power grid.
About 200 investors have already contributed $385,000, with the minimum target of $250,000 reached in just 80 minutes.
The finance model is widely used in the United States. Local company Komo Energy, who is running the drive, says it is a tangible way for people to contribute to the transition to renewable energy.
"I think a lot of everyday Australians are very interested in the transition of the Australian energy system to renewable energy, but feel like it's a bit limited how they can play a role," company director Jonathan Prendergast said.
Retired electrical engineer Chris Dahlitz lives in Narrandera, near the solar farm, and has invested $750 into the project.
"What appealed to me about it was the ability to invest at a small scale in solar," Mr Dahlitz said.
"A lot of people don't get that opportunity. They might be in rental accommodation or may not have a house suitable to rooftop solar, so the idea of a community-owned solar farm that people can invest in ticks a lot of boxes."
Grong Grong Solar Farm's offer document lists several risks in investing into the project, including: that the company is a single-project business; it may incur price increases; and its success relies on the market to be sustainable.
With larger power generators currently facing massive supply issues, the company hopes this project can help to counter those with small-time investors putting money into the project.
"You can put a very small amount of money in, but still have a stake. And if thousands of people all put in $250, then that's a substantial amount to be invested in these sorts of projects," Mr Dahlitz said.
The company has a $1.3 million grant for the project from the NSW government, but intends to raise a further $750,000 through crowdsourcing.
Similar models for community-owned solar projects are im use in Australia, with a number running as cooperatives.
"Cooperatives see individual investors invest various amounts, but it is one vote per shareholder," Mr Prendergast said.
"Crowdsourced finance is a bit different. It's relatively new legislation compared to co-ops, which are a different structure and quite old."
Crowdsourced finance for projects became possible in 2017 with a change 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 using institutional finance and large-scale bank loans, so this could create a new sector using crowdsourced finance," Mr Prendergast said.
Climate and energy program director at the Australia Institute Richie Merzian said the crowdsourcing model was promising for the broader energy sector, if it were to gain success.
"It's a clear sign to governments and businesses that there is a serious market for communities to invest directly in renewable projects.
"We've had a market failure when it comes to the national electricity grid.
"It really does help to see communities take action into their hands, even though they might not be in a position to change the rules around the national electricity market."
The Grong Grong Solar Farm company said it hoped the project could supply power to the grid as early as December.
