CarbonetiX

A short flight from energy waste to energy poverty

Last week I had the opportunity to travel to the island of Tanna, in Vanuatu, as a volunteer with start-up non governmental organisation Village Infrastructure Angels. VIA have developed a micro-credit programming for the financing of solar lighting, and I was there to demonstrate a range of household solar lights to see which lights were of the greatest interest to villagers.

The most popular lights were those with a central battery and a number of lights, so that several rooms in a house could be lit from the one battery and solar panel.

It was very different to my work in energy efficiency, which my role is to point out where energy, mostly electricity, can be used more efficiently. Here I was introducing electricity, and small lighting systems that produce much high quality light than that produced from a fire, a candle or a kerosene lantern. Normally my work is about reducing energy wastage, here I was introducing (efficient!) energy usage. From addressing energy wastage in a country (Australia) with substantial generation and distribution infrastructure to addressing energy poverty in a country with little energy distribution infrastructure.

This has not been possible or affordable until very recently, and has arising by the dramatic decrease in solar PV costs, improvements in LED lighting efficiency, and drops in LED pricing.

Just as mobile phone networks have provided phone access in many countries without the need to invest in expensive fixed line infrastructure (e.g. most of Africa), so lighting systems such as those promoted by VIA are eliminating the need for high cost electricity distribution infrastructure, and accelerating the pace of development. VIA’s hire-purchase model is also similar to a phone plan – pay as you go – and makes electric lighting affordable to almost everyone.

The video below has Vallette Nako, one of the people promoting the project, describing the lighting systems, the loan payments and highlighting two human development benefits: the ability to now weave mats and baskets at night (economic benefit), and for kids to do their school homework (educational benefit).

Australia’s Revised Emissions Trading Scheme

At the start of this week The Federal Government announced changes to Australia’s emissions trading scheme (ETS). Set to replace the carbon tax in 2015, the new ETS will be heavily linked to it’s European counter-part.

The European ETS has been operating since 2005 and covers more than 11,000 factories, power stations etc. By contrast, our ETS will apply to about 500 companies and is awaiting implementation. So, what are the changes?

Changes for Polluters

Those Australia companies that must pay for their right to emit co2-e will no longer be able to offset half of their emissions. Under the new system, cheap $5/tonne carbon offsets (generated, for example, by trees planted in China) can only be used to cover 12.5% of a companies emissions. This means that the other 87.5% of emissions must be paid for with a ‘right to pollute’ certificate not a carbon offset.

These “right to pollute” certificates can come from two places: (1) The Australian Government’s ETS and (2) The European ETS. The latter of these can only cover up to half of a liable entities pollution. This means that no matter what the prices of international offsets or European permits, Australian companies must pay the Federal Government for at least half of their emissions. This will most likely be an Auction system where companies pay between $20-$40 for the right to emit one tonne of co2-e.

By contrast, the same certificate from the EU-ETS currently costs around $10AUD/tonne and, as I mentioned, the price of an international carbon offset is about $5AUD/tonne. Assuming that these prices hold, a rational company will purchase as much as possible of the relatively lower offsets (12.5%). Next, they will purchase as much of the relatively cheaper EU permits as they can (37.5%). Lastly, they will purchase the minimum required amount of Australian permits (50%). The table below shows how this might look for a company who emits 100,000 tonnes of co2-e a year is looking at a cost of:

Where is it all heading?

We currently have an interim agreement with our EU counterparts, with a firmer agreement expected to be signed shortly. The thing to remember here is that the ultimate goal of this policy is to completely link the two schemes. This means that our permit price should equalise with the EU permit price in the long run. Of course this is all highly speculative (especially given the political uncertainty surrounding this policy). Further, for simplicity I have not included how the CFI will affect the net cost of emissions.

How is energy efficiency affected?

Investment in Energy Efficiency is predominantly motivated by savings on electricity costs, not the cost of emissions permits. For instance, a project to install more energy efficient lighting across a company might save 500 tonnes of co2 a year – which could save the company about $9,700 a year in permit costs. This might sound like a lot, but the same project will ALSO save over $50,000 in electricity costs each year!

Tackling your co2-e emissions with offsets, permits and even green energy production (where it is not used internally) all carry uncertainty, complexity and are a yearly ongoing concern. In contrast to this, investing in energy efficiency will permanently and directly cut emissions and significantly lower electricity and gas costs.

Our view at CarbonetiX is that companies should become as energy efficient as is cost effective – no more, no less. Only after cost-effectively minimising your actual co2-e emissions should one address the question of emissions reductions through offsets and permits.

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Want to discover your potential to reduce emissions and cut energy costs? Get an energy audit from Carbonetix! Call 1300 311 763 for more details.

Where are the extra charges on your electricity bills going… inefficiently?

Victoria’s electricity consumption has dropped and in real terms peak demand has been stagnant over the last four years (see https://carbonetix.com.au/gallery/a-surprising-analysis-of-victorian-electricity-consumption-demand/). Yet over this time electricity prices have increased.

One local government client cut its energy consumption by 34% between 2006 and 2011 at one of its larger sites, yet the amount it paid for electricity increased by 7%. Its average tariff went from 8.6 cents to 13.9 cents/kWh.

At the same time the average spot price for electricity on the wholesale market dropped from 3.4 cents/kWh to 2.9 cents/kWh. Renewable scheme energy charges (SRET, LRET) went from 0.09 cents/kWh to an estimated 1.3 cents/kWh.

The price increase and the components of this price increase are shown in the graph below. The sum of retailer and distribution charges has risen by 87%, and now comprises over 2/3rds of the charges.

Where price increases subsidise energy efficiency in buildings or more sustainable forms of energy generation I am in favour of such price increases, as this hastens our transition to a low carbon economy.

Higher prices can also be a driver for consumers to reduce their energy use, saving electricity. And when implementing an Energy Performance Contract higher prices mean that larger savings can be achieved within a given payback.

However the price increase added to electrons between the generator and the power point is extraordinarily high. The main argument for this is that the distribution businesses have needed to invest in more assets to cope with increasing peak demand. But weather-adjusted peak demand appears to be stagnant. So any investment has been into assets that may not be used, and may never be used as we now appear to be on a trend of decreased consumption and flat and potentially decreasing peak demand.

The Australian Energy Regulator needs to address this, and review the need for planned investments in network infrastructure. The billions that are being ploughed needlessly and inefficiently into network infrastructure that is unlikely to be used could instead significantly hasten our transition to a low carbon future.

In the meantime, what can be done about the high prices? Reducing energy use will reduce your electricity costs.

To reduce energy use mid to large sized energy users could consider implementing an Energy Performance Contract (EPC). You can typically expect to achieve guaranteed savings of 30% to 50% on a seven year payback. Smaller energy users could have an energy audit or energy assessment undertaken then take action on the audit, and also get very good savings. A valuable precursor to either of these actions would be to develop an energy management plan in order to get the corporate commitment necessary to make the investment needed to achieve substantial savings through energy efficiency.

A $20m lesson in energy efficiency from the City of Toronto

Background

The City of Toronto has spent around $20m retrofitting 89 buildings, and according to newspaper The Globe and Mail no one knows if the program produced “any real savings”. Particularly criticised in the audit of the program were the Building Automation Systems (BAS) installed in the arenas (particularly ice skating rinks), which “malfunctioned badly.”

The National Post provides more clarity than the Globe and Mail, however, and quotes the projects auditor’s report as saying that “it is not possible to determine whether or not the amount of the energy savings realized were adequate to finance the original capital costs as required by the program.”

This is bad news for the City of Toronto, both because of the bad publicity and because of the uncertainty around the savings.

Bad publicity

The Globe and Mail report, which was picked up by the Environmental Leader, tells the story a very different way to the National Post. It insinuates that there were no real savings and that the $20m was wasted. The National Post indicates that there were some savings, but is uncertain as to whether it was enough to cover the financing costs for the program.

The truth is that the energy efficiency works did achieve some savings, but it remains unclear as to whether the amount saved will be enough to pay capital and financing costs. The project had apparently expected a positive financial return (payback) after 10 years.

Savings

Without knowing the full details of what went wrong it appears to me that several reasons exist as to why the savings may not have been achieved:

Failure for the contractor to work well with the facility managers at the sites.

The Globe and Mail article leads with a facility manager at one of the sites saying “he warned early on that the estimated savings were ‘incredibly ambitious.’” Henry Ford said “if you think you can, or you think you can’t, you’re right.” Energy efficiency is not something that can be totally outsourced, and facility managers play a very important role in saving energy. By failing to effectively engage with and get the facility managers on side, it appears that the contractor made a significant mistake. In this case it appears that at least one facility manager didn’t believe the savings were possible.

A mistaken belief – all too common – that the BAS systems installed would save energy.

A BAS doesn’t save energy. What saves energy is the appropriate programming of the BAS, then good use of the BAS once it has been properly commissioned. It seems as though the BAS systems may have been poorly specified and possibly inadequately commissioned, with inadequate training. A BAS is complex, and to be effective in saving energy a good investment has to be made in properly configuring it and in training operators how to use it. By not effectively engaging with the facility managers the BAS systems were possibly doomed from the start. Particularly if the new BAS systems made it harder for the facility managers to maintain comfortable conditions in the facilities.

Failure to extend the contract for the full payback period.

It appears that the projects were completed in 2007 under an energy performance contract (EPC). Possibly what happened was that the formal monitoring and verification (M&V) of energy savings under the EPC went for a year afterwards. Then, with the contract finished and the contractor no longer around, the facility managers then turned off the BAS systems (that they had never liked and potentially made life harder for them), and the savings evaporated. Had the contract been extended to run and provide full monitoring and verification for the full term of the payback, then this may not have happened. But this would have added further costs which the city may have been keen to avoid.

Poor monitoring systems, and failure to institutionalise energy efficiency into annual performance requirements.

Possibly the City of Toronto failed to adequately monitor the savings on an ongoing basis, and it may not have incorporated energy efficiency as a KPI in its management systems. Had it done so, the problems may have been picked up a lot earlier.

Lessons for Australian local governments

This story contains some important lessons for Australian local governments who are pursuing energy efficiency works. These lessons are:

Have a strong framework for energy efficiency, with a corporate energy management plan that is reviewed annually, including measurement against targets and allocation of responsibility

Understand that there needs to be a strong corporate commitment across the organisation to energy efficiency. If the facility managers aren’t on board you have a problem

Put in place robust measurement systems

Understand that energy efficiency is an on-going investment

Be careful as to how the real results of your programs may be distorted in the media.

A recent Total Environmental Centre (TEC) report has demonstrated the benefits of investment in improving the energy efficiency of commercial buildings. The case study draws on six commercial buildings in Sydney.

The motivation for investing in commercial building upgrades and retrofits were many. Some organisations were looking to increase asset value, others wanted to attract higher rental incomes. In all cases, the works focused on reducing the buildings …

All Queensland businesses who consume 30TJ (terra joules) or more of electricity and gas per year are required to under take an Energy Audit and prepare an Energy Savings Plan.

This roughly equates to yearly gas and electricity costs of above $700,000.

The required plan must contain a minimum of one energy efficiency measure, one energy conservation measure and one energy management measure.

These measures are designed to ensure cost-effective reductions in energy costs are being pursued, which will benefit both the organisation (by saving money) and the environment (by saving carbon).

CarbonetiX have been providing large businesses with energy efficiency solutions since 2001. Our team are fully qualified to undertake the required level 2 energy audit under Australian Standard AS/NZS 3598:2000.

Further, our staff will turn this audit into an appropritate Energy Savings Plan that suites your budget.

Organisations with a well prepared Energy Savings Plan can cost-effectively save 10-30% on gas and electricity.

Any Queensland organisation that needs an Energy Audit or Energy Savings Plan under the Smart Energy Saving Program should speak to an energy efficiency engineer.

CarbonetiX
PH 1300 311 763
info@carbonetix.com.au

Environmental Finance Opens for Commercial Property Owners

The first privately funded Environmental Upgrade Agreement (EUA) has been signed under the City of Melbourne’s 1200 Building Program, paving the way for property owners to access finance for environmental (energy efficient) retrofits of commercial buildings.

National Australia Bank (NAB) has partnered with Low Carbon Australia Limited to develop a finance product that encourages commercial property owners to carry out sustainability upgrades through EUAs.

The building owners of 123 Queen Street, Melbourne will use the EUA to fund the implementation of energy efficiency measures which will result in the building’s NABERs rating increasing from two to four stars.

- Contact CarbonetiX about upgrading your NABERs rating -

NAB’s Head of Property Finance, Andrew Balzan said that NAB is pleased to be a part of pioneering Australia’s environmental finance market.

“NAB has worked extensively with the City of Melbourne to successfully legislate this new initiative, the key component of which is the partnership between building owners, tenants, councils, solution providers and capital providers.

“The signing of 123 Queen Street in Melbourne signals the first privately funded EUA. It is the first product of its kind in Australia, with legislation now implemented in parts of NSW and Victoria,” Mr Balzan said.

CEO of Low Carbon Australia, Ms Mcdonald, said: “This is a major milestone for low carbon finance in the Australian property sector. We are excited to be involved in the finance solutions readily available to building owners who wish to progress now to retro fit their properties and start capturing energy savings and reducing carbon emissions.”

City of Melbourne Eco-City Councillor Cathy Oke said the signing marked an important milestone.

“We know that access to affordable capital is a major barrier in retrofitting commercial buildings. This innovative financial mechanism removes this barrier and equips building owners with the financial tools they need. I’m confident we will see many more signings like it in the future,” Cr Oke said.

The NAB Environmental Upgrade Funding will be funding individual projects from $250,000 to $10 million.

CarbonetiX have significant experience working with private and public funding bodies and can help you secure finance for energy efficiency retrofittings in commercial buildings.

Our qualified NABERs certified engineering staff can consult, assess and project manage commercial building energy efficiency projects.

- Contact us to discuss an energy efficiency retrofit of your commercial building -

Energy Efficiency Pays in Port Melbourne

FOR Port Melbourne apartment dweller Steve Brown, getting his owner corporation committee on board with energy cuts was easy once he told them how much money they could save.

Bayview Apartments’ owner corporation MiCM Property has now won the 2011 Carbonetix Managed Property Energy Efficiency Award.

The block of 270 apartments was running up bills of $12,000 every month, which have been slashed to $6000.

As a former electrician, Mr Brown pushed for change which has now saved owner/occupiers thousands in body corporate fees.

“We have decreased the body corporate fees through the energy savings we are making and these can be reduced further because it covers a lot more than electricity,” Mr Brown said.“We haven’t even touched gas and water yet where there can be savings.”

Carbonetix spokesperson Peter Lambert said through a range of measures the block had reduced running costs substantially and was avoiding 92 tonnes of carbon pollution every year.

***Full Article from the Port Phillip Leader 13 Dec 2011 by Sally Spalding found here***

The project was undertaken with support from the Port Phillip City Council SOCs and Blocks program.

Google Uses More Power than Salt Lake City

Google has broken its silence on energy consumption, announcing that it consumed 2,259,998 MWh in 2010.

In a new section on the Google Green site, called “The Big Picture,” Google also said that it generated 1.46 million metric tons of carbon dioxide last year. Average annual carbon footprint per user was about 1.46 kg CO2 before offsets, and 0 kg afterwards, Google said.”

The company said that by purchasing and generating renewable energy, as well as buying high-quality carbon offsets, it has brought its carbon output to zero. “We’re very picky because we want to make sure that our investment has a positive impact that wouldn’t have happened without us. For example, we pay for reductions in emissions from a landfill near our data center,” Google said.

By embracing IT energy efficiency in areas such as system architecture, hardware provisioning, software design, and operations, organizations can stretch their budgets and respond more rapidly to demands for additional services.

The following video comes from Microsoft’s IT Energy Efficiency initiative:

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Category Archives: Energy Efficiency

A short flight from energy waste to energy poverty