Nambucca Shire Council: Renewable Energy Action Plan
Nambucca Shire Council Renewable Energy Action Plan Submitted by 100% Renewables Pty Ltd
Date: 08 April 2019
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Contents
1 EXECUTIVE SUMMARY FOR NAMBUCCA SHIRE COUNCIL...... 4
1.1 SHORT TERM REAP ...... 4 1.2 MEDIUM TERM REAP ...... 5 1.3 LONG TERM REAP...... 7 1.4 SUGGESTED RENEWABLE ENERGY AND CARBON EMISSIONS TARGETS ...... 8 2 BACKGROUND ...... 10
2.1 METHODOLOGY ...... 11 3 CONTEXT FOR ACTION BY NSC ON RENEWABLE ENERGY ...... 12
3.1 GLOBAL CONTEXT ...... 12 3.2 NATIONAL CONTEXT ...... 13 3.2.1 Energy management ...... 13 3.3 NSW STATE CONTEXT ...... 14 3.3.1 Energy management ...... 15 3.4 REGIONAL TRENDS – MID-NORTH AND NORTH COAST OF NSW...... 16 3.5 LOCAL TRENDS – WHAT IS OCCURRING IN NAMBUCCA SHIRE? ...... 17 3.6 NAMBUCCA SHIRE COUNCIL – WHAT HAS COUNCIL BEEN DOING? ...... 18 3.7 SUMMARY...... 19 4 NSC’S STATIONARY ENERGY BASELINE...... 20
4.1 COUNCIL’S OPERATING ASSETS ...... 20 4.2 COUNCIL’S OWNED LAND ...... 20 4.3 BASELINE ELECTRICITY USE...... 21 5 NSC’S EFFICIENCY AND RENEWABLE ENERGY OPTIONS...... 23
5.1 APPROACH TO EVALUATING EFFICIENCY AND RENEWABLE ENERGY OPTIONS...... 23 5.1.1 Omitted technologies ...... 23 5.2 ENERGY EFFICIENCY...... 25 5.2.1 Short term energy efficiency action plan...... 26 5.2.2 Medium term energy efficiency action plan...... 26 5.2.3 Long term energy efficiency action plan ...... 26 5.3 ONSITE RENEWABLE ENERGY...... 32 5.3.1 Short term onsite renewable energy action plan ...... 34 5.3.2 Medium term onsite renewable energy action plan ...... 36 5.3.3 Long term onsite renewable energy action plan ...... 38 5.4 OFFSITE RENEWABLE ENERGY ...... 41 5.4.1 Council-owned land...... 41 5.4.2 Purchased renewable energy ...... 43 5.4.3 Recommended offsite renewable energy action plan for NSC ...... 43
6 GOVERNANCE OF NSC’S RENEWABLE ENERGY ACTION PLAN...... 45
6.1 RESOURCING REQUIREMENTS...... 45 6.2 PROJECT POST-IMPLEMENTATION MONITORING...... 45 6.3 PROGRAM REVIEW PROCESSES ...... 45 7 FUNDING OF NSC’S RENEWABLE ENERGY ACTION PLAN...... 46
7.1 SUMMARY OF OPTIONS AND HIERARCHY...... 46 7.2 WHY IS A FINANCING PLAN NECESSARY?...... 47
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7.3 ATTRIBUTES, PROS AND CONS OF VARIOUS FINANCING OPTIONS...... 47 7.4 RECOMMENDED APPROACH TO DEVELOP A FINANCING PLAN FOR COUNCIL ...... 48 APPENDIX A: LIST OF NSC SITES...... 49
LIST OF LARGE SITES (>100 MWH PER YEAR ELECTRICITY CONSUMPTION) ...... 49 LIST OF SMALL SITES ...... 49 APPENDIX B: SITE VISIT OBSERVATIONS...... 53 APPENDIX C: SOLAR PV FEASIBILITY ASSESSMENT ...... 58 APPENDIX D: MID-SCALE RENEWABLES AND PPA MARKET ...... 84
ELECTRICITY AND LGC MARKET FACTORS ...... 84 Wholesale market trends and futures pricing ...... 84 The LRET and its influence on the business case ...... 86 Potential impact on TRC ...... 87 CONNECTION AND POTENTIAL RESTRICTIONS ...... 88 VIRTUAL PPAS AND CONTRACTS FOR DIFFERENCE...... 88 OFFTAKE PRICING ...... 89 CONTRACT DURATION AND FLEXIBILITY...... 89 COST-BENEFIT OUTCOMES FOR SIMILAR COUNCIL PROJECT EVALUATIONS...... 90 SSROC ...... 90 Build/EPC v PPA assessments ...... 91 ENERGY MARKET DISRUPTION...... 91 LACK OF RETAIL COMPETITION AND TAKE UP...... 92 APPENDIX E: REAP FINANCING GUIDE...... 93
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1 Executive Summary for Nambucca Shire Council This report presents a Renewable Energy Action Plan (REAP) for Nambucca Shire Council, outlining a Plan for Council to implement cost-effective actions that will reduce its reliance on grid electricity and increase the amount of rooftop or onsite solar supplying its energy demand.
The REAP responds to Council’s 2027 Community Strategic Plan (Strategy 1.1 - Nambucca Shire Council will provide Community leadership in sustainable energy use), Council’s August 2018 commitment to develop a renewable energy plan and targets, and Council’s commitments under its Cities Power Partnership (CPP) membership.
The scope of the REAP at this time includes Council’s stationary energy consumption which includes electricity. Viable energy saving and emissions reduction options for passenger vehicles and heavy fleet are emerging, and future revisions of the REAP should include fleet, and should develop electrification / fuel switching plans and targets. At this time the REAP does not include emissions from landfill gas.
Local Governments across Australia provide leadership in renewable energy adoption and climate action. Nambucca Shire Council is among more than 15 local councils in NSW who have made ambitious renewable energy and carbon reduction commitments. Commitments are underpinned by actions, and Council has implemented a range of energy efficiency and renewable energy measures in its facilities in recent years, as well as in facilities that are occupied and used by community groups.
The Nambucca Shire itself is also leading the way and lies in the top quarter of NSW councils in terms of the uptake of solar by its residents.
This REAP is therefore a continuation of Council’s current approach, and can see grid energy demand fall in coming years through further efficiency and onsite solar PV measures. Below are presented:
Recommended short-term action plan, Recommended medium-term action plan, Recommended long-term action plan, and Suggested renewable energy and carbon emissions targets
1.1 Short term REAP Nambucca Shire Council’s short-term REAP is based around on-site measures that are cost-effective and that will reduce energy demand as well as increase onsite renewable energy. The following sections of this report describe all proposed actions as well as their costs, energy and cost savings and return on investment. Council’s energy demand will be reduced by:
1. Street lighting – local roads have recently been upgraded to LED technology at a cost of over $350,000, with an expected payback of under 4.5 years, and energy savings of almost 350 MWh per year, 12% of Council’s electricity use, 2. Building lighting – both the Macksville offices and the Macksville library and seniors centre use fluorescent lighting that can be cost-effectively upgraded to LED technology. Costs of under $22,000 will yield annual savings of more than $9,500 and nearly 32 MWh in electricity savings, 3. Council should ensure that energy efficiency and renewable energy (where applicable) are part of all processes whereby Council replaces or implements new energy equipment. This should include end-of-life asset replacements (such as pumps, air conditioning plant, parks and
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sporting field lighting), sustainable procurement policies (when buying new office equipment and appliances for example), and building design to meet or exceed energy efficiency requirements, 4. Onsite solar PV – implement 78 kW of solar PV at six sites, generating 110 MWh of renewable energy with 83 consumed on Council sites and up to 27 MWh per year exported (which can later be stored for use on site). Capital costs of under $100,000 will yield cost savings of up to $24,000 annually. Allowing for expenses the simple payback for these systems will be 4.5 to 5.6 years. Recommended sites include:
Site Size Capex Administration Office, 44 Princess St Macksville 49.80 kW $59,760 Works Depot, River Street, Macksville 4.95 kW $6,683 Library, Princess Street, Macksville 12.20 kW $14,640 Macksville Senior Citizens Building 2.20 kW $2,640 Bowraville Dam, Bobo Road, Bowraville 4.48 kW $6,720 Entertainment Centre, Ridge Street, Nambucca Heads 4.13 kW $4,956 All short-term opportunities 77.76 kW $95,399
5. Offsite renewable energy – a renewable energy power purchase agreement represents the best approach to sourcing large-scale clean energy for Council’s facilities. The market for renewable energy PPAs is rapidly emerging and maturing, and in the short term it is recommended that Council focus on knowledge / information acquisition, engagement with renewable energy market experts and other councils with similar ambitions for renewables, and planning for future procurement of renewables via its normal electricity procurement processes.
The total direct investment in energy efficiency and renewables is estimated to be $475,000 with much of this already spent in street lighting LED upgrades. Additional marginal costs will be incurred as Council’s policies and processes ensure that efficient energy technologies are procured when required. Cost savings exceed $113,000 annually, giving a payback of around 4.5 years.
The impact in energy use terms is estimated to be grid energy reduction of 464 MWh with a further 27 MWh of solar energy exported. This represents 16% of Council’s electricity use.
1.2 Medium term REAP Nambucca Shire Council’s medium-term REAP is based around a continuation of on-site measures that are cost-effective and that will reduce energy demand as well as increase onsite renewable energy, as well as the sourcing of a fraction of Council’s electricity demand from offsite renewables.
1. Building lighting – Council can continue to upgrade its building lighting with LED technology, with the Macksville depot, Nambucca emergency management and entertainment centre / library highlighted as potentially cost-effective sites. Costs of under $20,000 are expected to
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deliver cost savings of $5,000 annually as well as maintenance savings, and energy savings of 16 MWh annually, 2. Onsite solar PV – a number of sites have potential for solar PV, with nearly 80 kW of solar expected to generate 132 MWh of electricity, with 106 MWh self-consumed. Annual cost savings of nearly $22,000 are forecast, with a payback after expenses of 6.1 to 7.5 years. Declining costs for solar panels may make these paybacks improve, and Council should review the expected costs and savings as appropriate, 3. Macksville aquatic centre solar PV – this asset is owned by Council but leased to a third party. An additional 66 kW of solar PV can be implemented at this site to increase its renewable energy consumption (heat pumps and solar water heating are already in use),
Recommended sites include:
Site Size Capex Mahogany Road Nambucca Heads STP 30.10 kW $45,150 Unit 1, River Street, Macksville (STP) 19.80 kW $29,700 Sewerage Works Scotts Head 5.12 kW $7,680 Nambucca Emergency Mgt, River St, Macksville 4.95 kW $6,683 Treatment Works, River Street, Bowraville 9.90 kW $13,365 Entertainment Centre, Ridge Street, Nambucca Heads 4.19 kW $5,028 New Waste Disposal Plant, Old Coast Road 3.30 kW $4,455 Visitor Information Centre, Nambucca Heads 2.20 kW $2,970 All medium opportunities 79.56 kW $115,031 Aquatic centre, Macksville 65.88 kW $81,362
4. Council should continue to ensure that energy efficiency and renewable energy (where applicable) are part of all processes whereby Council replaces or implements new energy equipment. This should include end-of-life asset replacements, sustainable procurement policies, and building design to meet or exceed energy efficiency requirements, 5. Offsite renewable energy – a renewable energy power purchase agreement (PPA) should be targeted in the medium term, seeking to source at least 25% of Council’s electricity from offsite renewable energy. An underpinning premise for this action is that renewables can be sourced at the same or less cost than ‘standard’ power via Council’s normal procurement process.
The total direct investment in energy efficiency and renewables is estimated to be $135,000 by Council, and a further $81,000 by the aquatic centre if their solar PV project is to proceed. Additional marginal costs will be incurred as Council’s policies and processes ensure that efficient energy technologies are procured when required. Cost savings exceed $41,000 annually including the aquatic centre. As noted a key premise of buying renewables under a PPA is that no additional costs to Council result.
The impact on energy is estimated to be grid energy reduction of 122 MWh from efficiency and onsite solar (with a further 26 MWh of solar energy exported). A 25% renewable energy PPA, accounting for savings from efficiency and onsite solar, will be 600 MWh per year. This gives a total of 721 MWh of energy savings and renewables from medium-term measures, 24% of Council’s energy use.
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1.3 Long term REAP Nambucca Shire Council’s long-term REAP is based around a continuation of on-site measures that are cost-effective and that will reduce energy demand as well as increase onsite renewable energy, as well as the sourcing of a higher fraction of Council’s electricity demand from offsite renewables.
1. Street lighting – main road LED street lights will be available for implementation by Council’s next bulk street lighting upgrade (est 2023). This will lead to an estimated additional energy saving of 212 MWh per year, and is likely to be available at a payback of 5 years. For this REAP a cost of $300,000 is estimated, 2. Onsite solar PV – additional opportunities to install 108 kW of solar PV and save a further 178 MWh per year are estimated from site inspections and solar modelling, in some cases expanding existing or short and medium-term recommended systems. The payback for these opportunities is currently more than 9 years driven in part by high export (104 MWh), but is likely to improve as solar and battery costs decline. Cost savings are currently estimated to be $20,000 per year. The business cases for long-term opportunities should be reviewed and opportunities progressively implemented as this improves. Recommended opportunities include:
Solar PV Additions Size Capex Mahogany Road Nambucca Heads STP 39.70 kW $59,550 Unit 1, River Street, Macksville (STP) 19.90 kW $29,850 Sewerage Works Scotts Head 10.28 kW $15,420 Works Depot, River Street, Macksville 12.95 kW $17,483 Macksville Senior Citizens Building 1.93 kW $2,316 Bowraville Dam, Bobo Road, Bowraville 10.92 kW $16,380 Nambucca Emergency Management, River St, Macksville 7.15 kW $9,653 New Waste Disposal Plant, Old Coast Road 4.70 kW $6,345 All long-term opportunities 107.53 kW $156,997
3. Council should continue to ensure that energy efficiency and renewable energy (where applicable) are part of all processes whereby Council replaces or implements new energy equipment. This should include end-of-life asset replacements, sustainable procurement policies, and building design to meet or exceed energy efficiency requirements, 4. Offsite renewable energy – in the long term Council should seek to increase its level of renewable energy purchased via PPA. Many councils have set themselves 100% renewable energy targets based on an expectation that larger PPAs will underpin the achievement of this at similar or lower cost than ‘standard’ grid purchasing. A cautious approach could see, say a 50% PPA objective set for the long term, with a plan to revise this target and re-set based on future market developments.
The total direct investment in energy efficiency and renewables is estimated to be >$456,000 by Council. Additional marginal costs will be incurred as Council’s policies and processes ensure that efficient energy technologies are procured when required. Grid energy savings of 286 MWh are forecast, rising to 396 MWh per year as exported solar energy is stored and consumed on Council’s sites. Cost savings exceed $80,000 annually. As noted long term costs and benefits should be reviewed
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periodically as solar and storage costs change. As noted a key premise of buying renewables under a PPA is that no additional costs to Council result.
The impact on energy is estimated to be grid energy reduction of 396 MWh from efficiency and onsite solar. A 50% renewable energy PPA, accounting for savings from efficiency and onsite solar plus battery storage for all exported renewables, will be close to 1,000 MWh per year. This would see nearly two thirds of current energy demand met with energy efficiency and renewable energy.
1.4 Suggested renewable energy and carbon emissions targets Targets for the REAP are limited to Council’s electricity demand at this time, and should be reviewed in future to consider transport energy and possibly landfill (and other) greenhouse gas emissions.
Summarising the above short, medium and long term recommended plans, the following targets are suggested. Potential savings from Council’s sustainable procurement, design and asset upgrade opportunities are not included, but could potentially exceed an additional 200 MWh per year over the long term.
REAP period Timeframe (est) Energy savings Onsite solar Offsite (est., excl savings (self- renewable sustainable consumption) energy PPA procurement, new design) Short term 2019-20 to 2020-21 382 MWh 83 MWh 0 MWh Medium term 2021-22 to 2022-23 16 MWh 106 MWh 600 MWh Long term 2023-24 to 2029-30 212 MWh 74 MWh + 157 400 MWh MWh from energy storage of all export Total MWh 610 MWh 420 MWh 1,000 MWh Adjusted grid 2,961 MWh 2,351 MWh 1,931 MWh 931 MWh electricity (MWh) % renewables 18% 42%
This suggests that Nambucca Shire Council should consider the following renewable energy and carbon reduction targets:
Renewable energy o 60% renewable energy target under pinned by 18% from onsite measures in the long term (including battery energy storage), and by at least 42% from renewable energy PPAs (50% PPA after onsite measures). This target is flexible, and analysis of the market for purchasing renewables may allow Council to lift this target towards 100% renewables in the long term. o A medium term renewable energy target of 30% is suggested by the potential opportunities, underpinned by cost-effective onsite solar PV (excluding storage) and an initial renewable energy PPA for 25% of Council’s grid electricity.
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Carbon emissions o In the long term – drawing on the above suggested targets – Nambucca Shire Council’s grid electricity consumption could be 931 MWh per year. Ignoring ‘greening’ of the grid which will augment abatement, this suggests a target of 69%, say 70% compared with 2017-18 emissions from electricity. This target could be flexible and would be larger if Council seeks to increase the fraction of its supply from renewables from PPAs. o A medium term carbon emissions savings target of 40% is estimated with the implementation of all short and medium term opportunities. If main road LED streetlights were implemented within the medium timeframe (or the medium timeframe extended to 2025) then this target could feasibly be increased to around 50%.
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2 Background 100% Renewables was engaged by Nambucca Shire Council to prepare a Renewable Energy Action Plan (REAP) to enable Council to transition to 100% renewable stationary energy over time. Council’s requirement for the development of the REAP has arisen as follows:
1. 2017: Council’s 2027 Community Strategic Plan is “Our Community will be a safe healthy place to live where everyone is valued”. i. Part of Strategy 1.1 to achieve this is “Sustainable Energy Use – Nambucca Shire Council will provide Community leadership in sustainable energy use”. 2. August 2017: Nambucca Shire Council established a Clean Energy Committee. 3. August 2018: the Committee recommended that Council formulate a Renewable Energy Action Plan, including a renewable energy target and an emissions reduction target, a recommendation which Council adopted. 4. 2018: NSC joined the Cities Power Partnership (CPP) with the following five pledges: i. Installing renewable energy (solar PV) on council buildings and setting targets to increase the level of renewable power for council operations over time. ii. Investigating using unused council-managed land for renewable energy, for example landfills, and road reserves. iii. Rolling out energy efficient lighting (particularly street lighting) across the Shire. iv. Providing EV charging infrastructure at key locations in the shire for electric vehicles. v. Implementing an educational program to encourage local residents and businesses within the Shire to drive the shift to renewable energy, energy efficiency and sustainable transport. This will be a regional goal, carried out in partnership with Bellingen Shire Council and Coffs Harbour City Council, subject to their agreement, through the Our Living Coast partnership.
The scope of the REAP at this stage is stationary energy (electricity and gas) only, for Council’s operational assets. Street lighting is mainly excluded as it is being part-upgraded to LED technology, though the potential benefits of this partial upgrade and subsequent main road lighting upgrade are noted for completeness. This project’s phases and deliverables are:
1. Review Council’s stationary energy use and related GHG emissions, as well as relevant information about Council’s buildings/assets, energy agreements, past and planned renewable energy and other sustainable energy initiatives. 2. Carry out inspections at Council’s energy using sites – focused on larger energy users but also sites that are representative of all of Council’s facilities. Inspect Council-owned land that may be suitable for say a future solar farm. Consult with Council staff and the Clean Energy Committee to solicit their input and ideas on renewable energy opportunities. 3. Prepare a draft Renewable Energy Action Plan for review by key staff and the committee, and present the draft REAP to Council. The draft REAP includes recommended priorities for short, medium and long-term actions to achieve 100% renewable energy that are accompanied by estimated costs and benefits, recommended financing strategies, recommended timeframes to achieve 100% renewables, and recommended GHG emission reduction targets. 4. Provide specific recommendations for implementation of feasible and cost-effective actions in the 2018-19 financial year. 5. Delivery of a final Renewable Energy Action Plan to Council, incorporating comments and edits provided by staff, the Clean Energy Committee and Council.
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2.1 Methodology 100% Renewables approach to the development of a 100% renewable energy (stationary electricity) for Nambucca Shire Council followed the project’s phases as outlined above. A key to the approach taken is that Council should look to reduce its energy and carbon footprint wherever feasible and cost- effective, so that the amount of energy that has to be sourced from renewables is reduced, with associated cost reductions. Following energy efficiency, the focus has been on the implementation of on-site renewables (including future opportunities that involve battery energy storage). Offsite renewable energy generation, whether sourced from a Council-owned solar farm or via Council’s energy sourcing strategy, are the third step in the method employed.
The diagram below illustrates the staged approach undertaken.
FIGURE 1- APPROACH TO ASSESSMENT OF NSC’S 100% RENEWABLES PATHWAY
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3 Context for action by NSC on renewable energy 3.1 Global context To address climate change, signatory countries adopted the Paris Agreement at the COP21 in Paris on 12 December 2015. The Agreement entered into force less than a year later. In the agreement, signatory countries agreed to work to limit global temperature rise to well below 2 degrees Celsius, and given the grave risks, to strive for 1.5 degrees Celsius1.
FIGURE 2: KEY ASPECTS OF THE PARIS CLIMATE AGREEMENT2 In October 2018 in Korea, governments approved the wording of a special report on limiting global warming to 1.5°C. The report indicates that achieving this would require rapid, far-reaching and unprecedented changes in all aspects of society. With clear benefits to people and natural ecosystems, limiting global warming to 1.5°C compared to 2°C could go hand in hand with ensuring a more sustainable and equitable society3.
1 Sourced from https://www.un.org/sustainabledevelopment/climatechange/ 2 Sourced from https://www.connect4climate.org/infographics/paris-agreement-turning-point-climate-solution 3 Sourced from https://www.ipcc.ch/news_and_events/pr_181008_P48_spm.shtml
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3.2 National context At a national level, Australia’s response to the Paris Agreement has been to set a goal for GHG emissions of 5% below 2000 levels by 2020 and GHG emissions that are 26% to 28% below 2005 levels by 2030. A major policy that currently underpins this is the Renewable Energy Target (RET). This commits Australia to source 20% of its electricity (33,000 GWh p.a., estimated to equate to a real 23% of electricity) from eligible renewable energy sources by 2020. The scheme runs to 2030. These two key targets are illustrated below.
FIGURE 3: AUSTRALIA’S RENEWABLE ENERGY AND CARBON GOALS An added scheme underpinning Australia’s national targets is the Emissions Reduction Fund (ERF). This fund provides incentives to businesses, farmers, landfill operators, landholders and others to reduce GHG emissions. Projects are funded on an auction basis with proponents bidding for the lowest cost (incentives) required to abate GHG emissions. To date, six auctions have been held with the most recent being in December 2017.
A proposed new policy initiative, the National Energy Guarantee (NEG) was developed during 2017 and 2018, and was aimed at ensuring reliability of supply at afforable costs to consumers while providing a pathway for emissions reduction to meet Australia’s electricity sector targets. Following recent political uncertainty this policy has been discontinued and there are currently no significant announced measures beyond the RET and the ERF.
3.2.1 Energy management As well as the RET the Commonwealth works to improve energy efficiency in collaboration with the States and Territories via the Council of Australian Governments (COAG). Major initiatives that are led by the Commonwealth and which can have impacts on energy use by NSC include:
The Equipment Energy Efficiency (E3) program, through which Australian jurisdictions (and New Zealand) collaborate to deliver nationally consistent mandated energy efficiency standards and energy labelling for equipment and appliances. Procurement policies and practices that routinely ensure that high star-rated appliances (motors, air conditioning units, kitchen appliances) are selected when replacing or buying new equipment will help Council’s energy footprint decline over time.
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Periodic review and update of the National Construction Code as it relates to efficiency (Section J). This section is currently undergoing a review, with proposed changes likely to come into effect in mid-2019. Both residential and commercial building changes will be targeted. The commercial building changes are aiming via increased stringency requirements to target savings in buildings of 23-53%. Among other measures the changes will target improvement via improved consideration of on-site renewable energy such as solar PV 4 . Any building upgrades or new facilities may need to comply with these requirements after mid-2019. Support for voluntary / market-based schemes such as Green Star and NABERS, and the implementation of the mandatory Commercial Building Disclosure (CBD) program. The CBD Program is a regulatory program that requires energy efficiency information to be provided in most cases when commercial office space of 1000 square metres or more is offered for sale or lease. The CBD Program requires most sellers and lessors of office space of 1000 square metres or more to have an up-to-date Building Energy Efficiency Certificate (BEEC), which includes a NABERS certificate and a CBD Tenancy Lighting Assessment (TLA) for the area of the building that is being sold, leased or subleased (http://cbd.gov.au/get-and-use-a-rating/what-is-a- beec).
At a national level, the Commonwealth is also a periodic provider of programs, funds and incentives aimed at helping governments, homes and businesses become more energy efficient.
3.3 NSW State context The NSW Climate Change Policy Framework5 outlines the State’s target of reaching net-zero emissions by 2050. This is an aspirational objective and helps to set expectations about future GHG emissions pathways to help others to plan and act. The current policy framework will be reviewed in 2020.
Through the Government’s Climate Change Fund (CCF) 2018-2022 Strategic Plan a number of initiatives will be progressed in the next four year period with a total funding allocation of $170 million. Implementation of programs is being led by the Division of Energy, Water and Portfolio Strategy (DEWPS) within the Department of Planning and Environment. The five major initiatives to be developed include:
1. supporting regional community energy projects and community energy hubs to give communities more control, avoid costly infrastructure upgrades and reduce rural energy costs. 2. supporting feasibility studies and commercialisation of emerging energy projects including pumped hydro generation and utility scale batteries, with potential co-funding from the Australian Renewable Energy Agency, to bring forward private sector investment to support the next generation of energy and storage projects in NSW. 3. providing small incentives to coordinate assets such as home and electric vehicle storage to beat energy peaks and provide household demand response to the grid, as highlighted by AEMO and the NSW Energy Security Taskforce as a key priority for system security. 4. supporting energy storage in state-owned sites, such as schools, to lower peak demand and potentially attract investment in local manufacturing.
4 http://www.abcb.gov.au/Connect/Articles/2017/03/09/Section-J-Overhaul-big-changes-are-coming-your-way 5 http://www.environment.nsw.gov.au/topics/climate-change/policy-framework
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5. increasing the energy savings for eligible recipients of the Low-Income Household Rebate by allowing them to opt out of the rebate and install a solar system on their roof. This would add solar capacity to the gird and more than double the energy savings for the households involved.
The NSW Renewable Energy Action plan has helped to drive the growth of renewables in the State through its three key goals:
Goal 1 – Attract renewable energy investment Goal 2 – Build community support, including the establishment of the Renewable Energy Advocate Goal 3 – Attract and grow renewable energy expertise
3.3.1 Energy management The NSW Government runs a number of initiatives aimed at promoting and increasing the uptake of energy efficiency and sustainable practices. Many of these initiatives are led by the NSW Department of Planning and Environment, and by the Office of Environment and Heritage within this Department. Initiatives that help local governments include:
Sustainability Advantage program, which helps local governments commit to, plan, implement and be recognised for sustainability practices in their operations and supply chains Energy Savings Scheme – information and resources that help organisations get access to financial incentives by implementing verifiable energy savings initiatives, such as building retrofits, plant upgrades and lighting upgrades to LED In 2018 the government completed a panel of renewable energy Power Purchase Agreement (PPA) providers, which local governments can access to implement onsite solar PV solutions. The advantage of an onsite PPA is that the solar PV can be installed and deliver cost savings from renewables at no upfront cost. However, cost savings are not as great compared to paying for a solar PV system using your own capital. This initiative is useful where access to capital is not available or is limited. Community renewable energy guides and resources e.g. http://c4ce.net.au/. A wide range of tools, guides, case studies, training courses and other materials is available to businesses through OEH, covering a wide range of sectors, technology types and energy forms Environmental Upgrade Agreements (EUA), which can help organisations and participating Councils overcome some traditional barriers to implementing and benefitting from environmental upgrades Clean Energy for Business – a program that ran in 2017 and helped businesses and local governments plan for a net-zero / 100% renewable energy future. Case studies from this program will help other organisations plan similar clean energy pathways.
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3.4 Regional trends – Mid-North and North Coast of NSW The mid-north and north coast councils of NSW provide national leadership on renewables through local action. Notable examples include:
Lismore City Council has a goal to self-generate 100% of its electricity needs from renewables by 2023, and a plan to achieve this was adopted by Council in 2014. Coffs Harbour City Council has a goal to source 100% of electricity from renewables by 2030, with interim targets for 2020 and 2025, and a 50% GHG emissions reduction target by 2025. The Renewable Energy and Emissions Reduction Plan was adopted by Council in 2015. Byron Shire is aiming to reach a “net zero emissions” target, and Byron Bay Council is a signatory to the Global Compact of Mayors. Uralla is aiming to be a zero net energy town (ZNET), through the use of energy efficiency, renewables and storage. A 7-10 timeframe was anticipated for the ZNET target to be achieved when the project was announced in 2014. Tweed Shire Council has set a goal to meet 50% renewables for its operations by 2025 and recently committed to more than 1,300 kWp of solar installations through 2019. Tyalgum is aiming to be a 100% renewable energy town and to potentially be ‘off-grid’, possibly by 2020.
These and other commitments are illustrated below, clearly highlighting the leadership position occupied by local governments in the mid-north and north coast of NSW.
FIGURE 4: NSW LOCAL COUNCILS AND COMMUNITIES – AMBITIOUS RE AND GHG GOALS
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3.5 Local trends – what is occurring in Nambucca Shire? Nambucca Local Government Area is one of Australia’s leading LGAs in terms of the uptake of solar hot water and solar PV systems. According to data sourced from the Australian Photovoltaic Institute (APVI), NSC LGA has:
2,541 PV installations, a 27.5% penetration rate, at April 2019, with almost 8.4 MW of installed capacity. Refer to the APVI map with NSC LGA details highlighted below. 62 installations over 10 kW and less than 100 kW, and 2,477 installations of less than 10 kW.
FIGURE 5: NAMBUCCA SHIRE LGA SOLAR PV INSTALLATIONS, APRIL 2019
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3.6 Nambucca Shire Council – what has council been doing? Nambucca Shire Council has implemented a number of initiatives to reduce energy demand and cost, primarily focused on energy efficiency. It is often the case that this is done as ‘business-as-usual’. Examples, supplied by Council and observed from site visits, include:
90 lamps, or 6.5% of the street lighting network is 46W compact fluorescent lighting, Major water pumps at the Bowraville headworks are controlled with soft starters and are scheduled to not run during Peak periods to avoid costly charges, Major blowers and pumps at large wastewater treatment sites, as well as large sewer pump stations, are variable speed controlled, meaning that the energy consumption is matched to the pumping and aeration task. This is typically 10-30% more energy efficient than throttling or other forms of flow control, Lighting efficiencies have included retrofitting Macksville’s administration building with single- tube fittings with reflectors, solar lights in Dawkins Park, and LED lighting recently installed at the Pool (3rd party leased), Council’s Administration Building in Macksville has a solar hot water system, The Macksville Memorial Aquatic Centre has used both solar hot water and heat pumps to provide pool heating. Quotations have been sought in recent months for new solar hot water as well as solar PV for this facility In 2014, 5 Solar hot water systems were installed at various Council facilities – two at E J Biffin Fields, Centenary Parade/Fred Brain Avenue, Nambucca Heads, two at Macksville Playing Fields, Cooper Street, Macksville and one at Hennessey Tape Oval, Coronation Street, Bowraville, Council’s Community centre and gallery next to the Library in Nambucca Heads has a small solar PV system installed, The Council Car Park at Ferry Street, Macksville, has a solar light, Gumma Reserve, a primitive camping area, has solar power to provide lighting to the amenities block and to operate the on-site sewage management system, Conversion of mains powered public lighting at the V-Wall in Nambucca Heads to 95 solar bollards with additional solar lights to be installed in future, Nambucca Shire Council was one of the first councils in Australia to install a suite of Bigbelly bins
Council has also supported community organisations to install solar systems, including:
The Nambucca Community and Arts Centre (NCAC) installed a 5kW solar PV system on the roof of their hall in February 2016, A 2 kW solar PV system was installed on the Missabotti Community Hall in 2015 with Council funding support
Further initiatives are planned including solar lights/bollards at a few locations, and potentially incorporation of solar PV within the design for an outdoor education space in Dawkins Park and solar power for the recirculation pump in the lake in the park.
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3.7 Summary There is clear precedent at all levels, from global to local, for organisations to set and implement ambitious renewable energy goals. Within the Nambucca Shire there is evidence that the community has embraced the opportunities available in recent years to make solar part of their energy supply. In coming years many of these same people will likely embrace energy storage technologies as a way of protecting the investment and the benefits they have gained from solar, and expanding their solar PV systems to further reduce costs and potentially power electric vehicles.
Council itself has implemented a range of energy efficiency and renewable energy projects and is evaluating more. Given this context, the focus of the work was directed at determining what options are available to Council to further improve energy efficiency and develop renewable energy, to reduce Council’s energy/GHG footprint. Given the context and the opportunities, Council will be better informed and in a position to determine:
1. What is its vision and targets for renewable energy supply of Council’s operating assets in the long term, and for reductions in greenhouse gas emissions? 2. What does Council anticipate can be achieved in the short, medium and long term, and where the focus should be in these periods?
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4 NSC’s stationary energy baseline 4.1 Council’s operating assets Nambucca Shire Council has approximately 41 active building electricity accounts, 2 public street lighting accounts, and 67 water & sewer services accounts. Some sites have more than one account, so the total number of active sites is less than the 110 accounts. The number of active sites and accounts changes from time to time for a number of reasons, such as new sites being developed (e.g. new residential developments requiring water & sewer services), sites being leased to third parties (such as the aquatic centre), or sites being sold / divested.
Past trends in consumption of electricity have been reported on, with reductions in building energy use being more than offset by increases in energy use for water and wastewater treatment. Specifically, major reductions in reported building energy use include leasing of the aquatic centre to a third party, and reduction in energy use by the Macksville office by around 40%. Increased scale and treatment processes at large plants such as the Mahogany Road works have underpinned changes in water & sewer energy use.
Overall, the period from 2006 to 2018 has seen a modest 3% reduction in electricity use or almost 100 MWh. Against this the level of services provided in particular via water and wastewater systems has increased substantially.
The sites owned by Council vary widely by function and energy demand.
7 water treatment and pumping (raw and treated) and wastewater treatment sites, consume 60% Council’s electricity that is not public street lighting and 44% of overall electricity. Conversely 57 water and sewer pumping stations consume just 19% of Council’s electricity use. Buildings vary from public facilities such as community centres and libraries, to public amenities and BBQs, to parks and ovals, to essential services such as Rural Fire Service and SES facilities, to Council operations facilities such as depots and administration buildings. Of these the administration building in Macksville is the only significant user of electricity. 4.2 Council’s owned land There has been increased interest in recent years by land owners in the potential for land to be used to develop renewable energy systems. This has included a number of local councils who see the potential for locally-developed solar farms to meet some of their energy needs and to potentially enable their communities to participate in ownership of renewable energy assets.
Council’s community and operational lands are mapped on its geographic information system (GIS). Community land such as parks, sporting fields, nature reserves, and Crown lands, are unlikely to be suited to this use. Similarly operational land may include land earmarked for future residential or industrial development, or active quarry sites, and these are also unlikely to be suited for renewable energy development.
Sites that other councils have assessed for solar farms – and in some cases developed – include wastewater treatment land, landfill sites, airports and dams. Nambucca Shire Council does not own an airport, but does have several wastewater treatment sites, a dam, and a landfill with capped and operating sections. Council also owns grazing land in Bowraville. The potential suitability of these sites is discussed further below in the context of future solar generation assets.
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4.3 Baseline electricity use Nambucca Shire Council’s sites consumed 2,961.4 MWh in the 2017-18 financial year. Water and sewer assets dominate consumption (64%) followed by street lighting (26%). Buildings are a small user.
FIGURE 6- NSC’S ENERGY BREAKUP BY ASSET CATEGORY Site visits and data analysis were used to develop estimates of end use of energy at both a category and technology level as shown below.
FIGURE 7- NSC’S ENERGY END USE BY EQUIPMENT TYPE
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This analysis demonstrates that electric motors associated with water and wastewater pumping, and street lighting, are the major energy end uses in NSC. In buildings there is a more disaggregated consumption profile with lighting and air conditioning being the major energy users.
We can look at energy at a sub-category level as well within each major category, as shown below.
Asset Categories Annual Electricity kWh Annual Usage % Water and Sewerage 1,887,795 kWh 63.75% Water Treatment 691,042 kWh 23.33% Sewerage Treatment 620,496 kWh 20.95% Water / Sewer Pumping 548,730 kWh 18.53% Waste 15,709 kWh 0.53% NA 11,818 kWh 0.40% Street Lighting 779,366 kWh 26.32% Public Lighting 779,366 kWh 26.32% Buildings 294,241 kWh 9.94% Office 117,908 kWh 3.98% Community 54,914 kWh 1.85% Depot 29,822 kWh 1.01% SES 23,610 kWh 0.80% Park / Oval 18,894 kWh 0.64% Waste 11,437 kWh 0.39% Public Lighting 11,143 kWh 0.38% Amenities 7,722 kWh 0.26% Fire 6,674 kWh 0.23% Water / Sewer Pumping 4,297 kWh 0.15% Unknown 4,163 kWh 0.14% NA 3,655 kWh 0.12% Grand Total 2,961,401 kWh 100.00%
This provides a base against which opportunities for energy eficiency and solar PV were assessed.
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5 NSC’s efficiency and renewable energy options 5.1 Approach to evaluating efficiency and renewable energy options The following were assessed for each of these categories:
Reduce energy demand through energy efficiency: o Street lighting (being progressed by NSC, savings reported here) o Building lighting o Building HVAC/BMS o Building power o Motor systems Renewable energy o Solar PV onsite . Battery energy storage o Solar PV mid-scale on Council-owned land o Solar hot water o Purchased renewable energy or RECs (LGCs)
Options were evaluated based on the following attributes:
1. Locations or sites where options are applicable, 2. Capacity for grid energy reduction, 3. Cost-benefit including identification of incentives, 4. Recommended timing (short, medium, long term), 5. Suitable approaches to implementation, 6. Identified risks / barriers
A summary of site visits to NSC facilities that was used to identify potential energy saving opportunities is provided in Appendix B.
5.1.1 Omitted technologies A range of renewable energy technologies were not evaluated in this work as they are not viable for the NSC LGA or are most likely to be commercialised through implementation in more suitable locations in coming years. These include:
Onshore and offshore wind energy generation Bioenergy/biofuel energy generation Marine energy generation technologies Geothermal energy technologies (other than ground-source heat pumps) Micro-hydro, mini-hydro or hydroelectric power schemes Concentrated solar thermal power generation
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Energy Efficiency Options
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5.2 Energy efficiency Site visits and data analysis were used to identify sites that are most likely to be suitable to improve energy efficiency. The summary below highlights the main findings from all sites visited and opportunities assessed.
Street lighting energy savings are significant, likely to be more than 560,000 kWh per year across both residential and main roads. Residential roads are to be upgraded in early 2019, and main road LEDs are expected to be available by Council’s next bulk upgrade cycle, likely in 2023. The main energy savings opportunities in buildings are in upgrading lighting systems to LED technology, which can be done as a retrofit program at several facilities cost-effectively, including Macksville Administration, Macksville Library, Macksville Senior Citizens, Macksville Depot, Nambucca Emergency Management Centre, Nambucca Library and Entertainment Centre. At sporting grounds lighting for both amenities and fields tend to have low annual operating hours. Hence it is generally cost-effective to upgrade these at end of life or when sporting grounds are being upgraded. There is an increasing trend towards LED technology for sporting fields as this can offer more flexible user control, lower costs to sporting clubs/Council, and improved lighting levels to support both training and competition games. Many small community facilities, rural fire service buildings, amenities blocks and sporting ovals do not warrant a retrofit program to install LED lighting owing to either high cost (LED floodlights) or low utilisation. However, a policy of implementing LED on fail or end of life is sensible and should be implemented. The Macksville administration building air conditioning plant is past the end of its nominal life and could be replaced, giving an excellent opportunity to select best practice technology. It is noted that replacement for energy savings alone is not justified. Most building air conditioning systems are split systems, and Council’s sustainable procurement should seek to ensure that high efficiency replacement units are purchased as required. Water and sewer pumping accounts for a large part of Council’s energy demand (18.5%) but offers low scope for energy saving. Much of the savings potential lies in VSD-controlled pumps, typically in larger sewer pump stations, and Council has taken up some of these opportunities. Retrofitting tends not to be cost-effective, and it is common for VSDs to be installed when pumps and switchboards are upgraded, typically at 10-15 year intervals. Major water and sewer treatment plants consume 44% of Council’s electricity. Major aerators and pumps in treatment works are usually VSD controlled, and systems such as UV treatment operate as required. Major water pumps operate during Shoulder and Offpeak times only, and are OFF during Peak demand charge periods, saving cost. The major pumps are soft-start controlled, and there may be an opportunity to upgrade these to VSD control, likely when pumps are replaced or rebuilt.
The suggested action plan for energy efficiency is outlined below.
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5.2.1 Short term energy efficiency action plan Site Description Cost Savings Savings Payback in Yr1 Years Administration Office, Upgrade $13,200 21,000 kWh $5,670 2.33 Years Macksville lighting to LED Macksville Library and Upgrade $8,400 10,800 kWh $3,929 2.14 Years Senior Citizens facilities lighting to LED Street lighting Upgrade to LED $357,6206 349,489 kWh ~$80,0007 4.47 Years - residential
5.2.2 Medium term energy efficiency action plan Site Description Cost Savings Savings Payback in Yr1 Years Macksville depot Upgrade lighting $7,500 7,000 kWh $2,149 3.49 Years to LED Nambucca emergency Upgrade lighting $4,500 5,000 kWh $1,430 3.15 Years management centre to LED Nambucca Library and Upgrade lighting $7,700 3,500 kWh $1,273 6.05 Years entertainment centre to LED
5.2.3 Long term energy efficiency action plan Site Description Cost Savings Savings Payback in Yr1 Years Street lighting Upgrade to LED $300,0008 211,948 kWh $60,000 5.00 Years - main roads
Site Description Savings Waste transfer station Assess potential to use electric rather than compressed 4,000 kWh Old Coast Road air-driven pumps. Administration Office, Replace HVAC system with energy efficient system, with 25,200 kWh Macksville cost estimates of $120,000. 50% savings in split system AC for the server room and 35% saving in the main HVAC system are expected, giving a 17.6 year payback.
6 This was the quoted figure for 1,126 luminaires. The final figure will be slightly different as some decorative lamps will not be upgraded. 7 Earlier savings estimates (2018) will change with changes to SLUOS for the next regulatory period. This effectively reduces savings for an LED upgrade but does reduce SLUOS charges outside of this business case, providing a further cost saving to Council. The savings estimated here are mostly electricity consumption savings, with a smaller estimate for SLUOS. Notwithstanding the changes the payback for the local road LED lighting upgrade is excellent. 8 Capital cost for main road LEDs is an estimate only. Approved lights will be available in the next year or so, and costs by the time of Council’s next bulk upgrade may be lower than the cost of the initial bulk quantities and lamps.
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Bowraville headworks Implement VSD control of major water pumps at the 80,000 kWh time these are next upgraded. Lighting at all sites Upgrade lighting to LED at end of life. Typically marginal 50,000 kWh costs will be paid for within 5 years. HVAC at all sites Upgrade with high-COP split units. Typically marginal 25,000 kWh costs will be paid for within 5 years. Appliances and office Purchase efficient appliances and office equipment. 30,000 kWh equipment at all sites Typically marginal costs will be paid for within 5 years. Motor systems at large Upgrade with VSD control at upgrade / rebuild. Typically sites marginal costs will be paid for within 5 years.
Much of the long-term potential for energy efficiency is in ensuring that new and upgraded equipment is energy efficient, applied to new facilities, and to both major capital upgrades and purchases of smaller energy-using equipment.
ImprovingOpportunities efficiency arise to make during step change end- of improvements-life equipment in energy replacement efficiency of capital intensive equipment when it reaches the end of its serviceable life and needs to be replaced. Examples include HVAC systems, park & oval lighting and major pumping systems.
Ordinarily there is not a financial business case for replacing this equipment while it is still serviceable, as the capital cost for replacement equipment usually far outweighs the annual cost savings that can result. However, if being replaced anyway then spending additional capital on an energy efficient solution can see significant savings achieved and a rapid payback on this marginal cost.
Nambucca Shire Council will have a number of opportunities for efficiency gains in this manner over time. The following opportunities are noted:
Public park lighting: LED lighting is gradually emerging as the default technology here. As parks are upgraded this will emerge as the preferred technology, integrated with controls where feasible/practical. Sporting oval lighting: some councils have started to select LED as the default technology for new sporting oval lighting (e.g. Oxley Oval in Port Macquarie Hastings Council, Strathfield Park synthetic turf field), and more suppliers of both LED and traditional sporting oval lighting technologies are giving equal prominence to both solutions. Ovals have relatively few operating hours so the technology cost and warranties need to more closely match those for existing technologies to make a compelling case for change to LED. A cost estimate of $120,000 has been estimated to upgrade the HVAC system at Macksville Administration offices including new split units for the server room and upgrade of the main system. Energy savings are likely to be around 25,000 kWh per year with an energy efficient solution (~50% saving for the server room and 35% for the main system), giving a payback of 17.64 years. Given the age of the plant there will likely also be maintenance savings achieved with an upgraded system. With a 25+ year life it is worthwhile spending a premium to ensure the most efficient solution is designed when this upgrade occurs. Water and sewer pumps are upgraded or rebuilt from time to time, typically more frequently with sewer pumping systems. Upgrades offer the opportunities to assess system design, evaluate VSD opportunities and improve control systems. As these systems account for more
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than 60% of Council’s electricity use, all savings made in these systems will impact on Council’s future energy demand. It is noted that the incorporation of VSD and controls in new works is currently business-as-usual practice by Council.
BuildingThe National design Construction policies Code is a uniform set of technical provisions for the design, construction and performance of buildings throughout Australia. It is published and maintained by the Australian Building Codes Board, on behalf of and in collaboration with the Australian Government and each State and Territory Government. The National Construction Code is made up of the:
Building Code of Australia (BCA), and the Plumbing Code of Australia
Energy efficiency performance requirements are set out in Section J of the BCA. This section is currently undergoing a review, with proposed changes likely to come into effect in mid-2019. Changes are expected to include:
quantification of the mandatory Performance Requirements introducing a NABERS Energy Commitment Agreement Verification Method introducing a Green Star Verification Method introducing commissioning requirements improved consideration of on-site renewables such as solar power improved thermal bridging requirements, and simpler Deemed-to-Satisfy Provisions
The changes will be released in February 2019, and are expected to come into effect on 1 May 2019. The measures expected to be introduced under NCC2019 would deliver energy and carbon savings of at least 25% compared with the provisions of the 2016 NCC.
SSimilarly,ustainable efficiencies procurement in equipment purchasing can extend to all office equipment, split system air conditioning, appliances, IT systems, emergency lighting and the like.
NSW Local Government Guide
“Sustainable procurement takes into consideration responsibility for the economic, environmental, social and governance impacts of any purchase – products or services. These four factors are referred to as the quadruple bottom line and relate to a total purchase cost, and not just the upfront dollar expense.
Sustainable procurement, applied to NSW councils’ spending, represents a significant opportunity to drive social and environmental change throughout a wide range of not only direct suppliers, but also the associated supply chains9”.
The 2017 Sustainable Procurement Guide for NSW local governments aims to help Councils develop and embed sustainable procurement practices in their organisation. The guide presents information
9 Sustainable Procurement Guide for Local Governments in NSW, 2017: https://www.lgnsw.org.au/files/imce- uploads/127/esstam-sustainable-procurement-guide-30.05.17.pdf
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on key concepts, certifications, standards and processes and is designed for all council staff involved in any purchasing. The Guide is applicable from major tenders through to one-off equipment purchases.
Council should examine the guide to identify key areas within its procurement processes where this can add value and lead to more informed and better procurement decisions.
Complementing a Guide such as this, Council has access to a wide range of information and data that can help it take decisions on equipment purchases. A prominent resource is the Equipment Energy Efficiency (E3) program.
The Equipment Energy Efficiency (E3) program10, through which Australian jurisdictions (and New Zealand) collaborate to deliver nationally consistent mandated energy efficiency standards and energy labelling for equipment and appliances. Procurement policies and practices that routinely ensure that high star-rated appliances (motors, air conditioning units, kitchen appliances) are selected when replacing or buying new equipment will help Council’s energy footprint decline over time.
ISO 20400 – Sustainable Procurement Guide Council can also consider the international standard ISO20400 for sustainable procurement.
Sustainable procurement is the process of making purchasing decisions that meet an organization’s needs for goods and services in a way that benefits not only the organization but society as a whole, while minimizing its impact on the environment.
ISO 20400 provides guidelines for integrating sustainability into an organization’s procurement processes. Aimed at top managers and directors of the purchasing function, it covers the political and strategic aspects of the purchasing process, namely how to align procurement with an organization’s goals and objectives and create a culture of sustainability. The standard defines the principles of sustainable procurement, including accountability, transparency, respect for human rights and ethical behaviour, and highlights key considerations such as risk management and priority setting. It also covers various stages of the procurement process, outlining the steps required to integrate social responsibility into the purchasing function11.
There are four key clauses of the Standard that provide guidance to assist organisations to meet social and environmental responsibility.
1. Clause 4 Understanding the Fundamentals is a generalist clause which discusses what sustainable procurement involves and its strategic goals. It also outlines fundamental practices such as due diligence, risk management and priority setting. 2. Clause 5 Integrating Sustainability into the Organisation's Procurement Policy and Strategy provides guidance to top-tier management on bridging the gap between sustainable procurement strategy and organisational policy. This clause clarifies the importance of mandating sustainability objectives within the organisation at all levels and in particular, stresses the importance of accountability and sustainable supply chains.
10 http://www.energyrating.gov.au/ 11 https://www.iso.org/files/live/sites/isoorg/files/store/en/ISO%2020400_Sustainable_procur.pdf
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3. Clause 6 Organising the Procurement Function towards Sustainability is most applicable for people engaged in procurement management and outlines the techniques to be employed to enable successful implementation, namely enabling people, engaging stakeholders, setting priorities and measuring performance. 4. Clause 7 Integrating Sustainability into the Procurement Process is directed towards individuals managing sourcing activities and contracts. It provides practical guidance regarding implementing sustainable procurement at each stage of the process including planning, supplier selection and contract management and review.
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Onsite Renewable Energy Options
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5.3 Onsite renewable energy Site visits and data analysis were used to identify sites that are most likely to be suitable to install solar PV. A summary of the opportunities at NSC sites is provided in Appendix C. The preferred sites are:
Location Annual Usage Comments on solar kWh Mahogany Road, 317,103 kWh 30 kW and 70 kW options are modelled on the hill on the Nambucca Heads south of the site as this may not be needed for expansion for 20-30 years. alternate locations could also be chosen. Unit 1, River Street, 222,271 kWh The best locations are the tree lines in front of the plant Macksville (STP) facing north, the land in front is subject to flooding. 20kW and 40kW options are modelled, replacing the front tree line. Office, 44 Princess St 117,908 kWh North-east and east roofs are modelled with 30 kW and Macksville 50 kW options shown. Sewerage Works 58,930 kWh Limited land, small systems are modelled to replace a Scotts Head tree in the north of the treatment works site. Works Depot, River 29,822 kWh Roof of the mechanical workshop is preferred, with two Street, Macksville systems modelled to meet current day demand and future whole site demand with a battery. Library, Princess 25,977 kWh Good site with east roofs modelled for solar, enclosed Street, Macksville area between the library and senior citizens centre could host a battery at a later time. Electrical switchboard improvements are likely to be required. Macksville Senior 7,035 kWh Good roof but low demand that is likely to be Citizens Building intermittent. A small system is modelled along with a larger one suitable when batteries are cheaper. Bowraville Dam, Bobo 23,902 kWh NMI has 2.5 kW demand, assumed fed from the building Road, Bowraville at the base of the dam. Two systems are modelled with the larger one sized to meet demand with a battery. Nambucca Emergency 23,610 kWh Building use may be intermittent, front building has Management, River St, several masts so solar is modelled on the rear building Macksville based on the annual consumption data. Treatment Works, 22,193 kWh Solar PV can be mounted on the roof of the new 12 dia River Street, tank, there is limited land on the site for a ground Bowraville mounted system. Entertainment Centre, 13,649 kWh Consider aggregating EC and library as EC has a better Ridge Street, roof for solar and already has 2 arrays. Aggregating the Nambucca Heads sites may work better for electric vehicle charging. New Waste Disposal 11,437 kWh The energy demand appears small given the running of Plant, 2 Old Coast three compressor-driven pumps and should be checked. Road Solar PV systems are modelled on the new main shed. Visitor Information 5,414 kWh South facing roof so there will be a loss of yield for a Centre, Nambucca flush-mounted system, wind and vandalism risk with tilt Heads frames to the north. Both options are modelled.
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The analysis of these opportunities was performed with the following inputs and parameters:
Solar modelling software (Helioscope with Nearmap) was used for all proposed installations. Council’s energy billing data and site interval data was used to determine optimum solar array sizes and to calculate the level of self-consumption of solar and the amount likely to be exported in each case. Benchmark pricing for solar PV systems (flush roof-mount, tilted roof-mount and ground-mount systems) and inverters has been used. Annual expenses include cleaning / maintenance and may include an insurance premium. Cleaning costs of $15/MWh of solar energy generation have been used, and anecdotal evidence suggests insurance premiums may be up to $10/kW per year. These are applied to each solar PV opportunity with annual escalation at 2.5%. For all exported energy a feed-in rate of $0.06/kWh was assumed to be available, which will require Council to seek this in future energy supply agreements. Analysis is presented both with and without depreciation as an expense. For the depreciation-inclusive case a straight-line 4% of original capital cost method is used over a 25-year life. Two discount rates are applied for net present value (NPV) calculations. A rate of 7% reflects the required rate for NSW government agencies accessing finance for energy efficiency and solar PV through the Treasury Loan Fund. A rate of 5% represents a reasonable premium to 10 year commonwealth government bond rates are at 2.13% for February 2019.
The suggested action plan for onsite solar PV is outlined below.
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5.3.1 Short term onsite renewable energy action plan Six opportunities are recommended for implementation in the short term, based on their rapid payback and apparent low complexity.
NoSitedepreciation Size Capex Savings12 Savings Payback in NPV over 25 NPV over 25 IRR over 25 Yr1 Years13 years at 5% years at 7% years discount rate discount rate Administration Office, 44 49.80 kW $59,760 68.32 MWh $14,778 4.49 Years $112,923 $84,356 22% Princess St Macksville Works Depot, River Street, 4.95 kW $6,683 7.51 MWh $1,435 5.23 Years $9,895 $7,152 18% Macksville Library, Princess Street, 12.20 kW $14,640 17.19 MWh $3,682 4.41 Years $28,407 $21,283 22% Macksville Macksville Senior Citizens 2.20 kW $2,640 2.98 MWh $637 4.60 Years $4,791 $3,562 21% Building Bowraville Dam, Bobo Road, 4.48 kW $6,720 7.85 MWh $2,172 3.32 Years $20,484 $15,888 30% Bowraville Entertainment Centre, Ridge 4.13 kW $4,956 5.72 MWh $1,167 4.75 Years $8,408 $6,215 20% Street, Nambucca Heads All short-term opportunities 77.76 kW $95,399 109.57 MWh $23,871 ~4.5 years $184,908 $138,456
12 Savings refers to the total yield from solar PV systems, and includes both self-consumed energy and surplus energy exported to the grid. 13 Note that payback takes energy savings, assumed energy price escalation of 1% pa and maintenance costs into account.
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WithSite depreciation Size Capex Savings14 Savings Payback in NPV over 25 NPV over 25 IRR over 25 Yr1 Years15 years at 5% years at 7% years discount rate discount rate Administration Office, 44 49.80 kW $59,760 68.32 MWh $14,778 5.48 Years $79,233 $56,499 17% Princess St Macksville Works Depot, River Street, 4.95 kW $6,683 7.51 MWh $1,435 6.64 Years $6,128 $4,037 14% Macksville Library, Princess Street, 12.20 kW $14,640 17.19 MWh $3,682 5.37 Years $20,153 $14,458 18% Macksville Macksville Senior Citizens 2.20 kW $2,640 2.98 MWh $637 5.65 Years $3,303 $2,331 17% Building Bowraville Dam, Bobo Road, 4.48 kW $6,720 7.85 MWh $2,172 3.83 Years $16,696 $12,756 26% Bowraville Entertainment Centre, Ridge 4.13 kW $4,956 5.72 MWh $1,167 5.87 Years $5,614 $3,905 16% Street, Nambucca Heads All short-term opportunities 77.76 kW $95,399 109.57 MWh $23,871 ~5.6 years $131,127 $93,986
14 Savings refers to the total yield from solar PV systems, and includes both self-consumed energy and surplus energy exported to the grid. 15 Note that payback takes energy savings, assumed energy price escalation of 1% pa and maintenance costs into account.
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5.3.2 Medium term onsite renewable energy action plan
NoSite depreciation Size Capex Savings Savings Payback in NPV over 25 NPV over 25 IRR over 25 Yr1 Years years at 5% years at 7% years discount rate discount rate Mahogany Road Nambucca 30.10 kW $45,150 52.21 MWh $8,402 6.17 Years $49,590 $33,959 15% Heads STP Unit 1, River Street, Macksville 19.80 kW $29,700 34.53 MWh $5,971 5.64 Years $40,233 $28,503 17% (STP) Sewerage Works Scotts Head 5.12 kW $7,680 8.94 MWh $1,717 4.45 Years $15,334 $11,462 22% Nambucca Emergency Mgt, 4.95 kW $6,683 6.66 MWh $1,143 6.73 Years $5,915 $3,862 13% River St, Macksville Treatment Works, River 9.90 kW $13,365 15.14 MWh $2,593 5.89 Years $15,226 $10,589 16% Street, Bowraville Entertainment Centre, Ridge 4.19 kW $5,028 5.99 MWh $499 > 12 Years -$2,651 -$2,803 NA Street, Nambucca Heads16 New Waste Disposal Plant, Old 3.30 kW $4,455 4.86 MWh $897 5.62 Years $5,710 $4,042 17% Coast Road Visitor Information Centre, 2.20 kW $2,970 3.50 MWh $570 6.00 Years $2,968 $2,039 16% Nambucca Heads All medium opportunities 79.56 kW $115,031 131.83 MWh $21,792 ~6.1 years $132,325 $91,653 Aquatic centre, Macksville17 65.88 kW $81,362 106.29 MWh $14,508 6.66 Years $73,855 $48,542 14%
16 During the investigations this site was identified as a possible location for an electric vehicle (EV) charge point. If this is implemented in the medium term then the addition of further solar panels to the Entertainment Centre could increase the percentage of vehicle charging supplied from renewable energy. The details shown for this site are the additional solar panels to those recommended for short-term implementation. 17 Note this site’s energy bills are not Council’s responsibility. This site is included per council’s request as it is Council-owned and a large energy user.
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WithSite depreciation Size Capex Savings Savings Payback in NPV over 25 NPV over 25 IRR over 25 Yr1 Years years at 5% years at 7% years discount rate discount rate Mahogany Road Nambucca 30.10 kW $45,150 52.21 MWh $8,402 8.23 Years $24,136 $12,913 10% Heads STP Unit 1, River Street, Macksville 19.80 kW $29,700 34.53 MWh $5,971 7.31 Years $23,489 $14,658 12% (STP) Sewerage Works Scotts Head 5.12 kW $7,680 8.94 MWh $1,717 5.42 Years $11,005 $7,882 18% Nambucca Emergency Mgt, 4.95 kW $6,683 6.66 MWh $1,143 9.28 Years $2,148 $747 8% River St, Macksville Treatment Works, River 9.90 kW $13,365 15.14 MWh $2,593 7.74 Years $7,692 $4,359 11% Street, Bowraville Entertainment Centre, Ridge 4.19 kW $5,028 5.99 MWh $499 > 12 Years -$5,486 -$5,147 NA Street, Nambucca Heads18 New Waste Disposal Plant, Old 3.30 kW $4,455 4.86 MWh $897 7.27 Years $3,198 $1,965 12% Coast Road Visitor Information Centre, 2.20 kW $2,970 3.50 MWh $570 7.93 Years $1,294 $654 10% Nambucca Heads All medium opportunities 79.56 kW $115,031 131.83 MWh $21,792 ~7.9 years $67,476 $38,031 Aquatic centre, Macksville19 65.88 kW $81,362 106.29 MWh $14,508 9.16 Years $27,986 $10,616 9%
18 During the investigations this site was identified as a possible location for an electric vehicle (EV) charge point. If this is implemented in the medium term then the addition of further solar panels to the Entertainment Centre could increase the percentage of vehicle charging supplied from renewable energy. The details shown for this site are the additional solar panels to those recommended for short-term implementation. 19 Note this site’s energy bills are not Council’s responsibility. This site is included per council’s request as it is Council-owned and a large energy user.
Page 37 Nambucca Shire Council: Renewable Energy Action Plan
5.3.3 Long term onsite renewable energy action plan The actions identified for long term implementation are shown below. The figures here are all additional to the costs and benefits for smaller systems at these same sites tabulated in short and medium term action plans. That is, only marginal PV capacity, costs and benefits are shown here. It is clear that the current business case for implementing these opportunities is weak, and cheaper battery storage and/or reducing panel costs will be required for these to become cost-effective. The recommendation at this time is that Council maintain a watch on panel and battery prices, and re-assess these expansion opportunities periodically.
NoSolar depreciation PV Additions Size Capex Savings Savings Payback in NPV over 25 NPV over 25 IRR over Yr1 Years years at 5% years at 7% 25 years discount rate discount rate Mahogany Road Nambucca 39.70 kW $59,550 66.79 MWh $8,193 8.88 Years $16,732 $5,333 8% Heads STP Unit 1, River Street, Macksville 19.90 kW $29,850 34.55 MWh $4,421 8.13 Years $12,959 $6,420 10% (STP) Sewerage Works Scotts Head 10.28 kW $15,420 17.50 MWh $2,583 7.63 Years $8,690 $4,938 12% Works Depot, River Street, 12.95 kW $17,483 19.76 MWh $1,544 > 12 Years -$10,906 -$11,191 NA Macksville Macksville Senior Citizens 1.93 kW $2,316 2.77 MWh $298 10.02 Years -$131 -$401 4% Building Bowraville Dam, Bobo Road, 10.92 kW $16,380 19.26 MWh $1,495 > 12 Years -$10,002 -$10,255 NA Bowraville Nambucca Emergency 7.15 kW $9,653 10.43 MWh $1,153 11.33 Years -$505 -$1,728 4% Management, River St, Macksville New Waste Disposal Plant, Old 4.70 kW $6,345 6.73 MWh $569 > 12 Years -$3,462 -$3,678 NA Coast Road All long-term opportunities 107.53 kW $156,997 177.79 MWh $20,256 ~9 years $13,375 $-10,562
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WithSolar PVdepreciation Additions Size Capex Savings Savings Payback in NPV over 25 NPV over 25 IRR over Yr1 Years years at 5% years at 7% 25 years discount rate discount rate Mahogany Road Nambucca 39.70 kW $59,550 66.79 MWh $8,193 > 12 Years -$16,839 -$22,426 1% Heads STP Unit 1, River Street, Macksville 19.90 kW $29,850 34.55 MWh $4,421 > 12 Years -$3,869 -$7,494 3% (STP) Sewerage Works Scotts Head 10.28 kW $15,420 17.50 MWh $2,583 11.67 Years -$3.40 -$2,250 5% Works Depot, River Street, 12.95 kW $17,483 19.76 MWh $1,544 > 12 Years -$20,762 -$19,341 NA Macksville Macksville Senior Citizens 1.93 kW $2,316 2.77 MWh $298 > 12 Years -$1,436 -$1,481 NA Building Bowraville Dam, Bobo Road, 10.92 kW $16,380 19.26 MWh $1,495 > 12 Years -$19,236 -$17,890 NA Bowraville Nambucca Emergency 7.15 kW $9,653 10.43 MWh $1,153 > 12 Years -$5,486 -$6,228 NA Management, River St, Macksville New Waste Disposal Plant, Old 4.70 kW $6,345 6.73 MWh $569 > 12 Years -$7,039 -$6,636 NA Coast Road All long-term opportunities 107.53 kW $156,997 177.79 MWh $20,256 > 12 Years $-74,670 $-83,746
Page 39 Nambucca Shire Council: Renewable Energy Action Plan
Offsite Renewable Energy Options
Page 40 Nambucca Shire Council: Renewable Energy Action Plan
5.4 Offsite renewable energy If Council were to implement all available energy efficiency and onsite solar PV opportunities then – assuming no underlying growth in energy demand – grid consumption would be reduced by more than 810 MWh per year, including 256 MWh from onsite solar PV (self-consumed estimate, with a further 130 MWh exported, which can be stored in batteries in future and used to further offset grid consumption).
Total electricity demand by all of Council’s operations is 2,960 MWh per year. Hence if Council has the aspiration to achieve 100% renewable energy for stationary energy in future, then the remaining 2,150 MWh (72%) must be sourced elsewhere. This is very typical of the situation for many local councils who have made such commitments, and it has led many councils to assess both larger-scale development of renewables on their own land, and renewable energy power purchase options. 5.4.1 Council-owned land If Council were to consider self-generation of some of its energy demand, then it is likely that a small solar farm would be a preferred option. Based on Council’s daytime demand and recommended onsite solar projects, a solar farm of up to 500 kW could offset much of Council’s daytime demand, occupying approximately 1 Ha to 2 Ha. At this size capital costs of up to $1 million would be likely.
Any ‘offsite20’ project such as this would require that Council work with a licensed retailer if it wishes to source this solar energy to increase its percent of energy from renewables. In the current market it would be difficult to find a retailer with an interest to incorporate such a small project in their offer at an affordable electricity rate to Council, and most approaches to the market for mid-scale solar have contemplated farms in the range 5 MW to 15 MW in capacity.
Council appears to have limited land that could be suited to solar PV generation, with GIS systems suggesting the following possible options:
Council’s landfill operations in Nambucca Heads, which is currently operational on one Lot. Advice is that the capped portion of the landfill may not be well suited to a project such as a ground-mount solar farm. Bowraville dam may offer future potential however at this time water-based projects at scale are few, and just one council (Lismore) has implemented a floating project at 99 kW. This option is unlikely to be feasible economically at this time given there is minimal load at the dam site, and any future consideration would also look at electricity infrastructure that could export power from a small solar farm to the grid. A small parcel of land in Bowraville is owned by Council, and a portion of this could conceivably be suited to a small solar farm.
Images of these sites are shown below. Note that there is no impediment to Council sourcing land from other owners – lease or buy – to develop future renewable energy projects in NSC.
20 Offsite refers to solar projects that are in front of meters on Council-owned sites, meaning that the energy generated must go in to the grid in the first instance.
Page 41 Nambucca Shire Council: Renewable Energy Action Plan
FIGURE 8- POSSIBLE MID-SCALE SOLAR FARM SITE – LANDFILL OPERATIONS
FIGURE 9- POSSIBLE MID-SCALE SOLAR FARM SITE – DAM SITE
FIGURE 10- POSSIBLE MID-SCALE SOLAR FARM SITE – LEASED EFFLUENT FARM, BOWRAVILLE
Page 42 Nambucca Shire Council: Renewable Energy Action Plan
5.4.2 Purchased renewable energy The main way in which renewable energy at scale has been sourced in recent years is via corporate power purchase agreements (PPAs), where renewable energy developers and retailers have engaged with end users to develop and/or sell all or a percentage of an organisation’s electricity requirements from renewable energy.
The majority of offsite corporate PPAs have been based on utility-scale solar and wind energy. In future we will see solar, wind, pumped hydro and battery storage be able to offer energy agreements based on renewables that are sculpted to an end user’s energy demand profile, with lower exposure to wholesale markets. Increasingly customer-focused models may enable small energy users such as Nambucca Shire Council to receive renewable energy supply offers that are comparable to ‘regular’ retailer offers that are sourced from the mix of energy sources supplying the grid.
However, at this time the approach recommended for councils in NSW, who cannot enter into derivatives-based agreements including Contracts for Difference (which underpin most large volume renewable energy PPAs that supply most or all or an organisation’s electricity), is to:
Consider purchasing a fraction of energy from renewables such as 20-30%, ideally with market- matching and review clauses that assure value for money over the term of an agreement, Plan to progressively increase purchases from renewables as the PPA market matures, Consider entering into a buying group to increase the volume of renewables being purchased, which is more attractive to retailers and thus can lead to lower pricing
The timing of any approach by Council to the market to source renewable energy as part of their normal electricity procurement will be best informed via consultation with Council’s electricity market experts, and may be influenced by factors such as the end of existing agreements, maturity of the market for buying renewables, interest by and ability of other parties to partner with NSC, new projects connecting to the grid, forecast electricity market trends, among others.
In recent months several NSW Councils have entered into an agreement to source 25% to 50% of their electricity via a 10-year PPA that will see solar supplied from the Moree solar farm to meet part of their energy demand.
5.4.3 Recommended offsite renewable energy action plan for NSC Up to now Council has not actively pursued the development or purchase of renewable energy at a scale that would enable it to source 100% of its electricity in this way.
As such the short-term recommendation is to focus on developing the knowledge base and understanding of this opportunity. A paper that outlines some of the key considerations in mid-scale renewables and PPAs is included as Appendix D. This may be a useful starting point to understand some of the drivers of renewable energy in the current electricity market, and the main factors that can make for good and bad outcomes for end users. As noted Council can and should also seek advice from electricity market experts.
Beyond this there are other actions that can be taken in the short term, such as:
Engage with other councils who have examined large-scale renewable energy sourcing, both from Council’s region and more broadly across NSW, Queensland and Victoria,
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Attend webinars, seminars and conferences on mid-scale renewables and PPAs, including for example any events hosted or provided by the NSW Office of Environment and Heritage or the Cities for Climate Protection of which NSC is a member
In the medium to longer term if Council is pursuing a 100% renewables goal, it will be necessary to take active steps to source renewables that meet more than 70% of its current demand for electricity.
Given the current market and trends, suggested recommendations at this time are:
1. In general, PPAs appear to offer lower risk and potential cost savings compared with mid-scale build options at this time. Ahead of any medium-term decision to source renewables and tender for same, seek advice on the market for emerging bundled PPA models for electricity (and LGCs if still applicable) that involve reduced risk and improved cost outcomes compared to regular energy offers. For example, approach and/or obtain advice on the Renewable Energy Hub and major retailers’ latest offers and monitor the announcements of new PPA agreements especially with respect to councils. Both ‘sleeved PPA’ and the ‘Virtual Generation Agreement’ PPA options (refer to Appendix D) appear to offer solutions that will not require Council to enter into a contract for difference, and further assessment of these options may be warranted.
2. Seek to incorporate the purchase of renewable energy from the start of the selected electricity contract period using a shorter-term agreement where it is found to be financially viable and has no additional risk when compared to a regular retail contract. Seek to incorporate a mechanism for managing market price risk over the agreement term. This could include: the ability to approach the market to reprice or price match grid power costs during the term; purchasing of hedging solutions; requesting pricing that is sculpted to follow the forecast market price trajectory; or potentially increasing the proportion of renewable energy over time when prices may be more favourable.
3. Ahead of any future tender, continue to engage with other organisations to seek interest to aggregate demand – e.g. forming a buying group or partnering with other councils in the region or state to increase the size of the electricity (including renewable energy) load to be contracted and the willingness of retailers to negotiate and price effectively. Investigate support for a buying group with councils that have a similar contract expiry and renewable energy aspirations and targets. If there is interest, set an opt in cut-off date that allows sufficient time to go to market and achieve supply for the next contract period (this may require lead time for a new project to be built).
4. Periodically review build and operate models to test viability against other available options following market investigations.
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6 Governance of NSC’s Renewable Energy Action Plan 6.1 Resourcing requirements The proposed program of work in the REAP will require resources to be allocated to a range of tasks, which may include:
Contract development and administration Project management of solar PV installations and energy efficiency upgrades Overall REAP program management, potentially including a management committee for the program Maintenance management process for solar PV projects, which will be new assets on many Council facilities Training of Council staff in the operation and maintenance of PV systems
The resourcing requirements should be taken into account when planning each year’s program of work. 6.2 Project post-implementation monitoring Council already has robust energy billing and large-site interval data records. As such changes in Council’s energy consumption will be apparent over time as the overall program of work is implemented.
At the level of individual solar energy systems access to monitoring is strongly recommended. Without monitoring Council has no idea if a system is performing as expected and has no insight to problems that may have occurred (e.g. failed inverter, system isolated, physical damage).
Monitoring can be specified with individual projects and this can help to monitor performance in the post-implementation phase. A key criterion here may be the ability for the selected inverter technology to communicate with a supervisory monitoring system, on the assumption that Council will ultimately have a few different types of inverter.
Council should begin to investigate the availability and capabilities of supervisory monitoring systems, or whether it is practical to monitor performance via proprietary systems. 6.3 Program review processes There should be a process to review Council’s program so that new technologies, innovative ideas, changed market conditions and other factors can be considered and the plan changed based on the best available solutions in future. A two to three year period is suggested.
Many of the new technology ideas and innovations come to Council in an ad hoc fashion, such as directly from suppliers, from community groups, advice from consultants, attendance at conferences or via social media. New ideas or solutions will come to numerous people across many functions.
Council should review what an appropriate process looks like for receiving, storing, evaluating and deciding on the merits of new clean energy ideas, and consider the resourcing requirements of this as part of the overall resourcing of the REAP.
Page 45 Nambucca Shire Council: Renewable Energy Action Plan
7 Funding of NSC’s Renewable Energy Action Plan 100% Renewables recommends that a range of funding and financing options be examined by NSC. A guide to financing options and an approach to determining what option/s work best for Council is provided as Appendix E to this report. The key summary points from this Guide are presented below. 7.1 Summary of options and hierarchy We recommend that 11 financial options be evaluated, organised in four groups as illustrated below.
FIGURE 11- SUMMARY OF RECOMMENDED FINANCING OPTIONS The 11 options are:
1. Free money a. Pre-existing and future incentives and grants 2. Internal financing a. Environmental levy/Special Rate Variation b. Self-financed through normal budgeting process c. Self-financed through Revolving Energy Fund (REF) d. Internal carbon price 3. Council borrows a. Loan financed 4. Third party a. Equipment lease b. On-bill financing c. Onsite Power Purchase Agreement (PPA) d. Energy Performance Contracts e. Community energy projects
Page 46 Nambucca Shire Council: Renewable Energy Action Plan
7.2 Why is a financing plan necessary? Most sustainability initiatives require some sort financing. We recommend planning for funding sustainability initiatives be aligned with other key plans and functions in council, including:
Strategic (e.g. Community Strategic Plan or CSP) and delivery/ operational plans Budgetary cycles Sustainability targets
It is important that each organisation determine the best way to finance sustainability projects given its particular circumstances and objectives. “Free” money is frequently preferred where available, however other approaches should be given due consideration and the best fit selected to meet the objectives of the Plan. 7.3 Attributes, pros and cons of various financing options Each of the 11 recommended financing options has its own attributes that can be looked at next to an organisation’s objectives to establish if or how it can be useful. Each option also has its pros and cons which should be examined. All 11 options are outlined in Appendix E. Below is an illustration of this for incentives and grants.
FIGURE 12- ATTRIBUTES, PROS AND CONS OF ‘FREE MONEY’
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7.4 Recommended approach to develop a financing plan for Council A summary of the attributes, pros and cons, together with Council’s approved Renewable Energy Action Plan, provides a basis for the assessment of Council’s preferred financing strategy.
For each project or group of projects (e.g. single or bundled on-site solar, street lighting upgrade, sourcing offsite renewables via a PPA, implementing single or multi-site lighting upgrades), an analysis of each financing option should be undertaken – e.g. as a group workshop. This may ask:
How does each option relate to Council’s current situation? How does each option relate to each project or group of projects under consideration? What is the proposed timing of implementation and how can each financing option fit in with or be developed to meet this objective? What are the risks and opportunities of each option?
Based on this review each option can be scored and ranked against each project, thereby generating a draft pathway to finance the Plan. This can be refined and presented to internal stakeholders such as senior management, to start the process of finalising Council’s financing strategy for the Plan.
Page 48 Nambucca Shire Council: Renewable Energy Action Plan
Appendix A: List of NSC Sites List of large sites (>100 MWh per year electricity consumption) Location Meter Number Annual Annual Usage kWh Cost Buildings Administration Office, 44 Princess St Macksville NFFFNRKS726 117,908.36 $6371.18 Water and Sewerage Unit 1, River Street, Macksville (STP) NFFFNRKW181 222,270.52 $16,886.76 Bellingen Road, Bowraville NFFFNRKS692 441,851.28 $36,499.76 No 8 Pump, Swimming Creek Road, N/Heads NFFFAA13710 181,446.00 $22,328.17 Mahogany Road, Nambucca Heads 40012324332 317,102.54 $21,406.35 Bowraville Pump Station 1, 321 Bellingen Road, 4001253675 102,864.60 $6,984.28 Bowraville Street Lighting Unmetered Supply Macksville 44073600814 775,669.84 $50692.78
List of small sites Location Meter Number Annual Annual Usage Cost Buildings Entertainment Centre, Ridge Street, Nambucca 44071267010 45,262.58 $8389.91 Heads (account says library) Pump No 8, Valla Beach Road, Valla Beach - 44071733547 882.00 $321.13 582406 Gordon Park, Wellington Dv, Nambucca Hds - 44071277891 5,294.00 $1926.23 537850 Gordon Park, Wellington Dv, Nambucca Hds - 44071283840 2,367.00 $674.04 538440 Valla Beach Road, Valla Beach - 582728 44071736808 766.00 $278.95 Seaforth Drive, Valla Beach 44073852097 703.26 $255.85 Tuna Street, Valla Beach 44071739958 73.00 $26.67 ANZAC Park, Riverside Dv, Nambucca Heads 44073770845 799.00 $290.96 Visitor Information Centre, Nambucca Heads 44073854012 5,414.00 $2006.27 Toilets Bellwood Park, Nambucca Heads 40011393751 3,942.25 $1434.07 Valla Rural Fire Station, Valla Road, Valla 44073731518 515.00 $188.43 Nambucca Breakwall Lighting, Wellington Dv, 44073549355 11,143.00 $4054.45 Nambucca Heads Macksville Coach Stop, Macksville 44072464737 489.00 $177.97 Scotts Head Fire Brigade 147, Vernon Street 44073503023 1,584.00 $577.01 South Arm Bush Fire Brigade Shed, South Arm 44071336467 419.00 $152.77 Road Sonnys Road, Warrell Creek 44073811343 400.00 $145.60 Talarm Bush Fire Brigade Shed, Rhones Creek Road 44071343347 691.00 $251.60
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North Arm Road, Argents Hill RFS (change on other 44071333217 436.00 $158.67 worksheets) Herborn Drive, Bowraville Reservoir (change on 44071757257 338.00 $123.24 other worksheets) Bush Fire Shed, Gumma Road, Macksville 44071331575 598.00 $217.87 Rural Fire Shed, Main Street, Taylors Arm 44071342984 654.00 $237.94 Library, Princess Street, Macksville 44071252639 25,977.00 $9450.58 Dawkins Park, Princess Street, Macksville 40011298167 10,434.15 $3795.94 Reservoir, Wallace Street, Macksville 44071252409 1,070.00 $389.48 Waratah Street, Scotts Head 44071330172 298.00 $108.45 Works Depot, River Street, Macksville 44071247696 29,821.96 $9021.45 Nambucca Emergency Mgmt, River St, M''ville 44071247754 23,610.00 $6745.60 Dog Pound, River Street, Macksville 44071254131 2,350.00 $855.29 Cross Street, Eungai Rail 44071332282 1,923.00 $1298.47 Toilet block, Princess Streets, Macksville (change 44071253991 1,151.00 $418.98 on other worksheets) Flood Gauge, River Street, Macksville (last bill 7 44071253851 533.00 $193.91 June 18) Grays Crossing Bush Fire Shed, Boat Harbour Road 44071344017 556.00 $202.38 Utungun Bush Fire Brigade Shed 44071343703 827.00 $301.17 New Waste Disposal Plant, 2 Old Coast Road 44073781264 11,437.01 $3513.47 Water Tower Old Coast Road Macksville 40011501084 422.00 $153.70 Missabotti Bush Fire Shed, Missabotti Road (last 44071339287 632.00 $229.92 bill 27 June 18) North Arm Bush Fire Brigade Shed, North Arm 44071336383 394.00 $143.61 Road Bush Fire Shed Irvines Road, Newee Creek (change 44071734959 780.00 $283.76 on other worksheets) (last bill 27 June 18) Pump Station 5, McKay Street, Macksville 44071247861 1,585.36 $576.73 Anderson Park, Max Graham Drive, Valla Beach 40012311944 2.00 $0.71 (last bill 29 June 18) BBQ opposite V Wall Tavern, 7016 Wellington 40012500224 1,708.00 $621.38 Drive, Nambucca Heads (new installation) (last bill 22 May 18) Public Toilets, Ferry Street, North Macksville 40012556729 680.25 $247.47 Macksville Senior Citizens Building 44071252805 7,035.00 $2559.47 Stuart Island Public Toilets 40012639855 1,949.00 $709.28 Water and Sewerage Pump Station No 1, Kuta Ave, Valla Beach (last bill 44071735790 8,573.00 $3207.47 29 June 18) No 7 Pump, Cnr Beer Pde & Nelson St, N/Heads NFFFAA11920 23,984.60 $11568.40 Pumping Septic Effluent, Headland Reserve, N/Hds 44071259329 1,184.00 $430.98 Pump No 5, Pilot Street, Nambucca Heads 44071268117 15.80 $5.78 Water Tower - Mann Street, Nambucca Heads 44071271054 259.00 $88.40 Reservoir, Bellingen Street, Nambucca Heads 44071276340 926.00 $337.17 No 7 Pump, Banyandah Road, Hyland Park 44071739918 19,107.00 $5585.59 No 3 Pump, Riverside Drive, Nambucca Heads 44071270930 12,714.00 $3749.67
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Pump No 6, Gordon Park, Nambucca Heads 44071284856 9,885.00 $2893.30 Pump No 10, Doncaster Place, Hyland Park 44071739123 2,041.01 $742.51 Pump Station No 6, Banyandah Road, Hyland Park 44071735840 4,901.85 $1783.31 Pump Station No 4, Thompson St, Valla Beach 44071735824 592.00 $215.59 Pump Station 3, Buchanan Street, Valla Beach 44071735818 2,471.93 $899.29 Pump Station No 5, Valla Park, Valla Beach 44071735832 15,779.00 $4648.85 Pump No 10, Cockburn Street, Valla Beach (last bill 44071739288 6,642.00 $2416.36 29 June 18) Pump No 8, Marshall Sub, V/Beach Rd, V/Beach 44071737688 481.00 $281.88 Pump 12, Ocean Waves Estate, Off Ocean View Dr 40011781057 4,389.00 $1596.83 Sewer Pump Station, Marshall Way, Nambucca 44073493446 464.00 $168.90 Heads Pump Station No 2, Myall Street, Nambucca Heads 44071271441 464.00 $168.91 No 1 Pump, Pacific Highway, Nambucca Heads 44071264873 6,646.00 $2418.00 Sewerage Pump No 13, Marshall Way, Nambucca 44071279996 3,443.00 $1252.82 Heads Sewerage Pump No 9, Banksia Cres, Nambucca 44071272415 3,333.00 $1212.70 Heads Pump Station 2A, Pacific Highway, Nambucca 44073717508 7,132.00 $2594.77 Heads Pump Station 4A - Centenary Parade, Nambucca 44073713687 45,024.10 $16350.01 Heads Sewerage Pump Station, Ocean View Dr, Valla/Bch 44073742297 317.00 $115.52 Pump No 9, Birugan Close, Valla Beach (last bill 29 44073647877 5,176.00 $1883.02 June 18) Pump No 14, Alexandria Drive, Nambucca Heads 44072464729 610.18 $221.97 Pump Station SH8, Greenfields Estate, Scotts Head 44073753700 2,296.00 $835.29 Treatment Works, River Street, Bowraville 44071757455 22,193.00 $8074.05 STW Tertiary Transfer Pump, River Street, 44073558851 15,977.00 $5812.95 Bowraville Pump Station No 4, Matthew Street, Scotts Head 44071330165 773.56 $281.41 Reservoir Vista Way, Scotts Head 44073435497 9,770.00 $3554.64 Sewerage Works Scotts Head 44072111895 58,930.00 $16297.42 Sewer Pump 1, South Pacific Drive, Scotts Head 40011340805 10,149.36 $2934.68 No 5 Pump Station 5, Warrell Close, Scotts Head 44071330379 1,388.08 $505.33 Pump No 7, Raleigh Street, Scotts Head 44071337539 3,559.55 $1294.97 No 11 Pumping Station, Wallace Street, Macksville 44071249486 2,369.00 $862.08 Pump 6, Star Street, Macksville 44071247845 3,424.00 $1245.73 Pump 8, Willis Street, Macksville (change on other 44073516496 17,089.00 $4879.01 worksheets) Pump 9, River Street, Macksville 44071254742 23,000.00 $6602.72 Sewer Pump 3/Vernon Street, Scotts Head 40011341167 4,391.00 $1419.60 Pump 7, Willis Street, Macksville 44071247746 4,831.00 $1558.53 Macksville South Res & Scotts Head Booster Pump, 44071254783 7,082.00 $2576.43 Wallace Street, Macksville Pump Station M14, Lot 101 Kylie Street, Macksville 40011590078 231.00 $84.05 Pump 3, Sturdee Street, Macksville 44071247853 16,603.92 $4672.12
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Pump Station M10, Kylie Street, Macksville 40011305015 7,511.00 $2732.68 Pump 2, Bellevue Drive, Macksville 44071247952 2,911.00 $1059.27 No 2 Pump, Ferry Street, North Macksville 44071254775 6,018.00 $2189.48 Pump Station, Old Waste Depot, Old Coast Road 44073741994 19,107.14 $5251.39 Pump Station 13, Lot 88 Yarrawonga St,Macksville 44071336334 8,765.00 $3188.86 Adin Street, Scotts Head - Pump Station 44071330149 1,531.00 $733.40 Belmore/High Street, Bowraville, Reservoir 44071756905 779.00 $283.41 Mtce/town clock - rick watts checking Pump Station 12, Glenmore Crescent, Macksville 44071252176 2,111.00 $768.18 Industrial Estate, Newville, Pump Station 44071268314 5,558.00 $2022.18 Waste Depot, 142 Old Coast Road, Macksville 44071739775 15,709.30 $5719.78 Pump Station No 4, Park Street, Macksville 44071252886 11,812.06 $4297.22 Temp Pump Station M17, 67 Sturdee Street, 40012084839 716.00 $260.55 Macksville Pump 15, Preston Drive, Macksville 40012333160 1,105.95 $402.32 L1 Balance Tank Road, Bowraville 40012553329 210.00 $93.02 Bowraville Dam, Lot 1 DP 1186268 Bobo Road, 4001258157 23,901.51 $3231.68 Bowraville Bowraville Pump Station 2, 321 Bellingen Road, 4001253676 65,357.60 $4563.10 Bowraville Borefield Road, Bowraville 4001256115 57,066.95 $3807.99 Pump Station 16, Lot 111, 90 Upper Warrell Creek 40012646645 1,476.57 $537.16 Road, Macksville Street Lighting Nightwatch Lighting, Coach Stop, Riverside Drive NV013885132 0.00 $0.00 Unmetered Lighting, Macksville - Nambucca Heads SU13885673 3,695.99 $1344.60 (Bus Shelter and Park Lighting)
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Appendix B: Site visit observations
Macksville Night/external Administration lighting load Centrerises from 3.8 kW to 5.4 kW nightly which equates to 1.6 kW of external lighting that runs all night. Some of these are CFL but most are HID lighting. Estimated annual demand is 7,000 kWh. Saving opportunity is 40-50% from LED change, up to 70% with smart controls to dim lights down to a minimum level with a proximity sensor. Interior lighting includes ~150 single 36W centre mounted recessed fittings with reflectors plus ~25 twin suspended and surface mounted fittings in the office and customer service areas. There are also HIDs in council chambers, which hosts two Council meetings per month and may be used regularly for internal meetings. There are also fluorescent lights in toilets and meeting rooms, some observed to be on and some off. Total estimated energy demand is 28000 kWh per year or 24% of total usage. Upgrading HID, twin fluorescent and meeting room & toilet lighting to LED is the main opportunity available, plus LED tubes for single-tube fittings. Base demand at night and through the day is for servers, emergency and exit lights and appliances. Estimated energy demand is approximately 3.5 kW at all times which equates to around 30,000 kWh per year. Changes to this can occur through shut-down of computers at night, IT upgrades, sustainable procurement of high-star appliances and implementation of LED exit signs. Computers and printers consume around 10,000 kWh per year. Heating Ventilation and Air Conditioning (HVAC) is mostly made up of: o Fan load based on load profiles of around 7 kW equating to 20,000 kWh per year. This is split among multiple air conditioning units which are mostly old so there are no retrofit options available. Time based control is good. o Cooling and heating is all load above 25kW based on load profiles, which equates to 22,000 kWh per year.
Opportunities include:
Solar: 30kW to 50kW based on demand and roof space. Efficiency: upgrade outside lights to LED, chambers lights to LED, twin 36W fittings to surface mount LEDs, single 36W lights to LED tubes. Replace air conditioning with high-COP/EER systems as this is near the end of its life.
DawkinsEnergy use ofPark10,500 kWh per year is mainly associated with the operation of pumping and aeration systems for the pond in the park. Solar lights and solar bins are in operation. The main potential opportunity is to test the quality of pond water in response to adjusted pump / aeration operation to confirm if reduced / intermittent operation is feasible.
MacksvilleThe library accountLibraryuses 26and,000S keniorWh pa andCitizensthe Seniorfacilities Citizens account uses 7,000 kWh per year.
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In the library there are ~70 twin 36W fittings which operate say 50 hours a week. This equates to 6.16 kW and 15,000 kWh per year. Office equipment and appliances are minimal at say 2,000 kWh pa.
Air conditioning is supplied by two split systems and will supply the remainder of energy demand at 9,000 kWh per year, mostly in summer. The marginal summer energy use compared with other periods is approximately 5,000 kWh which supports this view.
The senior citizens has 30 single 36W fluorescent lights, 4 split system AC units and a few ceiling fans plus appliances. Energy use is intermittent and likely to include around 3,000 kWh for lighting, 1,000 kWh for appliances and the balance for split systems and fans.
Lighting is the main energy using system and offers the greatest savings potential. Practices relating to the use of split systems is likely to be the main opportunity, with intermittent and/or fairly low energy use.
Solar on both roofs is a good opportunity and daytime summer demand will be around 15kW with air conditioning. Improvements to the metering and electrical switchboard at the front of the library is likely to be required.
MacksvilleEnergy use is aroundDepot 30,000 kWh per year at roughly 7,500 kWh per quarter. This suggests low use of air conditioning, with the main AC system seen in the front office. Lighting and power will be the main energy using systems. Amenities hot water is supplied with bottled gas.
LED lights will likely reduce demand by around 5 MWh to 7 MWh per year. Operations and energy use will be mainly during daytime on working weekdays. Depots often suit solar PV given their daytime demand and relatively large roof space.
Given the amount of roofspace it may be feasible in future to install a larger PV system with a battery to meet most of the site’s energy demand.
NambuccaConsumption is emergency23,000 kWh per management year with roughlycentrethe same consumption per quarter. The facility was not inspected but based on similar facilities lighting and plug-in power are likely to be the main energy users with air conditioning used periodically.
Masts on the roof of the main building will limit or rule out solar PV, hence this is modelled on the roof of the adjacent building.
MacksvilleThis site is a largeSTP energy user with some 222,000 kWh per year. There is a base demand of 11-12 kW at all times, which includes UV lighting systems, main switchroom air conditioning, minor computer load and some small pumps. These end users consume around 100,000 kWh per year.
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The major energy users are 2 x 55 kW blowers together with effluent pumps. Load profiles suggest these systems consume over 120,000 kWh per year. Variable speed (VSD / VVVF) control is installed for all major pumps and blowers which will have led to substantial energy savings when installed.
The main focus should be on renewables, and a ground mount system in front of the STP where the trees are to be removed should be considered. The tree line in front of the STP can host over 40 kWp of solar arrays on the hill and above the flood-prone land in front.
MacksvilleBoth of these sites #9 wereSewer visited Pump as representative & St Patrick’s of larger #16 SPS Sewer’ in the NBCPump wastewater network. Both pump systems are VSD controlled and no land is available for solar PV.
MacksvilleThis site is tenantedaquatic and centreCouncil doesand nothydro pay the pool energy bills. The lessee has installed LED lighting throughout the gym and has installed a new heat pump for pool water heating. The air conditioning units are old and may be up for replacement in coming years, which would see further energy savings made. Solar PV is likely to be a feasible solution for the roof of the facility.
ScottsEnergy demandHead isSTP58,000 kWh pa. The main focus of the site visit looked at areas where solar PV could be installed. Possible areas identified include the space where a tree currently stands in the treatment works as well as space between two overflow lagoons on the west side of the plant.
NambuccaThe major energyHeads demandSTP comes (Mahogany from 3 x Road) large variable speed driven effluent pumps. Similar to Macksville UV treatment is a sizeable continuous load. Opportunities for energy efficiency are likely to be small and generally from ongoing optimisation of processes and controls.
Three possible areas for solar PV were identified, including the hill at the south of the site that faces near due north, land next to the office block, and the lagoons on the north-west of the site. A water- based system may be an option in future years, however ground mounted should be preferred initially.
NambuccaThe library has library approximately 34 twin 36W fluorescent fittings that are ceiling-recessed, a few twin 18W fluorescent fittings, while air conditioning is supplied by both ceiling fans and a small air conditioning system. The library has a flat roof with protected trees to the north, so this site is unlikely to have solar PV potential.
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An upgrade of all lights to LED technology will reduce energy use by around 25-30%. Confirmation is needed whether this site and the Entertainment Centre use the same meter / NMI.
Outside the library is one possible location for a proposed electric vehicle charging station.
NambuccaThe Centre has community approximately 36centre twin 36W / entertainmentfluorescent fittings centre in the main hall and the entrance / art gallery. There are numerous other lights in stores, change rooms and stage change rooms but these are intermittently used. The main opportunities are to replace all hall and gallery lights with LED, and to replace other lights with LED on fail.
A solar PV system is already installed on the roof, which is well oriented and has space to host additional panels. With a possible electric vehicle charger to be sited outside the library additional solar arrays on the Entertainment Centre could be used to supply a battery for a charger.
VisitorEnergy useInformation is small and theC mainentre opportunity of interest is a small solar PV system on the roof. A small south-facing array could be feasible and will be unseen, whereas a north-tilted array would deliver higher solar energy generation but would be visible from the car park.
WasteThe main transfer potential opportunities station Old at thisCoast site includeRoad solar PV – likely on the roof of the main shed which could supply the whole site combined with a battery in future – and the requirement for compressed- air driven pumps. The potential for electric pumps that can operate in hazardous environments should be investigated.
BowravilleLimited space and wastewaterlimited savings treatment opportunities plant in energy were noted. The roof of the new tank may be suited to a small solar PV system to offset grid consumption.
BowravilleThe main energy dam demand in the dam is from an aerator that is required to run 24/7. Energy demand for this system is far less than blower and compressed air systems used in other dams so it is more likely that this system can help other councils to lower their demand.
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A small solar PV system roof or ground mounted could supply a sizeable part of the site’s demand, and a larger system with a battery could enable most of the site’s demand to be met from renewables in future.
BowravilleThis is Council’s Headworks largest site and several NMIs highlight pumping operation in offpeak times but also during the daytime. The combined load profile of three accounts (NFFFNRKS69, 4001253675, 4001253676) show this below. Pumps are not run in the peak period, but are run in shoulder periods owing to the limited reservoir capacity.
FIGURE 13- BOWRAVILLE HEADWORKS LOAD PROFILES
Large pumps are energy efficient and use soft start control. Solar PV is not a feasible opportunity at the site.
Two opportunities require further analysis:
Can costs be reduced further by avoiding operation of pumps in the shoulder period. The head and flow data are requested so that an estimate of potential savings from VSD control can be developed. Based on limited daytime run hours and low-cost offpeak operation it is likely the retrofitting VSD control is not economically but it may be feasible at the end of life of the current drives.
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Appendix C: Solar PV feasibility assessment
MahoganyProposed location Road,: slope Nambucca at the southern Heads end of the site as this area is unlikely to be required for expansion for 20-30 years. At that time the system will be at the end of its life or could be moved to another location.
Load profile:
FIGURE 14- NAMBUCCA HEADS TREATMENT WORKS LOAD PROFILES Proposed solar PV capacity based on load profile: 30 kWp and 70 kWp systems are modelled.
30.1 kW solar PV system performance: o Yield of 52.212 MWh per year o Self-consumption of 43.907 MWh per year, equal to 14% of site energy demand o Export of 8.305 MWh per year, 16% of total yield
69.8 kW solar PV system performance: o Yield of 119 MWh per year o Self-consumption of 78.791 MWh per year, equal to 25% of site energy demand o Export of 40.21 MWh per year, 34% of total yield
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Images of proposed systems: 30.1 kW solar PV system
69.8 kW solar PV system
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UnitProposed 1, River location Street,: tree line Macksville in front of the (STP) plant at the main entrance. We understand this can / will be removed and a solar array may provide a useful barrier here. The trees are located on a slope above the flood-prone land in front.
Load profile:
FIGURE 15- MACKSVILLE TREATMENT WORKS LOAD PROFILES Proposed solar PV capacity based on load profile: 20 kWp and 40 kWp systems are modelled.
19.8 kW solar PV system performance: o Yield of 34.532 MWh per year o Self-consumption of 32.496 MWh per year, equal to 14.6% of site energy demand o Export of 2.036 MWh per year, 6% of total yield
39.7 kW solar PV system performance: o Yield of 69.08 MWh per year o Self-consumption of 52.064 MWh per year, equal to 23.4% of site energy demand o Export of 17.019 MWh per year, 25% of total yield
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Images of proposed systems: 19.8 kW solar PV system
39.7 kW solar PV system
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AdministrationProposed location: nor Office,th-east 44 and Princess east roofs areSt proposedMacksville for solar PV installation. Load profile:
FIGURE 16- MACKSVILLE ADMINISTRATION OFFICE LOAD PROFILES Proposed solar PV capacity based on load profile: 30 kWp and 50 kWp systems are modelled.
30 kW solar PV system performance: o Yield of 42.467 MWh per year o Self-consumption of 34.585 MWh per year, equal to 29% of site energy demand o Export of 7.882 MWh per year, 18.5% of total yield
49.8 kW solar PV system performance: o Yield of 68.315 MWh per year o Self-consumption of 50.853 MWh per year, equal to 43% of site energy demand o Export of 17.461 MWh per year, 25.6% of total yield
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Images of proposed systems: 30 kW solar PV system
49.8 kW solar PV system
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SewerageProposed location Works: the Scottslocation modelledHead is the area where a single tree stands in the treatment works. There is limited space to site solar arrays, and an area between the two overflow ponds was not modelled.
Proposed solar PV capacity based on load data: 5 kWp and 15 kWp systems are modelled.
5.12 kW solar PV system performance: o Yield of 8.943 MWh per year o Self-consumption estimate of 8.05 MWh per year, equal to 13.6% of site energy demand o Export of 0.894 MWh per year, 10% of total yield
15.4 kW solar PV system performance: o Yield of 26.44 MWh per year o Self-consumption estimate of 18.508 MWh per year, equal to 31% of site energy demand o Export of 7.932 MWh per year, 30% of total yield
Images of proposed systems:
5.12 kW solar PV system
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15.4 kW solar PV system
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WorksProposed Depot, location :River roof of Street, the mechanical Macksville trades workshop which is used in the daytime, is close to the main switch and has space to mount inverters.
Proposed solar PV capacity based on load data: 5 kWp and 18 kWp systems are modelled.
4.95 kW solar PV system performance: o Yield of 7.511 MWh per year o Self-consumption estimate of 6.001 MWh per year, equal to 20% of site energy demand o Export of 1.502 MWh per year, 20% of total yield
17.9 kW solar PV system performance: o Yield of 27.27 MWh per year o Self-consumption estimate of 8.18 MWh per year, equal to 27% of site energy demand o Export of 19.09 MWh per year, 70% of total yield (requires battery to be viable)
Images of proposed systems: 4.95 kW solar PV system
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17.9 kW solar PV system
Page 67 Nambucca Shire Council: Renewable Energy Action Plan
Library,Proposed location Princess: east Street, facing roofs Macksville of the library are modelled, but west-facing could equally be used as could some north-facing slopes. East facing panels are the least visible.
Proposed solar PV capacity based on load profile: 5 kWp and 12 kWp systems are modelled.
5.23 kW solar PV system performance: o Yield of 7.356 MWh per year o Self-consumption estimate of 6.6204 MWh per year, equal to 25% of site energy demand o Export of 0.7356 MWh per year, 10% of total yield
12.2 kW solar PV system performance: o Yield of 17.19 MWh per year o Self-consumption estimate of 12.8925 MWh per year, equal to 50% of site energy demand o Export of 4.2975 MWh per year, 25% of total yield
Images of proposed systems: 5.23 kW solar PV system
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12.2 kW solar PV system
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MacksvilleProposed location Senior: slopeCitizens at the southern Building end of the site as this area is unlikely to be required for expansion for 20-30 years. At that time the system will be at the end of its life or could be moved to another location.
Proposed solar PV capacity based on load profile: 2 kWp and 4 kWp systems are modelled.
2.2 kW solar PV system performance: o Yield of 2.976 MWh per year o Self-consumption estimate of 2.232 MWh per year, equal to 32% of site energy demand o Export of 0.744 MWh per year, 25% of total yield
4.13 kW solar PV system performance: o Yield of 5.746 MWh per year o Self-consumption estimate of 2.873 MWh per year, equal to 41% of site energy demand o Export of 2.873 MWh per year, 50% of total yield (only viable with a battery)
Images of proposed systems:
2.2 kW solar PV system
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4.13 kW solar PV system
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BowravilleProposed location Dam,: modelled Bobo on Road, land at Bowraville the building on the southern end of the dam, any location near the main switch would be suitable.
Load profile:
FIGURE 17- BOWRAVILLE DAM LOAD PROFILE Proposed solar PV capacity based on load profile: 4 kWp and 15 kWp systems are modelled.
4.48 kW solar PV system performance: o Yield of 7.846 MWh per year o Self-consumption estimate of 6.67 MWh per year, equal to 28% of site energy demand o Export of 1.177 MWh per year, 15% of total yield
15.4 kW solar PV system performance: o Yield of 27.11 MWh per year o Self-consumption estimate of 8 MWh per year, equal to 33% of site energy demand o Export of 19.11 MWh per year, 70% of total yield (only viable with a battery)
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Images of proposed systems: 4.48 kW solar PV system
15.4 kW solar PV system
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NambuccaProposed location Emergency: solar on the Management, roof of the rear shedRiver was St, modelled, Macksville as the larger building has masts that will impact performance and space.
Proposed solar PV capacity based on load profile: 5 kWp and 12 kWp systems are modelled.
4.95 kW solar PV system performance: o Yield of 6.664 MWh per year o Self-consumption estimate of 4.998 MWh per year, equal to 21% of site energy demand o Export of 1.666 MWh per year, 25% of total yield
12.1 kW solar PV system performance: o Yield of 17.09 MWh per year o Self-consumption estimate of 8.545 MWh per year, equal to 36% of site energy demand o Export of 8.545 MWh per year, 50% of total yield
Images of proposed systems: 4.95 kW solar PV system
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12.1 kW solar PV system
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TreatmentProposed location Works,: a 12m River diameter Street, tank is Bowraville newly built on the site and is proposed as a host to a small solar PV system.
Proposed solar PV capacity based on load profile: 10 kWp system is modelled.
9.9 kW solar PV system performance: o Yield of 15.14 MWh per year o Self-consumption estimate of 10.598 MWh per year, equal to 48% of site energy demand (assumed there will be added demand with the new tank, if no new load then self-consumption level will likely be lower) o Export of 4.542 MWh per year, 30% of total yield
Images of proposed systems: 9.9 kW solar PV system (new tank is roughly where tree is located, image illustrates size)
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EntertainmentProposed location: theCentre, roof of Ridge the centre Street, already Nambucca has 2 small arraysHeads and more solar is proposed. The centre and library are both assumed to be supplied from this system as accounts include just a single bill.
Proposed solar PV capacity based on load profile: 4 kWp and 8 kWp systems are modelled.
4.13 kW solar PV system performance: o Yield of 5.722 MWh per year o Self-consumption estimate of 4.0054 MWh per year, equal to 29% of site energy demand o Export of 1.717 MWh per year, 30% of total yield
8.32 kW solar PV system performance: o Yield of 11.71 MWh per year o Self-consumption estimate of 4.684 MWh per year, equal to 34% of site energy demand o Export of 7.026 MWh per year, 60% of total yield (surplus can supply EV)
Images of proposed systems:
4.13 kW solar PV system
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8.32 kW solar PV system
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NewProposed Waste location Disposal: the roof Plant,of the main Old shed Coast is proposed Road to host a solar PV system. Proposed solar PV capacity based on load profile: 3 kWp and 8 kWp systems are modelled.
3.3 kW solar PV system performance: o Yield of 4.857 MWh per year o Self-consumption estimate of 3.643 MWh per year, equal to 32% of site energy demand o Export of 1.214 MWh per year, 25% of total yield
8 kW solar PV system performance: o Yield of 11.59 MWh per year o Self-consumption estimate of 4.636 MWh per year, equal to 41% of site energy demand o Export of 6.954 MWh per year, 60% of total yield (viable with a battery only)
Images of proposed systems: 3.3 kW solar PV system
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8 kW solar PV system
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VisitorProposed Informationlocation: the roof Centre, slopes south, Nambucca and a flush Heads-mounted system as well as one on tilt frames for north orientation are modelled.
Proposed solar PV capacity based on load profile: 2.5 kWp (south, flush) and 2.2 kWp (tilted north) systems are modelled.
2.5 kW solar PV system performance: o Yield of 3.166 MWh per year o Self-consumption estimate of 1.583 MWh per year, equal to 29% of site energy demand o Export of 1.583 MWh per year, 50% of total yield
2.2 kW solar PV system performance: o Yield of 3.502 MWh per year o Self-consumption estimate of 1.751 MWh per year, equal to 32% of site energy demand o Export of 1.751 MWh per year, 50% of total yield
Images of proposed systems:
2.5 kW solar PV system (south face, flush mount)
Page 81 Nambucca Shire Council: Renewable Energy Action Plan
2.2 kW solar PV system (tilted north)
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AquaticA 65.88 kW centre solar PV & system hydro was pool,designed Macksville and costed for the pool operator in 2017. This is illustrated below. Details of the proposed system include:
6 inverters and 244 x 270W Solar panels = 65.88kW Capital cost of $118,185 minus $37,838 in STC’s (certificates as a discount) = $80,347 (add $1000 more for monitoring Solar production of an average 291.2 kWh per day (342.4 kWh summer, 192.6 kWh winter). The pool is estimated to consume 97% of this as consumption is around 1000 kWh per day21 The estimated average buy rate is 8.95c ex GST per kWh, averaged across Peak and Offpeak periods. This is likely to include only retail electricity rates, and the addition of network, environment, market charges as well as a fraction of the site’s peak demand costs (PV won’t reduce peak demand by its full installed capacity, typically reductions of 10-30% of installed capacity is achieved), likely increases the average value of solar PV savings to around $0.15/kWh. This is used in this analysis Energy price escalation of 4% was assumed in the 2017 estimate; a lower rate of 1% pa is used here reflecting recent trends in wholesale electricity markets
65.88 kW solar PV system (design by other supplier to NSC)
21 This PV system design is used in this plan development. However we note that a significant fraction of a pool’s electricity demand occurs at night with heat pumps continuing to heat water, and that energy demand is often greater in winter to maintain conditions during daytime, when solar yield is low. Conversely with lower energy demand in summer daytimes the solar yield is high. The potential therefore is that part of the output from a 65.88 kW system is surplus to demand and is exported. In this analysis it is assumed that 15% of solar output is exported at a feed-in rate of $0.06/kWh.
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Appendix D: Mid-scale renewables and PPA market A summary of key factors influencing the market for renewable energy is presented, with a focus on what different factors could mean for NSC. This draws on recent assessments for local councils seeking to source a large % of their electricitty demand from renewables. The following aspects are reviewed:
Electricity and LGC market factors Connection and potential restrictions Virtual PPAs and contracts for difference Offtake pricing Contract duration Cost-benefit outcomes for similar Council project evaluations Energy market disruption Lack of retail competition and take up
Electricity and LGC market factors Wholesale market trends and futures pricing Any business case for renewable energy needs to be assessed within the context of available pricing of non-renewable or standard grid power rates. Notwithstanding the environmental and other benefits gained, for a business case to be viable it should make financial sense for decision makers.
The electricity market in 2017 and 2018 saw significant volatility and unprecedented high pricing, and many of the price drivers at play then will continue to influence power costs in future years. Comparing renewable energy pricing to this inflated market has prompted increased interest from consumers.
However, large-scale projects that often take over 18 months to begin generating and have lives of 25 years or more require an assessment beyond the contemporary market. These projects require assessment against long-term forecasts. Owing to recent volatility, even energy industry experts are finding it difficult to develop a reliable case.
What is clear is that over time the cost of renewable energy technology is declining and that for the first time in the NSW market, there appears to be a consistent price differential favouring renewable energy over standard grid power.
Using the Australian Energy Market Operator’s (AEMO’s) forecast influences on demand in the electricity market, the following price trajectory for wholesale power is a possible outcome.
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Underlying this price path are the following drivers:
Retirement of Liddell coal-fired power station in 2022 exerting upward pressure on pricing before exit. Declining gas pricing as a result of new entrant supply available from 2019. Incorporation on Snowy Hydro 2 and potentially more generation from Tasmania providing additional supply in the order of 3,500 to 4,500 MW from 2024. Increased proliferation of renewable generation with reducing technology costs and greater output.
If there is a relatively consistent and overall decline in standard grid power pricing, then it is likely that renewable energy will be more cost-effective in the initial years and then less so in the later years of a contract for its supply. However, if at the conclusion of the contract the renewable energy asset becomes the property of Council, then it may only require ongoing maintenance costs to continue generating at very low cost into the future.
The below chart shows the trend in Calendar Year electricity futures in NSW.
Clearly a downtrend has been in operation since the market highs in 2017. Rates following 2020 may see a slight upswing, as noted above, with the exit of Liddell power station in NSW in 2022.
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The LRET and its influence on the business case In the current market, many renewable project developers are competing to apply for network connections and construct generation assets in short order to take advantage of higher electricity market pricing, combined with high prices for Large-scale Generation Certificates (LGCs). These certificates are created when a large-scale project generates 1-megawatt hour of renewable energy that would otherwise have been majority coal-fired or non-renewably generated grid energy.
LGCs also make up around 8 to 10 percent of costs to energy consumers as retailers are obligated under the Renewable Energy Act to ensure that a percentage of their electricity sold to clients is sourced from renewable generation. This means that the retailer must surrender certificates to a government-set percentage value annually, with the percentage increasing each year to in excess of 20% of their load under management by 2020.
The cost to retailers purchasing these certificates is passed on to consumers via their electricity bills. Alternatively, where large customers have access to their own LGCs, either by purchasing them on a secondary market or where a large-scale renewable energy project is willing to sell to them directly, the retailer may allow self-surrender by customers of an amount of LGCs equivalent to their load obligation.
As LGCs do trade on a secondary market after being created and have an associated penalty per megawatt hour for retailers if the required volume is not surrendered, they effectively have a notional market cap. The penalty translates to an after-tax market cap of around $90 per megawatt hour as the retailer could elect to pay the penalty rather than purchase certificates if they were priced above this value.
Chart of LGC ‘Spot’ Market pricing (Data Source: Green Energy Markets)
Over recent years where long-term energy policy (including the Renewable Energy Target that drives the amount of LGCs required to be purchased by retailers) has been far from certain, the appetite for investment in large-scale renewable energy has been low, with developers and financiers concerned about the uncertainty of returns.
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The outcome of lower investment in renewable generation resulted in a short supply and has seen LGC pricing increase to around penalty levels over the last two years22. This not only provides an incentive for renewable energy project developers but provides a driver for Council and energy consumers to investigate ways of reducing LGC costs.
Many organisations have considered purchasing LGCs directly from project developers who have been motivated vendors. The aim being to self-surrender or resell LGCs in the secondary market to achieve a discount overall against what their retailers would otherwise charge them as a result of their Renewable Energy Target obligations.
In the context of purchasing electricity from a large-scale project, developers have recently been bundling the sale of LGCs and renewable electricity in a single rate per megawatt hour. For Council, this has cost-saving implications both if electing to purchase supply from an off-site renewable energy project or if generating its own electricity and LGCs from a large-scale on-site project.
Importantly, continued uncertainty regarding energy policy is impacting LGC pricing especially with respect to the life of the Renewable Energy Target scheme and the Federal Government’s intentions for carbon abatement beyond the current RET and ERF schemes.
Potential impact on TRC We can look ahead say 10 years (to 2028) taking the above trends on board, and forecast potential bundled pricing for electricity and LGCs with retailer margin, based on a split of say 65%:35% offpeak to peak energy demand.
Grid Power pricing LGC pricing Bundled pricing Wholesale Price (AEMO Calendar Year Calendar Year LGC Weighted $/MWh cost for fundamentals) Retail Price Price 65%:35% split of offpeak to peak, plus LGCs Financial $MWh Peak Off Peak $/MWh $/MWh Year Wholesale $/MWh $/MWh 2019 $74.00 $84.56 $64.93 >50 $80.80 2020 $63.00 $72.24 $55.47 44 $70.14 2021 $62.00 $71.12 $54.61 30 $66.39 2022 $68.00 $77.84 $59.77 25 $71.09 2023 $74.00 $84.56 $64.93 20 $75.80 2024 $76.00 $86.80 $66.65 10 $75.70 2025 $73.00 $83.44 $64.07 5 $71.85 2026 $72.00 $82.32 $63.21 5 $70.90 2027 $70.00 $80.08 $61.49 5 $69.00 2028 $68.00 $77.84 $59.77 5 $67.09
22 In the past 2 years certificates have been trading between $75 and $89 per certificate. However given the amount of LGCs to come onto the market the expectation is that these prices will halve by 2021 and be reduced to very low amounts of around $5 per certificate between 2025 and 2030.
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This provides one possible ’standard grid’ energy price pathway (~$80/MWh bundled energy + LGCs and weighted in 2019 and declining over 10 years) against which any offer for renewable energy should be compared to assess whether Council’s needs can be met.
As part of any future tender process an updated forecast would be developed that takes recent developments and key sensitivities on board. In this way offers for renewable energy supply can be compared against the best available forecasts to help determine if one or more respondents offer a discount to standard grid pricing while also helping NSC meet its GHG objectives and reduce risk.
Connection and potential restrictions Discussion of a generating asset in the current market must also consider the likelihood of achieving a network connection. In the case of rooftop and small-scale generation, most networks in NSW agree to connect through standard metering arrangements, and it would be unusual not to achieve a connection in a relatively short time frame.
In the case of mid and large-scale generation, networks are currently being swamped by applications to connect. This can result in the connection process being drawn out for many months or in some cases, for example in some regions of the Essential Energy Network in country NSW, a refusal to connect where the network is at capacity. With the increase in large scale and behind the meter PV there is a future risk (within the 30-year life of a solar project) that the grid may become saturated with PV during peak production times and there will be constraints placed on generators or negative pricing. This could particularly be the case if the asset is a semi scheduled generator23 as these can be requested to curtail by the market operator.
For NSC the main potential implications / risks here may be timing to connect an asset on land it owns compared with a project or projects that are generating or are well advanced with their connection and construction activities, and the potential risk of not achieving a connection.
Virtual PPAs and contracts for difference A virtual PPA decouples the link between a grid power supply agreement and renewable energy generation in that it does not require the physical delivery of electricity. A virtual PPA is a stand-alone financial derivative agreement that guarantees a fixed price return for the developer. The customer and developer agree a ‘strike price’ and agree to settle the difference between the strike price and the
23 Under Australian Energy Market Operator (AEMO) rules, a solar farm will be classified as exempt, scheduled, non-scheduled, or semi-scheduled depending on the extent to which it will be participating in central dispatch. Exempt – Plant size is less than 5 MW Scheduled – The generating unit participates in central dispatch. Plant size is greater than 30 MW. Non-Scheduled – The generating unit does not participate in central dispatch. Between 5 MW and 30 MW if some or all energy is sold in the NEM. Less than 30 MW if energy output is purchased by a local retailer or a customer located at the same connection point. However, ‘local use’ means that no more than 50% of the electricity supplied can be exported to the network. Semi-Scheduled – The generating unit will participate in central dispatch in specified circumstances. Greater than 30 MW. However, AEMO can – at its discretion – classify the renewable energy plant as a scheduled generator.
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spot electricity market. If the spot market price rises above the strike price, then the customer receives a payment from the project developer (who would have sold the generated power into the spot market and received revenue for it). If the spot market price falls below the strike price, then the customer would be required to pay the difference. This payment would guarantee that the project developer would not receive anything less than the strike price for each megawatt hour generated and would offer income opportunities for the customer of up to the market cap of $14,200 per megawatt hour, less the strike price value. This form of contract is also known as a contract for difference and may require Australian Financial Services Licence to deal in this derivative product. There is a Ministerial Order for preventing councils from directly investing in derivatives24. If a virtual PPA was to be used to meet 100% renewable energy target, an additional PPA for LGCs would have to be undertaken (separate agreement, but could be bundled).
For NSC the potential implication of this is fairly clear; it may be that any future offers for virtual PPAs cannot be entered into at this time unless the Ministerial order is lifted.
Offtake pricing Offtake pricing is driven by the cost of capital of the renewable energy developer, the technology and EPC costs including connection and project management, and the competitive landscape. The offtake price represents the the total cost of the project including a developer margin and is quoted in dollars per megawatt hour of generation and often includes a CPI escalator or indexation.
Capital costs are benefiting from low interest rates available and a perceived increased willingness for banks and financiers to lend against renewable projects. Technology and EPC costs are coming down in price even though connection and project management fees are under upward pressure with electricity networks being inundated with applications and new models requiring additional legal fees, firming costs and administration. The competitive landscape is also exerting downward pressure with so many projects bidding to supply customers prior to 2020. Another aspect of the competitive landscape is the ’standard’ grid power price (see market pricing sensitivity above). Renewable energy must be able to successfully compete against long term forecast pricing.
In 2017, offtake pricing was between $75 and $80 per megawatt hour and in 2018 prices of $65 to $75 per megawatt hour were available in the market. This puts pressure on investment solutions that rely on offtake revenue.
For NSC downward trends in offtake pricing should ideally be reflected in build or PPA offers that can represent value compared with standard grid pricing. Future offers that are significantly higher (noting any sleeving and/or firming costs that may be additional) than the above trends may not be reflective of what can be achieved.
Contract duration and flexibility Build / EPC offers on Council-owned land may be more likely to require a financial commitment by NSC for the long term, potentially more than 25 years, whether with council as the owner, council as the
24 https://www.olg.nsw.gov.au/sites/default/files/Investment-Policy-Guidelines-May-2010.pdf
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offtaker / customer or both. Even if council were not the final customer after an initial PPA period there would be a land lease agreement requiring management for the life of the asset on council- owned land.
The tenure of offsite PPAs has reduced from fifteen and twenty years in recent times, to now being typically ten years, with even shorter agreement periods of 4-8 years emerging. This is in line with the decline in cost of hardware and installation and the willingness of financiers to allow projects to proceed with less certainty regarding long term offtake customers. However, in a market that is so rapidly evolving, the risks for electricity consumers inherent even in a ten-year investment appear to be increasing with the speed of change and the pace of disruption in the energy market.
Emerging models such as the Renewable Energy Hub for PPAs, novatable renewable energy agreements with market matching mechanisms, and retailer arrangements that are very recently beginning to fully integrate renewable and regular grid energy, all warrant investigation. These models could considerably reduce long term investment risk, improve cost outcomes and also deliver against renewable energy targets.
Given this, for NSC it would likely be preferred if shorter-term investments / commitments could be made based on known or fairly predictable information. In addition to shorter contract periods, this could be delivered via say repricing / market price matching flexibility, price ‘sculpting’, optimising hedging options, awareness of long-term council plans that will impact energy demand and contract flexibility to accommodate this, reviewing electricity 3-year futures markets, and reviewing options for divestment or on-selling of excess energy.
Cost-benefit outcomes for similar Council project evaluations Evaluations of build and PPA (and PPP) options for a handful of councils in NSW in recent months have been carried out. 100% Renewables and Sourced Energy worked with two councils to assess these options. City of Newcastle is progressing with a 5 MWp build project that will meet a part of its load. In addition the Southern Sydney Regional Organisation of Councils has negotiated an agreement for the supply of renewables for 18 councils. SSROC25 Southern Sydney Regional Organisation of Councils Inc (SSROC) has signed a landmark agreement on behalf of 18 councils that will result in up to 35% of their retail electricity being supplied by a renewable energy generator from 1 July 2019. This innovative approach, achieved through a renewable energy Power Purchase Agreement (PPA), allows councils to purchase renewable electricity without exposure to the volatility of the National Electricity Market (NEM). The renewable energy PPA will provide councils with significant cost savings compared to the current market while also reducing their carbon emissions.
25 All text sourced from http://ssroc.nsw.gov.au/18-nsw-councils-sign-39gwh-per-year-landmark-renewable- energy-agreement-to-cut-emissions-and-costs/
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The ground-breaking contract will provide councils with renewable energy from the Moree Solar Farm project until the end of 2030, with the balance of their retail electricity needs being supplied as regular grid electricity by Origin Energy for at least the next three years.
One benefit highlighted in the SSROC approach was the value of aggregating the demand of multiple end users to achieve a better price for renewable energy supply. Build/EPC v PPA assessments The main outcomes for the options assessed for other councils are summarised below.
Option Build/EPC PPA Council ownership / stake 100% if BOO by Council 0%, power purchase only Estimated capital investment ~$1 million for a 0.5 MWp Minor, advisory services to for a 0.5 MWp plant solar farm source electricity Significant potential revenue / Electricity cost savings, LGC Electricity cost savings savings streams income Significant recurrent costs O&M, AEMO registration fees, Contract management inverter replacement Estimate financial return / Low single-digit returns for Modest electricity cost savings, savings options assessed in the current higher in the first 3 years and market (<5% over 25 years). lower or negative savings in higher returns where assessed later years where RE 2-3 years ago in a much more represents ~30% of total volatile market. Predicated on demand, potentially slightly an offtake price of $70/MWh higher costs when firming / hedging costs are included to manage spot market risk Likely scale of renewable 20-30% of load-matched >75% of total indicated by energy sourced by Council daytime load, balance to spot typically tier 2 or emerging market or offtaker /retailer retailers, 20-30% offers from tier 1 retailers
For NSC the main finding that is relevant is that PPA offers sourced from large renewable energy projects or project portfolios have offered cost savings at fairly low risk compared with the current economics for mid-scale build options where high upfront costs and low returns have been indicated. The turnkey capital cost is an important factor in this outcome and any further substantial cost reductions in solar technology and EPC would positively impact the return on the project and savings to Council. In any decision to include a build option, appropriate due diligence would be performed on turnkey costs to avoid or minimise the risk of costs exceeding tendered levels.
Energy market disruption The propensity for energy market disruption from not only new technology such as battery storage, but from policy settings, new retail offers, purchasing models and consumer behaviour, such as energy sharing, is significant. Especially in the context of multi-million dollar business decisions over terms of ten years or more.
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For NSC the evolving marketplace for renewables suggests that shorter duration commitments would be preferred. It also indicates that investment decisions might be best made on portions of council’s portfolio and diversified options rather than a single investment decision to cover all consumption in one transaction for the long term.
Lack of retail competition and take up The retail landscape in NSW is currently dominated by major retailers that are also large generators (‘gentailers’). They have been very active in the purchasing of large scale renewable projects or their output over recent times. That said, they also have significant investment in coal fired generation and long-term coal contracts that source cheap local coal. Thus far these major retailers have not been actively pursuing renewable energy supply agreements or retailing renewable energy outside of rooftop solar. The three major retailers likely have less than 20 large scale PPAs that are in planning, but many projects will have approached them to assist with retailing their generated output.
To date, these retailers have shown only moderate interest in entertaining large scale renewable energy projects and this has been in part due to the fact that they are in a very strong position in terms of not having to pursue this market. They also know that under electricity market rules all projects whether customer-owned or not must have a retailer to invoice and sell energy to an end user.
Naturally, an organisation that has executed an agreement with a renewable energy project is keen to ensure that a retailer can perform retail services and also provide the balance of the load outside of the renewable generation. A large retailer looks at this in terms of whether they can make margin on this transaction. If there is a large renewable component upon which the retailer can’t make a margin and they also have to manage risk of intermittent supply on a small amount of grid energy, then they would likely be not interested.
In recent times there have been some agreements made where the proportion of renewable energy against the entire load of a customer is small, typically less than 20%, and this is because there is still 80% or more energy upon which they are making their regular margin.
This issue is non-existent if the retailer has their own project and they are selling electricity and making margin on both the renewable and the regular grid power. Also, if they have negotiated supply from a large renewable project at discounted rates, then there is opportunity to make as much, if not more, margin than from regular grid power.
There are many smaller retailers that are more accepting of renewable projects, however, they represent a greater counterparty risk especially if entering a long-term deal. So, whilst their pricing and terms may be more palatable, they represent more risk for customers.
For NSC, the evolving interest in and participation by major retailers in bundling standard plus renewable energy offers should merit continued monitoring. Some customers are willing to limit their initial purchase of renewable energy so that there is no actual or perceived disadvantage to their regular grid contract pricing with a view to purchasing more renewable energy when it becomes cheaper, and this may be an option for NSC as well given the changing market.
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Appendix E: REAP Financing Guide
Page 93 LOCAL GOVERNMENTS
FINANCING OPTIONS FOR SUSTAINABILITY PROJECTS
GUIDE Table of contents
01 Introduction 3
02 Why you need a financing strategy 6
03 Organisational alignment of your financing strategy 9
04 Financing options & pros and cons 11
05 Integrating your financing strategy 57
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5 02 Why you need a financing strategy Reasons you need a financing strategy
• Most sustainability initiatives require some sort financing • Need to plan ahead to align with • Strategic (e.g. Community Strategic Plan or CSP) and delivery/ operational plans • Budgetary cycles • Sustainability targets • Determine the best way to finance sustainability projects given your circumstances and objectives
7 03 Organisational alignment Organisational alignment of your financing strategy 04 What are your financing options? Financing options
1. Pre-existing and future incentives and grants Free money 2. Environmental levy/Special Rate Variation 3. Self-financed through normal budgeting process Internal funding 4. Self-financed through Revolving Energy Fund (REF) 5. Internal carbon price 6. Loan financed Council borrows 7. Equipment lease 8. On-bill financing 9. Onsite Power Purchase Agreement (PPA) Third party 10.Energy Performance Contracts 11.Community energy projects
11 1. Pre-existing and future incentives and grants
• Small-scale Technology Certificates (STCs) • Large-scale Generation Certificates (LGCs) • Energy Saving Certificates (ESCs) • NSW Climate Change Fund • Grants and incentives (e.g. OEH Heritage, Knowledge Sharing Initiative, CEEP, LGEEP) • Potential CEFC and ARENA financing
12 Impacts of establishing and maintaining financing from incentives and grants
People resources to establish, upskilling Low effort High effort
Setting up internal systems Low effort High effort
Maintaining systems and skills Low effort High effort
13 Pre-existing and future incentives and grants
Provide discounts on renewable energy and Special skills required for grant appl. process energy efficiency projects (or ongoing revenue in the case of LGCs) Grants may need matched funding
Less internal resistance for sustainability Grants may not align with budget cycles initiatives Need to have projects ‘shovel-ready’ to apply Doesn’t compete with funds for other projects Always need to investigate when grant financing is available
Risk in LGC value
14 2. Environmental levy/Special Rate Variation
• Special rate paid by residents • Generally used for protection of the natural environment, but can also be used for energy efficiency and solar PV projects • Examples: • Coffs Harbour Council (since 2003, $1.3m p.a) • Blue Mountains (SRV since 2015, replacing previous environmental levy) • Willoughby (e.restore generates >$4m p.a. for sustainability initiatives
15 Impacts of establishing and maintaining financing from environmental levy/SRV
People resources to establish, upskilling Low effort High effort
Setting up internal systems Low effort High effort
Maintaining systems and skills Low effort High effort
16 Environmental levy/Special Rate Variation
Continuous funds Community has to be willing to accept expenditure on sustainability Expectation that funds will be spent projects on environmental projects Council has to account and report Great financial return on how the money was spent
17 Case Study Environmental Levy – Ku-ring-gai Council
From http://www.kmc.nsw.gov.au/Current_projects_priorities/Key_priorities/Environment_sustainability/Environmental_Levy
18 3. Self-funded through normal budgeting process
• Energy efficiency and renewable energy projects financed directly from capital budget • Possible options: • General funds • Water and sewer funds (regional councils) • Streetlighting fund (for SL upgrades) • Potentially Section 7.11 (formerly S94) and Section 7.12 (formerly S94A) • Projects may compete for funds with other activities • Energy efficiency measures are likely to be funded through this option
19 Impacts of establishing and maintaining financing from budget
People resources to establish, upskilling Low effort High effort
Setting up internal systems Low effort High effort
Maintaining systems and skills Low effort High effort
20 Self-funded through normal budgeting process – pros and cons
No contractual obligation Financial and performance risk
In most cases best financial return Responsibility for maintenance
Owning the equipment Less capital for core business activities
21 4. Self-funded through Revolving Energy Fund (REF)
• A REF is a sustainable financing mechanism • Savings from sustainability projects are tracked and used to replenish the fund for the next round of investments • Seed fund can come from capex or opex budget • Essential that the portfolio performance and cash injections are forecast to see whether the fund will grow or deplete over time • REFs can be very popular but need to be set up well in order to work
22 Self-funded through Revolving Energy Fund (REF)
23 Impacts of establishing and maintaining financing from a REF
People resources to establish, upskilling Low effort High effort
Setting up internal systems Low effort High effort
Maintaining systems and skills Low effort High effort
24 Self-funded through Revolving Energy Fund (REF) – pros and cons
Monetary investment spent many Verification of savings can be challenging times without reducing its value and expensive depending on the method used Financing of sustainability projects becomes an organisational habit Requires time to implement and convince stakeholders Can make it easier to get sustainability projects over Requires seed financing and availability the line of money in the fund to be functional
Council resolution may be required
25 Case Study REF – Penrith City Council
• Penrith Council has a forward financing financial reserve • Balance maintained through payback of cost savings from projects • Initially used an actual savings approach, but found that this was too difficult to implement • Switched to estimated savings • 100% of realised savings reinvested into the REF for 3 years • Council ensured asset managers were in charge of electricity bills to ensure incentive to reduce costs
26 5. Internal carbon price
A value that organisations voluntarily set to internalise the economic cost of their GHG emissions 01 02 03
SHADOW PRICE INTERNAL TAXES, FEES, IMPLICIT PRICE OR TRADING SYSTEMS
Hypothetical or assumed Formal financial incentive or Implicit cost per tonne of cost for carbon emissions to program. Internal fee for carbon emissions based on better understand the various activities or how much an organisation potential impact of external expenditures. spends to reduce its carbon pricing emissions.
DIRECT INDIRECT
27 Impacts of establishing and maintaining financing from internal carbon price
People resources to establish, upskilling Low effort High effort
Setting up internal systems Low effort High effort
Maintaining systems and skills Low effort High effort
28 Internal carbon price– pros and cons
Easier to fund sustainability Difficult to implement initiatives Difficult to generate buy-in from Shift in organisational thinking to be business units with high emissions less carbon intensive
Ability to establish a Science-Based Target
29 Case Study– Internal carbon price
• Microsoft – Carbon Fee – Assigned a carbon fee in 2012 across its business units – Funds used to pay for energy efficiency projects, renewable energy projects and launching new product lines • National Australia Bank – Implicit price on carbon – Introduced in 2010 to fund its goal of becoming carbon neutral through offset purchases and energy efficiency projects • ENGIE – Shadow price – Implemented a price on carbon for future investments to lower investment in high emissions energy generation
30 Case Study – Internal carbon price • Microsoft – Carbon Fee – Assigned a carbon fee in 2012 across its business units – Funds used to pay for energy efficiency projects, renewable energy projects and launching new product lines • National Australia Bank – Implicit price on carbon – Introduced in 2010 to fund its goal of becoming carbon neutral through offset purchases and energy efficiency projects • ENGIE – Shadow price – Implemented a price on carbon for future investments to lower investment in high emissions energy generation 6. Loan-funded
• Lender provides capital • Pre-determined variable interest rate • Repayments are made over time • Typically used for expensive equipment
32 Impacts of establishing and maintaining financing from a loan
People resources to establish, upskilling Low effort High effort
Setting up internal systems Low effort High effort
Maintaining systems and skills Low effort High effort
33 Loan-funded – pros and cons
No or reduced upfront cost Economic and technical risk if equipment becomes unusable and Capital available for other projects the loan is on the balance sheet
Councils have access to cheap Financial returns are less compared interest rates with self-funded equipment
34 7. Equipment lease
• Supplier owns and installs equipment • Monthly repayments for 5-10 years • Options for end of the lease: • Remove • Rollover • Buyout
35 Equipment lease
100% 40% 60% 30% 30%
Energy use Energy use Gross Equipment Net savings before the after the savings for lease for project project Council payment Council
36 Impacts of establishing and maintaining financing from an equipment lease
People resources to establish, upskilling Low effort High effort
Setting up internal systems Low effort High effort
Maintaining systems and skills Low effort High effort
37 Equipment lease – pros and cons
Supplier responsible for Repayments with interest are maintenance incurred
No or modest upfront cost Equipment is more expensive compared to upfront purchases Cost of investment spread out No ownership Access to new equipment after the lease has run out
38 8. On-bill financing
• Retailer installs equipment • Repaid through a repayment charge on the energy bill • Once payments are made ownership is transferred
39 Impacts of establishing and maintaining financing from on-bill financing
People resources to establish, upskilling Low effort High effort
Setting up internal systems Low effort High effort
Maintaining systems and skills Low effort High effort
40 On-bill financing – pros and cons
No or reduced upfront cost Repayment liability on the balance sheet Payment via utility bill reduces risk of default May tie customer to the energy retailer
May be more expensive in the long run
41 9. Onsite Power Purchase Agreement (PPA) – behind-the-meter
• PPA provider designs, constructs, owns, operates and finances the renewable energy generation equipment • PPA provider retains ownership and responsibility for maintenance • Company agrees to purchase certain amount of electricity from provider • Purchase price of electricity lower than bundled price of electricity from the grid • OEH has created a panel of preferred suppliers • https://www.environment.nsw.gov.au/government/solar.htm
42
Impacts of establishing and maintaining financing from an onsite PPA
People resources to establish, upskilling Low effort High effort
Setting up internal systems Low effort High effort
Maintaining systems and skills Low effort High effort
44 Power Purchase Agreement (PPA) – pros and cons
Cheaper price for electricity Not beneficial for small systems especially those under 100 kW No upfront cost Ties customer to the PPA provider Provider takes responsibility of maintenance and equipment Higher cost in the long run for solar replacement
LGC risk is taken by the solar PPA provider (>100kW)
45 10. Energy Performance Contracts (EPCs)
• An EPC is a contract between an energy service company (ESCO) and an organisation • Under an EPC, • the ESCO is engaged to improve the energy efficiency of a facility • the ESCO examines a facility, • evaluates the level of energy savings that could be achieved, • then offers to implement the project and guarantee those savings over an agreed term • The guaranteed energy savings from the project pay for the capital investment required for the project
46 Energy Performance Contracts (EPCs)
47 Impacts of establishing and maintaining financing from an EPC
People resources to establish, upskilling Low effort High effort
Setting up internal systems Low effort High effort
Maintaining systems and skills Low effort High effort
48 Energy Performance Contracts (EPCs) – pros and cons
Upgrade aging and inefficient assets Require a large project above $500K to attract ESCOs Technical and financial risk borne by ESCO Not cost effective for addressing a single measure Guaranteed savings reduces Establishing governance arrangements the risk of savings erosion over time Skills are being outsourced to another provider, no upskilling in the organisation
49 Energy Performance Contracts (EPCs) – Warringah Council Case Study
• Commenced an EPC to improve energy efficiency in several buildings • Contract valued at $560,000 over two years with replacement of – Lighting – Plant and equipment • Saved – 1,155 GJ – 300 t CO2-e
50 11. Community energy projects
• Community energy projects are usually either structured as a PPA or a community loan • With a PPA, • renewable energy is developed and owned by the community, • The host buys the energy (example: Repower Shoalhaven) • With a loan, • funds are raised from investors and lent to the host who builds and operates renewable energy projects. • The host repays the loan (example: Lismore City Council, Farming the Sun) • Council could be host to a community energy project to develop solar projects in the local area
51 Impacts of establishing and maintaining financing from a community project
People resources to establish, upskilling Low effort High effort
Setting up internal systems Low effort High effort
Maintaining systems and skills Low effort High effort
52 Community energy projects – pros and cons
Financial benefits returned to the Take a long time to set up community Financial benefits are not as great Transfer of skills and knowledge of as compared to being funded from renewable energy to the local capital budget community Significant resources required to Raises the profile of Council implement
Shares the financial rewards with the community
53 Summary of financing options 1/2
People resources to Setting up internal Maintaining establish, upskilling systems systems and skills
1. Existing/future incentives & grants 2. Environmental levy/SRV 3. Normal budgeting process 4. Revolving Energy Fund 5. Internal carbon price 6. Loan-funded
Legend: Low effort High effort
54 Summary of financing options 2/2
People resources to Setting up internal Maintaining establish, upskilling systems systems and skills
7. Equipment lease 8. On-bill financing 9. Onsite PPA 10. Energy Performance Contracts 11. Community energy projects
Legend: Low effort High effort
55 Remember: Financing options are not mutually exclusive 05 Integrating financing into your strategy Method for integrating the financing with your sustainability strategy
1. Run a workshop 2. Present to the leadership team
• Pre-evaluate possible financing options • Get feedback from leadership and select shortlist team • How does each option relate to Council’s • Refine Council’s preferred current situation? financing options • What are the risks and opportunities of • Develop a pathway for each option? implementation • Let the group determine the best options • Develop a draft pathway
58 Optimal financing strategy Need help with developing your Financing Strategy?
• How does each option relate to Council’s current situation?
• What are the risks and opportunities of each option?
• What are the financial outcomes of the various funding options?
100% Renewables is specialised in helping our clients develop business cases and model financial outcomes. BARBARA ALBERT Director, 100% Renewables If you need help with shortlisting financing options, preparing a workshop or presentation for your senior management, or with modelling different funding PATRICK DENVIR options, please talk to us. Director, 100% Renewables THANK YOU
100percentrenewables.com.au Tel: 1300 102 195 Level 32, 101 Miller Street, North Sydney 2060 [email protected] Nambucca Shire Council: Renewable Energy Action Plan
Level 32, 101 Miller Street North Sydney 2060
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