Denmark Community Wind Farm

Project Overview

Denmark Community Wind Farm will comprise two 800 kW wind turbine generators which will be
erected at Wilson Head, taking up about one hectare or 1% of a coastal reserve (Crown Land). It will
supply about 55% of the demand for electricity by Denmark homes and businesses and reduce
greenhouse gas emissions by the equivalent of taking around 1500 cars permanently off the road.
The wind farm will also generate funds that will stay in the community, create local employment
during construction, provide a model for other rural communities to follow, and it will have spinoff
benefits such as education, consultancies and tourism.

Project Funding

Federal and State government agencies have awarded grants totalling more than $450,000. These
include the federal Department of Transport and Regional Services, the Great Southern
Development Commission, the Great Southern Area Consultative Committee and the Sustainable
Energy Development Office.

An additional grant of $1.4 million was approved in October 2008 by the federal government, to
cover 50% of project capital costs.

The remaining 50% of capital costs will be sought through a public share offer.

Origins

Denmark township has been supplied with electricity from the state electricity grid for many
decades, generated by coal and gas-fired power stations more than 400kms away. Situated at the
end of a long transmission line, Denmark has experienced power quality and reliability issues,
including occasional extended blackouts in some areas. The need for a more reliable supply has
reached a critical level as population has grown and electricity usage has risen with increased use of
electrical appliances.

The Denmark Community Wind Farm project originated as a local response to the global challenge of
climate change. A clear direction for the local community to own and operate a renewable energy
facility was provided by community workshops in 2003. Skyfarming P/L, a Perth-based wind energy
consultancy, carried out initial modelling and presented this to a group of local residents keen to
reduce Denmark’s dependency on carbon-based electricity. Because WA’s south coast has strong,
consistent winds, it made good sense to consider a small-scale wind farm feeding into the grid. This
would help improve quality and reliability of electricity supply, reduce Denmark’s carbon footprint
and deliver environmental and social benefits to the region. Western Power, which is responsible for
maintaining energy infrastructure, considers the wind farm the centerpiece of its multimillion dollar
program to upgrade the local power network.
Site

As part of the project’s pre-feasibility study the whole shire was surveyed for potential sites. Using
criteria laid down by the Australian Wind Energy Association’s Best Practice Guidelines for
Implementing Energy Projects in Australia, and WA Planning Commission Guidelines, eight possible
sites were chosen for further investigation. Extensive assessment of these potential sites indicated
that Wilson Head, 11 km south of the Denmark township and facing the Southern Ocean, had
excellent wind resource and met criteria relating to environmental impact, noise, flicker, distance
from other residences, Native Title, proximity to existing infrastructure, land tenure, amenity and
other constraints.

A wind monitoring mast was then erected at Wilson Head and two years’ data collected. Results
indicated a site efficiency of >35% - similar to Albany and amongst the best in the world.

The Wilson Head site has proven to have a good wind resource (30% better than the next best site
investigated) and sufficient clear space. Turbines will be more than 3 km from permanent
residences, reducing visibility and noise, and a high-voltage power line already exists close to the
site, providing a major cost saving.

Major Project Priorities

Community Engagement and Support

In 2003 public workshops provided clear support for the local community to own and operate a
renewable energy facility, with wind technology seen as the most appropriate response. About 70
local residents attended three workshop sessions over a period of about seven months. These
community workshops determined the structure for ownership of the wind farm – a company
funded by the public purchase of shares. In addition a trust will be created, into which the company
will, and shareholders may, direct some or all of their profits. The trust’s assets will be used to help
finance local community projects such as dual-use paths, a public swimming pool, facilities for youth
and aged.

There were also a couple of public information sessions held and the local newspaper was used to
publish updates and press releases. Denmark Community Wind Inc. (DCW Inc.) management
committee of seven, plus ex officios, meets monthly and on an as-needs basis. Members are sent
occasional letters as progress is made on the wind farm.

In March 2005 DCW Inc. ran bus tours to the Albany wind farm, for Denmark residents to have a
close look at working turbines. The overwhelming comment was, “Aren’t they magnificent?” In
February 2009 a survey conducted in Denmark shire showed that 70% of residents supported the
wind farm project.

Although there is room to accommodate extra turbines on the rezoned site, the community will
decide in time whether it wants the project to build in extra power generation capacity to service
future population growth. Part of the project philosophy is to encourage people to reduce their
energy requirements. On the other hand a smaller wind farm would have reduced the margin for
success, as well as the return on investment and the reduction in greenhouse gas emissions, so the
proposed wind farm is considered an appropriate size for Denmark.

Government support

Government funds were obtained to undertake a feasibility study and DCW Inc. applied to rezone a
50 ha area for a wind farm. At the time local council did not support rezoning, but councils since
then have supported the endeavours of DCW Inc. The WA state government approved the rezoning
of 50 ha of reserve in November 2005. The project has environmental approval from the WA
Environmental Protection Authority and then federal Department of Environment and Heritage, and
is supported by all relevant state government agencies. As noted above, Federal funding has been
obtained for half the project capital costs.

Business model

GHD, a leading Perth civil engineering firm, completed the project’s feasibility study, which shows
the project to be technically feasible and financially viable.

DCW Inc. is a registered not-for-profit community group which started and initially managed the
project on behalf of its members and the broader community, through an elected committee of local
residents. The project is now owned and operated by Denmark Community Windfarm Ltd, a public
company limited by shares. DCW Inc. is not connected in any way but will hold shares in the
company, in recognition of the in-kind and cash inputs it has made over the past eight years.

This project “changed owners” because in WA a not-for-profit association cannot conduct a

commercial business that makes a profit and distribute that profit amongst it members. Because the
wind farm is a profitmaking venture offering financial rewards for shareholders, there was a need to
create a commercial entity that permitted public investment.

DCW Inc.’s constitution requires that the wind farm be owned and operated by the community. This
ensures that all Denmark residents will benefit – either directly, through holding shares, or
indirectly, through a community “future fund” which will provide financial assistance for community
projects. No single shareholder will be allowed to have a majority interest.

Challenges

The Denmark Community Wind Farm project has faced the usual challenges of maintaining
momentum, estimating costs and returns, and dealing with local council, and because this project is
a new concept in WA, the process has been complicated, expensive and breaking new ground in
several areas. As well, the coastal location has caused some disharmony within the community and
technical difficulties have been experienced relating to grid connection.
However, because the wind farm will be built on Crown land, by far the greatest hurdle has been
dealing with bureaucracy at all levels and at every turn. The DCW Inc. team feels it should have
anticipated this, but admits they were inexperienced, keen and energetic, none of which washed
with bureaucracy. The longest single hiatus was with their original (2006) federal funding application
which was held up for two years, a process which should have taken no longer than six months. As a
result the project went into hibernation until September 2010, when they were advised that they
had been awarded the grant (of $1.4 m) and they were only given two weeks to proceed with using
these funds.

As far as the remaining capital raising is concerned, there have already been pledges for most of the
money required before the public share offer expected in May 2011.

Environmental impact

Careful planning and design will minimise impact. The service road will be located low in the
landscape, out of sight; areas disturbed during construction will be rehabilitated; turbines will be
fitted into the natural contours of the landscape, minimising visibility.

The wind farm will not impact on the rare plant communities within the reserve.

The wind farm will be more than 1.5 km from nearest residences (caravan park) and 3 km from
permanent homes to minimise noise and visibility issues.

In response to concerns regarding bird deaths from turbines, DCW Inc. has pointed out that far more
birds are killed each day by vehicles, cats, aircraft, other birds, weather and natural attrition, as well
as by stationary objects such as high voltage pylons, radio towers and tall buildings, than by all the
wind farms in Australia added together. DCW Inc. also notes that entire species are disappearing
globally due to habitat loss and global warming from fossil fuel emissions.

Project Benefits

A business owned and operated collectively by the people of Denmark has clear benefits for the
local economy. Money currently goes out of the community in the form of $1m each year on
electricity, but keeping some of that money in the local economy will benefit local families and
businesses.

Environmental benefits include preventing 7,000 tonnes of carbon dioxide and associated pollutants
from entering the atmosphere each year. Everyone in Denmark, shareholder or not, will have direct
access to their own source of clean, green energy.

Wind turbines will produce about 55% of Denmark’s electricity needs, employ local and regional
contractors on up to 40% of the total project cost, and create a new tourism attraction. (Nearby
Albany Wind Farm is a major tourist attraction, with on-site interpretive signs, walking track and
public facilities).
The wind farm will increase community cooperation, through having a shared goal, will be a great
educational tool, and will improve reliability of the local power supply. It will continue to remind
people of Denmark’s positive commitment to the environment and a sustainable future.

Next steps

Negotiations have started in relation to a Power Purchase Agreement, an access agreement should
be in place by May-June, with electrical design, roadworks, etc. after that.

The remaining half of required capital for construction, installation and operation will be sought
from the public from mid-May, and as already noted, most of it has already been pledged. When
sufficient finance has been acquired, turbines will be ordered and headworks can commence –
construction of access and installing infrastructure.

The funding agreement requires that the wind farm is up and operating by April 2012, a very tight
deadline, due mainly to the abovementioned funding hiatus. However, DCW thinks this is achievable
and is determined to meet that deadline.

Denmark’s community wind farm will play a major role in solving Denmark’s historic energy
problems. It may also become the beating heart of an exciting energy storage project currently being
investigated by Western Power, to overcome transmission losses and balance load variation when
the wind isn’t blowing.

Sources:

DCW website: www.dcw.org.au

Craig Chappelle – DCW Convenor

Elizabeth Gardiner

April 2011