News

Introduction

In Australia, there is an increasing interest in renewable energy microgrids due to their ability to provide remote areas with a more reliable energy supply. In 2024, there were about twenty microgrid feasibility projects. Some microgrids are operating, such as Kalbarri Microgrid, the largest remote microgrid in Australia, serving the local community. The Agnew Hybrid Renewable Microgrid, located in Leinster, Western Australia, which has a larger energy capacity than the Kalbarri microgrid, provides electricity to a gold mine. 

Australia’s land area is vast at 7.7 million km2. But its electricity grid infrastructure is concentrated on the East Coast. The East Coast national electricity grid does not connect communities all over the country. Towns located at the fringe of the energy grid and smaller remote towns rely on standalone distributed electricity grids (1). People and businesses in outback Australia face many challenges; one of them is the lack of a stable and reliable electricity supply. For example, Thargomindah, a rural Queensland town with 200 residents, experienced 20 unplanned outages between December 2023 and February 2024. One way to improve the energy reliability for remote and regional communities is to invest in microgrids that can bring economic, social and environmental benefits.

What are microgrids?

Microgrids are small-scale, self-sufficient energy systems powered by renewable sources such as solar and wind, commonly combined with battery storage and backup diesel generators. According to Simon Wright, a Senior Research Fellow in Energy and Circularity at Charles Sturt University, and his colleagues’ research, the Australian microgrid market is still nascent and experimental, especially in regional and remote areas. Most projects are in the feasibility or early implementation stage. They are underpinned by government programs such as the Regional and Remote Communities Reliability Fund (RRCRF) (2) and the ARENA Regional Microgrids Program (3), among others. Solar farms are the dominant energy source, often paired with batteries and occasionally with pumped hydro or hydrogen (diesel is still considered for backup, especially in off-grid remote communities). 

These microgrids are often seen as a costly solution facing regulatory, management and social barriers, among others. Researchers from the Institute of Sustainable Futures at the University of Technology Sydney found that the main obstacles to microgrid projects in Australia were related to:

• policy and regulatory framework, 
• business models and a lack of transparency over revenues and costs, 
• maintaining sustained levels of community engagement, and 
• bridging the gap between feasibility and implementation. 

Microgrids bring potential benefits to the community, such as improved energy stability and reliability of local energy supply (so power is maintained during energy outages due to the length of powerline susceptible to storm damages and other natural disasters); economic development via reducing energy costs and supports local jobs and skills; energy grid support; reduced pollution and lower carbon emissions due to the replacement of diesel generation with clean energy.

Feasibility study of microgrid in Southwest Queensland

A client engaged Adept Economics to evaluate financial metrics and economic contributions of a microgrid project located in SW Queensland (a Queensland outback town, approximately 1,000 km west of Brisbane). The analysis revealed the community will benefit in several ways.

• Customer savings on power bills: Households and businesses in the town will directly benefit from lower energy tariffs compared to Ergon’s retail rates. The client is considering charging less for electricity, which translates into thousands of dollars in annual savings for local consumers.
• Reduced diesel consumption: Currently, electricity in town relies heavily on diesel generation, particularly by some larger industrial users. The microgrid will replace a significant amount of diesel per year with solar and battery power. This shift delivers annual fuel cost savings while also cutting greenhouse gas emissions.
• Lower government subsidies: Under Queensland’s Uniform Tariff Policy, the state government subsidises electricity in remote areas so consumers pay the same rates as in South East Queensland. By reducing the cost of supply, the microgrid could potentially cut the required Community Service Obligation (CSO) subsidy, saving the government money over the project’s time horizon.
• Improved power reliability: Remote communities face frequent outages, averaging 20 hours per year for that region. The microgrid will provide a more reliable power supply through its renewable and battery-backed system. This translates to greater productivity for businesses and improved quality of life for residents.

The evaluated business case shows that microgrids can deliver tangible savings, improved reliability, and environmental benefits for remote and regional communities. They can reduce dependence on diesel fuel, decrease government subsidies, and provide more resilient power during extreme weather conditions. When both financial and social benefits are considered, microgrids can represent a net gain for communities. Microgrids are not just an engineering solution — they are an economic opportunity. They can strengthen local economies and align with climate and energy policy goals.