Community Energy: Achieving Australia’s Energy Transition
A moment of ambition and risk
The Australian Government has announced a new target to cut emissions by 62–70% below 2005 levels by 2035. Achieving this goal will depend heavily on the energy sector, which is expected to carry the lion’s share of the effort. Renewables already supply more than a third of Australia’s electricity, but the pace of rollout is falling short of what’s needed to stay on track for future targets.
The Australian Energy Market Operator (AEMO) has warned that transmission build-out is lagging; industry reporting confirms a sharp fall in large-scale renewable approvals since 2018. Connection queues are growing, and communities across the country have pushed back against new wind, solar and high-voltage transmission lines.
The social licence problem
Arguably, Australia’s renewables build out is being slowed not by technology, but by trust. Some research shows that most Australians support renewables in principle, but when projects land in people’s backyard, opposition can be significant. The Australian Energy Infrastructure Commissioner (AEIC) in their “Community Engagement” report observes that poor or absent engagement correlates with stronger local opposition, delays, and even legal challenges.
In Planning to engage the community on renewables: insights from community engagement plans of the Australian wind industry (Lansbury et al., 2020), an analysis of 32 wind farm engagement plans found increasing use of benefit-sharing practices, but also wide variation in how meaningful engagement is, and a gap between intention and actual practice.
NSW has established community funds for Renewable Energy Zones (REZs), and Victoria is proposing compensation for landholders near new lines. These are important steps, but some detail is still lacking, and more could be done to drive faster or more widespread uptake. Social licence shouldn’t be considered a secondary issue, it has become one of the most important determinants of whether Australia can build the infrastructure to meet its climate goals on time.
Community energy: a missing lever
Community energy refers to models where communities take a direct role in generation, storage, or energy sharing. This can take different forms, some include:
- Shared ownership: local residents or councils hold equity stakes in projects.
- Benefit-sharing: dedicated community funds, local bill reductions, or infrastructure upgrades.
- Participatory governance: communities co-design siting, design, and revenue distribution.
- Energy sharing: neighbours pooling solar, or accessing shared “solar gardens” or batteries.
In principle, these approaches can help align national ambition with local acceptance. They turn communities from passive consultees into active partners. Yet in Australia, such models appear relatively rare or small-scale (some exceptions include Hepburn Wind, Indigo Power, and the Haystacks Solar Garden).
What might be blocking community energy in Australia
Our research suggests that some of the barriers to greater uptake include:
No consistent enabling framework: Unlike the EU (which defines Renewable Energy Communities in law), Australia has no clear national policy framework giving communities rights to participate, share energy, or access markets on fair terms.
Uncertain financial pathways: Community projects cannot access dedicated development grants, low-cost loans, or tax reliefs. Scotland’s CARES program offers structured support, while Australian groups may not benefit from the same type of structured and long-term support.
Complex governance and legal structuring: Community groups often lack the legal templates, governance guidance, and risk-allocation models needed to negotiate shared ownership with developers - every deal is bespoke, adding cost and delay.
Voluntary, not mandatory, benefit-sharing: Current practice is guided in part by the Clean Energy Council’s Best Practice Charter, but there is no baseline requirement for developers to offer equity or revenue-sharing. By contrast, Denmark mandates a 20% local ownership offer for new wind farms.
Capacity and skills gaps in communities: Many local groups lack the technical, financial, and legal capacity to engage on equal terms with developers. Compressed consultation windows exacerbate the imbalance.
Retail and market design barriers: Community solar gardens, batteries, and peer-to-peer energy sharing face complex retail and tariff rules. Each project must negotiate bespoke retail contracts, undermining scalability.
Limited recognition in planning and approvals: Approvals frameworks don’t distinguish between developer-led and community-inclusive projects. There are no streamlined pathways or scoring uplifts for proposals embedding community ownership or benefit funds - so the system offers no incentive to go beyond the minimum.
Lessons from abroad
International practice shows these barriers can be overcome:
- Finance frameworks: Scotland’s Community and Renewable Energy Scheme (CARES), tax-relief schemes, and dedicated community benefit/share-ownership policies (e.g. UK Govt working paper Community benefits and shared ownership for low carbon infrastructure) offer examples.
- Legal rights: EU law (via RED II and IEMD) requires legal status for energy communities and rights including energy sharing, equal market access and governance structures.
- Mandatory/local ownership: Denmark has required developers to offer at least 20% ownership to local residents in new wind projects under its Renewable Energy Act 2008. Germany also saw wide co-operative ownership thanks to feed-in tariffs and favourable rules.
- Capacity support: At EU level the Citizen Energy Advisory Hub (CEAH) will provide one-stop support with technical, financial, and governance advice. The Citizen-led Renovation (CLR) initiative (concluding in 2025) has strengthened citizen participation in building renovation and energy efficiency, while the new LIFE EnerCOM project (launched in September 2024) is expanding support for innovative community energy models. Without support for communities to engage (technical, financial, governance capacity), sharing offers or mandates are less likely to succeed. As an example, Ricardo led the Rural Energy Community Advisory Hub (RECAH) to help rural communities develop renewable energy projects, complementing wider EU initiatives like CEAH, CLR and LIFE EnerCOM.
- Connection & planning reforms: EU/UK jurisdictions have simplified permitting/licensing for community energy groups; reduced regulatory burdens; and implemented priority grid access in some cases for small/community-led generation.
A call to action
The Australian Government’s new Net Zero Plan and sector strategies set out five national priorities: decarbonising the electricity system, electrifying wherever possible, switching to low-carbon fuels, driving innovation, and expanding carbon removals. Community energy is not explicitly named in these documents, yet it directly supports several of these pillars. By embedding shared ownership, participatory governance and local benefit-sharing into renewable projects, community energy can accelerate renewables deployment, build social licence for transmission, and make household and community-level electrification more affordable and inclusive.
For community energy to become more than niche, Australia needs to take a more active and supportive stance. Possible policy support and reform could include:
- A national enabling framework defining Renewable Energy Communities in law
- A finance stack: grants, loans, and tax relief to de-risk community equity
- Mandatory benefit-sharing baselines for renewables and transmission
- Priority connection and streamlined planning for projects with verified community participation
- Dedicated capacity-building for communities and First Nations partners
- Scaling REZ community funds into a standard national model
Australia’s climate targets and REZ rollout create the right conditions. The question now is how to make community energy a core enabler of the transition, not an afterthought.
International evidence shows it can accelerate deployment, reduce resistance, and strengthen social licence. But without the right frameworks, finance, and capacity, community energy in Australia could remain small scale and fragmented. With them, it can become a cornerstone of delivering on Australia’s 2035 and 2050 goals.
Ricardo’s work leading major initiatives on community energy and citizen-led energy renovation has shown how to embed participation into national systems through policy advice, advisory hubs, financial innovation, and citizen engagement. This experience demonstrates how structured frameworks and inclusive models can accelerate renewable uptake while building fairness and trust - lessons directly relevant to Australia’s transition.
To explore how these approaches could support your organisation or project, reach out to our experts for tailored advice and collaboration.