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With recent legislation aiming to reduce Australia’s carbon emissions by 43% in the next 8 years, there’s no better time for renewable energy solutions. Launching a startup in the renewable energy sector is more than just potential to earn a profit, but also, a sustainable and ethical contribution.
In this article, we’ll take a look at what it means to launch a startup in Australia’s renewable energy sector as well as some legal requirements you may need to consider. Keep reading to learn more!
Renewable Energy Startups Australia
Clean energy solutions are progressing in Australia and the public has largely demonstrated an interest in greener solutions.
According to the Clean Energy Council of Australia, 32.5% of the energy generated in 2021 was renewable. This was more than any other year, providing an optimistic outlook for the future of clean energy for Australians.
In addition, the Australian Renewable Energy Agency (ARENA) gave almost half a million dollars in funding to entrepreneurs working in the renewable energy sector. This highlights the need for more renewable energy solutions in Australia’s future.
There is obviously clear interest and growth in the renewable energy sector. Already established renewable energy companies like Brighte, Redback Technologies and Amber Electric have found their niche and established a successful enterprise.
We’ve found that when people think of renewable energy, they often think of solar panels and windmills on a field. Solar panels and windmills are an important part of the renewable energy sector, however, there is so much more to it than that.
Renewable energy occupations can range from architecture, marketing, engineering, consulting, farming, mechanics and so much more. If you’re thinking of getting involved, it’s better to take a look at your strengths and see which part of the industry you can contribute to.
Renewable energy itself is rather multifaceted and this is reflected in the different types of renewable energy startups.
Types Of Energy Startups Australia
Renewable energy solutions are not all identical. Therefore, different aspects of renewable energy are more effective in certain areas. As a result, it’s important to have a range of renewable energy specialisations.
We’ve listed a few classes of renewable energy startups that can be found in Australia.
Hydrogen Startups Australia
Hydrogen startups use water along with other elements to power energy. There’s been a push for more hydrogen production, with Australia teaming up with Germany to fund projects that use hydrogen as an energy source.
Solar Energy Startups
Solar energy startups are where the heat and energy from the sun is converted to produce power. It’s not uncommon to see solar energy panels on homes, where residents are able to collect solar energy in order to reduce their electricity bill.
Solar energy is something electricity companies commonly offer alongside their usual services, even if they are not entirely a renewable energy company.
Green Energy Startups
Green energy uses infinite sources such as the air, sun and water to produce energy that does not pollute the earth. We’ve mentioned hydrogen and solar energy startups, another kind of startup that would fall into the category of green energy is wind energy.
This is a form of energy that uses the kinetic energy generated from the movement of the wind to produce a more sustainable form of energy.
Clean Energy Startups
Clean energy startups focus on generating energy without releasing any greenhouse gas emissions or only emitting a small amount. This may sound similar to green energy, but it’s important to remember they are distinct from one another.
Even though both aim to ensure their methods don’t release carbon emissions into the air, only green energy startups use the natural resources available to them. Clean energy on the other hand, doesn’t necessarily use wind, water or sunlight.
For example, nuclear power can be a form of clean energy.Therefore, while green energy is clean energy, not all types of clean energy can be considered green.
Energy Storage Startups
Energy storage startups retain energy that is produced in order for it to be used when there is actually a demand for it. As a result, energy that is being produced isn’t going to waste when there is no need for it.
It often uses a chemical process or a hydro powdered apparatus to achieve this. As renewable energy increases in use across Australia so will the need for effective energy storage.
How To Start A Renewable Energy Startup
Now that we’ve had an overview of renewable energy in Australia, it’s time to think about launching your own renewable energy startup.
We’ve compiled a list of some of the main considerations you will need to take into account when getting your renewable energy business started.
Choose A Business Structure For Your Renewable Energy Startup
Deciding on a business structure is one of the most fundamental commitments you will make when setting up your venture. The business structure will impact your business’ registration process, operations, taxes and even the regulations it will need to follow.
Carefully choose a business structure based on what your business’ goals are as well as what currently suits your individual circumstances. The most common types of business structures are:
- Sole Trader
- Company
- Trust
Each of these structures have different requirements and liability limitations. For example, a sole trader structure will have unlimited liability, whereas a company structure will have limited liability and therefore greater protection.
Before you decide on a structure, you need to assess the level of risk that your business activities will have so you can decide which structure is most appropriate for your renewable energy startup.
It is possible to change your business structure. For example, your business can start off as a sole trader (individually owned business) and later on become a company as you begin to see more growth.
If you need more guidance regarding your options, it’s best to talk to a legal professional.
Register Your Renewable Energy Startup
Once you’ve thought about how you will structure your business, it’s time to register your business.
All Australian businesses need to attain an Australian Business Number (ABN). You can get an ABN upon registering your business, which can be done online. Once you have filled out the relevant details and paid the compulsory fee, your application will be processed. If it’s approved, you should receive an email containing your 11 digit ABN.
If you are registering a company, then you will need to undergo the additional step of getting an Australian Company Number (ACN).
Additionally, the taxes you apply for will depend on your business structure, industry and organisation so ensure you have all this sorted upon registering your business.
Get Funding For Your Startup
You’ve likely heard the famous quote by Plautus, “you must spend money to earn money”. This may not always ring true, but it can certainly be applied in business scenarios.
To grow your business, you will need funds. There are multiple ways to get funding for your startup, and what you decide to do really depends on your individual circumstances.
Methods to secure money for your startup can include:
- Bootstrapping: This refers to using your own money to launch the business- it can be attractive as there’s no debt involved, however, it can put your personal finances at risk
- Getting a loan: You can also go to a bank or private lender for a loan. Be mindful of any terms and interest rates that could potentially work against you in the future
- Capital raising: Getting investors to place their resources into a business in exchange for shares in the company is a common way for businesses to raise funds
- Crowdfunding: Crowdfunding refers to the act of pitching your idea to the public and if they like it, they can donate to your startup to help launch it
- Grants: It can be competitive, however, you can always research and apply for grants. They can be government funded or even corporate grants – either way, it is great to keep an eye out for them.
Legal Documents For A Renewable Energy Startup
There are a number of legal documents you will need to look into getting for your startup. Having the right legal documents in place can help protect your business, so be sure to have them properly drafted by a legal professional.
We’ve compiled a list of some of the legal documents you might want to consider getting below.
Employment Contracts
If you plan on hiring people to help run your business, then it’s crucial to have an Employment Agreement in place. This will help everyone understand their role and resolve any potential disputes.
Employment contracts often include:
- Pay
- Leave
- Entitlements
- A description of the role
- Duties and responsibilities
- Conflict resolution
- Termination
Employment Contracts can also include clauses to minimise competition, such as Non-Compete Clauses. This way, you can further protect and secure your business practices and trade secrets.
Terms and Conditions
Terms and Conditions set out certain rules that users should abide by when they engage with your business.
There might be certain conduct or behaviours that are deemed inappropriate which can possibly cause distress to other customers or employees.
When terms and conditions are in place, people that are using your business are able to understand their duties and obligations. If they ever violate it, you possess the authority to take whatever action is necessary.
Terms and conditions can also aid in limiting your liability for things that go wrong when customers engage with your business.
Privacy Policy
If your renewable energy business is going to be online, then you might need to look into getting a Privacy Policy.
Generally, a Privacy Policy is needed for businesses that have an annual turnover of more than $3 million. However, if your startup earns less than that but collects any kind of personal information from people that visit the website, a Privacy Policy is required.
This is in accordance with the Privacy Act 1988 and the Australian Privacy Principles.
Generally, a Privacy Policy should inform users that you will be collecting their personal information, and should also disclose things like:
- How is the information being collected?
- Where is the information being stored?
- How can they access their personal information?
- What rights do they have regarding that personal information?
- Is the information being given or disclosed to a third party?
Protect My Startup’s IP
It’s crucial to secure your business’ intellectual property (IP) as it will likely play an important role in your business operations and even public identity.
IP is a broad term which is essentially any intangible asset created by the business. Therefore, your logos, trade secrets, designs or any kind of original work can all be considered the business’ intellectual property.
These forms of IP are often essential to the business’ brand and position in the market. So, one of your first considerations here is how you can protect your business’ IP.
It’s important to secure this either by registering it with IP Australia or by inserting certain clauses in your legal documents. This could include Confidentiality Clauses to protect inside information or Non-Disclosure Agreements to prevent trade secrets from falling into the wrong hands.
Beware Of Greenwashing
Greenwashing occurs when businesses claim to be more sustainable and environmentally friendly than they actually are. Not only is greenwashing extremely deceiving, but it’s also a violation of the Australian Consumer Law (ACL).
Businesses have a number of obligations under the ACL if they are advertising to individuals and small businesses. So, if this sounds like your startup, make sure you understand how it works.
If your startup is accused of greenwashing, it can lead to an investigation by the Australian Competition and Consumer Commission (ACCC). If the allegations are true, then you could face legal consequences.
In order to avoid greenwashing, it’s extremely important to be as transparent as possible with your customers. Don’t claim something does not release carbon sessions when it actually does release some emissions.
Avoid misleading consumers about where a product’s materials were sourced or how it was made. Consumers use this information to inform their decisions and rely on your representations before making a purchase.
The ACL is designed to protect consumers from unfair advertising or trading practices. For example, you should also ensure that your legal documents do not contain unfair contract terms, as this also carries legal consequences.
Key Takeaways
Renewable energy is a large field with great potential. Establishing a startup in this field could be very rewarding, however, it’s important to go about it the right way so your business can be legally compliant and protected at every step.
To summarise what we’ve discussed:
- Renewable energy is a growing industry in Australia with a lot of different aspects to it
- If you thinking of running a renewable energy startup, decide on a business structure then get your business registered
- Organise funding for your startup
- Get the correct legal documents in place
- Look into protecting your IP
- Be active in avoiding greenwashing through transparency and honesty
Need A Startup Lawyer?
Running a startup is a unique experience and sometimes, it’s easier to talk to someone that specialises specifically with startups as opposed to other types of businesses.
At Sprintlaw, our legal team works with startups everyday. From the registration of a business to discussing compliance requirements, we’re happy to help you out.
If you would like a consultation on launching a startup in the Australian renewable energy sector, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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