Cowra renewables project put on hold

The Regional Investment Activation Fund (RIAF) was opened by the former Perrottet Coalition government in October 2022 but paused six months later before any grants had been offered, in the whole-of-government expenditure review ordered by the Minns government.

It was shelved in September and was subject to a parliamentary inquiry.

The closure of the fund has frozen a $26.8m biomass project in the regional town of Cowra, which applied for a $4.9m grant in February 2023.

The project was pitched as the largest regional anaerobic co-digestion facility in the country, using biodigesters to turn agricultural and processing waste into renewable gas and fertiliser.

Construction on stage one of the Clean Cowra project, a 4MW digestor, was scheduled to begin this year, and be in operation by 2025.

"We were due to get underway in July last year [but] were only advised in late September that the program had been discontinued," Clean Cowra co-founder Dylan Gower said.

Mr Gower said government grants were an essential part of retaining community ownership over the project. Without them, they will have to seek capital from private investors and larger corporations, who would take a controlling stake.

"The principle of Clean Cowra is creating opportunities for local distributed energy: producing energy locally, supporting business industry and providing cheaper forms of energy," he said. "If we hand this over to other stakeholders, the community loses that opportunity."

Cowra mayor, Ruth Fagan, said council remained "very supportive" of the project.

"It's a very exciting project for us," she said. "It would help a lot of our industries ... We would really like the project to continue."

But Cr Fagan said the council would not be able to step in to provide the missing funding. "As far as offering any cash incentives, it's a bit difficult as they've become a commercial operation, but we can support them in other ways."

Clean Cowra signed a memorandum of understanding with gas supplier Jemena in the 2022-23 financial year to explore the injection of renewable gas into the Cowra network. The gas company could use biogas generated by the project to manufacture biomethane, which is compatible with existing gas infrastructure and appliances.

Mr Gower said they had increased the size of the project on the back of conversations with Jemena in the hopes of supplying the town of 12,000 people with locally produced renewable gas.

"Jemena requested if we go to a larger scale, we would then meet 100% of Cowra's gas needs, which is ideal," Mr Gower said. "That meant a bigger project, more capital investment and more significant benefits for the project."

A spokesperson for Jemena said they could not comment on the specifics of the project. But they added that biomethane had the potential to meet all of the energy needs of their residential customer base in NSW, with enough biomass projects.

A spokesperson for the Department of Regional NSW said both the minister's office and the department had been in contact with Clean Cowra to assist in identifying new opportunities for the future of the project. They said the NSW government had created a new $350m Regional Development Trust, which will "strategically set out to back projects that communities say they need".

"The Department has been actively working with RIAF applicants to provide support in identifying and leveraging alternative federal and state funding programs," the spokesperson said.

Mr Gower said organising the MoUs, energy supply agreements and land use agreements that underpinned the original funding application took two years, and all agreements would have to be renegotiated to fit the application requirements for any alternative funds.

"We don't know whether that type of project will be under the same criteria or if we'll have to scale it back," he said.

"If we are going to decarbonise the energy space and the agriculture space, there's no time to waste."