Author: Sara Howard
Contributors: Liz Hamilton, Prem Panickar, Alicia Webb
Securing government funding can make all the difference in the early stages of your project. In this article we look at potential funding opportunities, and how to build your business case to local, state or federal government organisations.
The funding for your community energy project will come from a combination of capital, debt and grants. If you can secure government grants or funding, you'll have a better chance of proving the project’s feasibility to investors and the bank. It’s also the least expensive form of funding available – no interest payments, and no money tied up in dividends.
Funding opportunities
It's important to search for grants that apply to the various community benefits your project will bring. Rather than applying only for renewable energy grants, search for grants in the areas of:
- Renewable energy
- Education
- Capacity-building
- Regional resilience
- Employment
Types of government funding
Government funding initiatives and departments change frequently, so the following is a guide only. To find out more about grant requirements and application deadlines, visit the relevant government department website.
Local government
Local councils are taking a keen interest in sustainable initiatives, and also want to encourage local business development and growth. They may receive funding from state and federal agencies, which they can direct towards the feasibility stages of your project.
Local council involvement may also help with the planning and permits process, and with encouraging local community support. It's a good idea to discuss potential grants with your local council.
State government
Each state government will have grants programs under their various departments. It's generally a good idea to start by finding a directory of the state departments, and then searching the applicable ones for grants programs.
Every state government has a department responsible for the environment and/or climate change, and it's worth searching for specific government agencies dedicated to education, economic development, and communities.
Federal government
Various federal government departments have initiatives to assist in the uptake of renewable energy generation technologies. There is also a central grant searching service called Grant Connect.
How do you get government funding?
Start by researching the funding programs available in your local area and state. Make a note of the requirements and deadlines, and stick to them.
Ask other government agencies for advice – for example, your state's small business advisory department (see the Legal and Financial Responsibilities article). They may be able to recommend the best people to talk to in the relevant environmental departments, as well as contacts to help you with planning and permits.
Government bodies look for as much information as a bank or investor would, so prepare your business case and make sure you include all your preliminary assessment data. You need to prove your project is economically feasible and your choice of energy resource makes sense. You should also be prepared for questions, such as:
- Is the project too close to other similar projects? Concentration can be an issue
- What's the delivery timeframe?
- How does the community feel about the project?
- Who else is funding the project, including private developers, equity or bank loans?
- Will it create local employment and investment?
- Will it help the government meet its renewable energy targets?
For Hepburn Wind Farm in Daylesford, Victoria, the early funding provided by Sustainability Victoria (SV) was crucial.
To calculate the amount it was willing to invest in the project, SV worked backwards. It decided how much money was needed to make the project attractive to investors, so the project could go ahead. This ended up being $1 million, or around 8% of the total capital requirements. In fact, it was more than the Hepburn Wind team had hoped for.
Tips for winning government grants
Answer the questions. This can be harder than you think when you're immersed in your project. Ask someone to read your proposal, to check it's clear, succinct and easy to understand.
Keep it simple
- Don’t go into too much technical detail.
- Keep it as brief as possible within the framework of the grant requirements.
Use pictures
- Grant applications often have a word limit, but that doesn’t include diagrams.
- Plus, a diagram is a great way to explain how your project works.
Prove your case
- Grant assessors need to know who's behind the project, and that they have the skills and expertise to make it work.
- You may also need to prove access to a certain level of funding, such as a line of credit, loan agreement, or shareholder commitments.
Show the figures
- Use your financial model and cash flow projection to demonstrate the commercial viability of your project.
Be prepared to offer something in return
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Government grants are not always ‘free’ money. In return, they may look for a seat on your board, a commitment to a local community fund, or contributions to local training and employment.
- They may want to use you as a case study, which could require extra work documenting your processes.
Triple the benefits
Government grant assessors are interested in economic, environmental and social benefits, so discuss all of these.
- Economic benefits: Keeping revenue from energy creation and RECs in the local economy, creating local employment and reducing dependence on fossil fuels.
- Environmental benefits: Reducing greenhouse gas emissions and pollution related illness, no waste issues, low water consumption, and increased local awareness of energy use and impact.
- Social benefits: Building community pride and identity, local employment and skills development, and allowing rural landowners an alternative source of income.
More information
Government funding initiatives and departments change frequently, so please put in opportunities in the comments field.