About 100 homes and businesses in Kioloa and Bawley Point will soon be part of the state's first community microgrid.
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The homes have been equipped with subsidised solar panels or batteries as part of the project providing a reliable, stand-alone and renewable electricity supply while reducing the number of power outages.
The two communities were hard hit during the Black Summer bushfires, which cut power and communications to the towns.
However the microgrid is designed to allow the towns to power themselves independently during power outages, ensuring the resilience of their communities during storms and bushfires.
The grid is on track to be operating by the end of the year.
The $8 million community microgrid includes contributions from the state and federal governments' bushfire local economic recovery fund, along with Endeavour Energy and local residents.
It will act as a self-contained energy system, harnessing electricity from renewable sources like rooftop solar, home-based batteries, and a 3MW grid-connected battery, positioned between the two towns.
This configuration empowers the microgrid to operate autonomously during outages, forming an island of power for the community.
Endeavour Energy's chief executive officer, Guy Chalkley, said the microgrid would lead the way in making isolated communities more resilient while laying the foundation for future renewable energy solutions.
He said that the strategic location of Bawley Point and Kioloa on the edge of the Endeavour Energy network and prone to adverse weather events, made it the ideal candidate for the state's first community microgrid of its kind.
"These two towns, like many other rural and regional communities across Australia, are vulnerable to catastrophic weather events," Mr Chalkley said.
"The grid independence provided by this microgrid becomes essential for their survival and safeguarding our regional communities.
"What makes this microgrid the first of its kind is the customer centric and integrated approach to planning - we can call upon a customer's energy resources such as rooftop solar and batteries to add resilience to the network and the community's power supply."
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Mr Chalkley said the system "will serve as a blueprint for other communities, empowering them to embrace renewable energy and attain self-sufficiency during times of crisis."
State Member for South Coast, Liza Butler, commended Endeavour Energy for its collaboration with the local community over the past 18 months to establish the microgrid.
"Endeavour Energy has been on the ground in the region, working with the community every step of the way to develop the microgrid, and as a local resident who experienced the last devastating bushfires, I know first-hand the impact of being left without electricity," she said.
"This microgrid will be a huge success for the region, providing us with the renewable energy solutions we need to keep our communities resilient."
Federal Member for Gilmore, Fiona Phillips, said the microgrid would not only help support local people with the cost of living, but also provide relief and reassurance during emergency situations.
"We saw during the bushfires that energy reliability was a significant issue," she said.
"This microgrid will make our communities more resilient, better prepared for future disasters, and will also deliver significant environmental benefits."
Endeavour Energy is already exploring additional locations that could benefit from similar microgrid installations.