Meeting with Sydney Council Officers, 23/01/19

We met with Nik, Melinda and Chris to discuss the Grant Contract procedure and to provide them with details of our plans and the recent past in our process.  Both Melinda, whose responsibility is in the area of Residential renewables, and Chris, who has been a source of consistent cautioning advice, were particularly interested in our Embedded Network Management decision process and how we had identified the likely selection.  Chris cautioned us to be careful about our ENM fee beyond our agreed first year term.  If we decide to continue with an ENM we should endeavour to ensure that subsequent years’ fee increases are based on cost-of-living rises.

We discussed some of the issues involved in dealing with Ausgrid and the Officers offered to arrange a meeting with Craig from Ausgrid together with our ENM when we are at the pre-lodgement point of being ready to switch over.  Our plans must describe exactly what we will be doing to avoid delays from Ausgrid.

Luci raised the issue of the potential loss of 10% of our Grant due to GST.  This was an issue that the Officers had not previously had to consider and they undertook to investigate whether it is possible for the Grant to cover the GST cost on our payments to the network supplier.  Once this issue is resolved we will need to sign and seal the new contract with the Sydney Council.

We established that our Strata will need to invoice the Council via our Strata Manager for the $25K grant.

Moving into implementation of BlackwattleSolar

On 15 January, Neil, Luci, Paul and Alex visited one of the tenderers to examine the proposed solar panels and inverters and to refine the project scope. We had a briefing on a wide range of panels and inverters with advice on selection criteria to optimise the installation for BlackwattleSolar. We also explored contractual issues and were advised that we could get 25 year warranties on both panels and inverter.


The next steps are to finalise the tender, negotiate and sign the contract and pay a 20% deposit. In parallel, we will meet with City of Sydney officers on Wednesday 23 January to discuss the contract for the City’s grant of $25,000. We aim to do both in time to report to the next meeting of the Strata Committee on Monday 5 February.


As discussed at the EGM, we then need to move quickly to select the Embedded Network Manager and so are looking to set up a briefing and opportunity to endorse for all residents (resident owners and tenants) later in that first week in February. 85% need to support the ENM appointment for the project to proceed but each can still opt out if they decide not to buy cheaper electricity via BlackwattleSolar.

Team Meeting, 8th January

Our next important step is to meet with SolarPro and James and we decided to propose Tuesday next week.  Our goal in this meeting will be to review their original tender proposal in detail and agree on the specifics to be embodied in our Contract with them.  We will also seek to have them provide implementation documentation including things such as supply requirements and operating requirements.  We must establish the legal basis for the BlackwattleSolar Billing Contracts.

In order to manage the implementation process soundly we will aim to set up a separate fund in the Strata accounts at Jamesons.  Alex will liaise with our Treasurer to develop an agreed system for receiving and expending funds.  We need to establish that we still have approximately $3K of unexpended funds from the first Council Grant.  We also need to ascertain from our Strata Manager what insurance arrangements we need to make to cover the possibility of storm damage to the solar panels.

Paul was to contact Nik at the Council to arrange for the signing of our contract with them.  Luci was to contact Cathy at the Council to see whether our Grant monies could be paid direct to SolarPro so we would avoid losing 10% to GST. Her reply indicated that this would not be possible.

Luci agreed to prepare a protocol that would be followed if at a future point the Embedded Network became financially non-viable due to opt-outs. 

Finally, the big decision at the Special General Meeting, 18th December

On the big day Neil and Sharon’s living room was packed, so many that Bo had to resort to the piano stool to have a seat.  The week before had been a very nervous one for most of the Project Team even though the ambience at the drinks was so positive.  Our new Strata Manager, Paul Culbi, was in the Chair and after dealing briefly with the Minutes of the Annual General Meeting he put the first of the two motions. 

A couple of questions were raised mainly to do with the Embedded Network Management role and then the vote was taken – ‘All those in favour’ – all but one hand raised; ‘Those against’ – no hands; ‘Carried unanimously’.  The second motion dealing with the financing was then put and this time all hands were raised – ‘Carried unanimously’. ’There being no further business meeting closed’.

A collective sigh of relief, a brief pause, and then a small cheer and excited chatter as we opened the bottles of Champagne.  The long journey toward a break-through for Sydney Strata communities had reached its successful conclusion.  Messages went out to the many people involved in assisting us to reach this wonderful conclusion, immediately followed by congratulations.

A few days later the team agreed by email that, having reviewed the tenders and the analysis by Wattblock, we would select the ENM/SolarPro tender subject to a satisfactory final proposal from them and agreement on an acceptable contract (Luci has suggested 90 days settlement). We would then need to meet with them early in the new year to develop a detailed project plan and schedule.

We also need to develop a communications plan to inform owners and tenants and schedule the Embedded Network Manager briefing and vote to affirm the selection of James Pearce’s company (ENM Solutions) for the first 12 months of the operation. We also have to arrange with Nik Midlam at the SCC to receive the draft Contact.  Luci will ask Cathy at the City whether they can pay an invoice directly to SolarPro, the chosen installation contractors.

To avoid the confusion we experienced with the first grant, we decided we would designate one team member to certify invoices for payment, forward them to Strata Manager Jameson with a copy to the Strata Treasurer for payment.  We will then keep a spreadsheet record of all income and expenditure (including the small scale certificate rebate) so that we can fully and transparently account for all funds. This reminded us that we need to track down the residual from the first grant.

Early in the new year we would have to saddle up again to deliver the implementation but for now we could just enjoy our sense of achievement.

Extraordinary General Meeting at 6 pm on Tuesday 18 December in Unit 3

The notice for the Extraordinary General Meeting has been sent by Jamesons. Please note that it will now commence at 6 pm.
As this is such a momentous initiative for Blackwattle Mews, it would be wonderful if all owners could attend at least by proxy. A proxy form is attached to the agenda so, if you can’t attend the meeting, please ask another owner if they would take your proxy and fill out the form for them to deliver at the beginning of the meeting. It’s now important to check because the new Strata Act limits owners attending the meeting to holding only one proxy.

Owners’ briefing session on the 4th December and Xmas drinks on the 7th.

Nine of the owners had been part of the previous night’s meeting, three were overseas, two were working, leaving only four to be ‘briefed’.  In the event two of that four attended with three of the Team and two of the Committee there to do the briefing.  Understandably, it was a low-key amicable conversation where all questions were answered satisfactorily.  One of the two made the pleasing observation that she was really enjoying the sense of our working as a collective to share the benefits the Network would bring.  There was also a small-scale sense of pride that we would become joint owners of our own electricity grid.

On the following Friday from 6 pm many owners and their families gathered in Neil and Sharon’s garden for drinks and chat.  Several owners who had previously been unable to attend our various events were there helping to engender a real feeling of community and anticipation. 

 

Strata Committee Meeting with the Team on 3rd December

There being 7 SC members and 4 PT members this was quite a big meeting.  In the days before concerns were expressed that we take care to follow the letter of the Strata Act in this major piece of decision-making.

Following an initial summary of the scope of the project and the financing options, questions and concerns were raised and one by one dealt with so that a sense grew that this was an opportunity that the Strata should grasp, especially in view of the $48,000 (or 40%) support that has been secured.  The actual operation of the Network was less of a concern and questions about it were relatively easily addressed. The more difficult issue was the method of financing. Following extensive discussion, the Team and the Committee agreed that this should be done by drawing on the Capital Works Fund plus a one year owners’ levy (four quarters at an average $320 per quarter) which would subsequently be reimbursed from the profits generated by the Network over its first five years of operation.

Although the CWF has built up to $100K+ at this point, the Committee had agreed to use $80K of this in 2019 to repair and seal brickwork and paint all timber features.  The challenge was to pursue a both/and solution rather than either/or and the levy was the way to do this. Alex had worked diligently to demonstrate how we could manage the short-term cashflow. That confidence enabled the Strata Committee to vote unanimously to recommend to the Owners that the project be supported and financed by a levy with both proposals put to an Extraordinary General Meeting at 6 pm on Tuesday 18 December in Unit 3. The meeting ended on a very positive note.

Between them Alex and Neil then created and despatched the agreed Notice of Special General Meeting with its agenda and the Notice of Motions resolving to establish a Solar Energy Embedded Network and the means of financing it by increased levy for the Capital Works Fund.  The next day the Strata Manager mailed these including Proxy Forms and a detailed descriptive document to all Owners thereby fulfilling the requirements under the Strata Act.

Notes from Team meeting on 3rd November

The previous day we had received a formal letter from the Lord Mayor announcing the Council decision to provide us with a $25,000 Grant to ‘help us with our project’. It has therefore been included above in our project financing.  At this meeting we agreed we need to develop an implementation plan, including a communication program for the other Owners and tenants.  Our first step will be to move at the forthcoming Strata Annual General Meeting on 12/11 that the cost of a new Main Distribution Board be added as part of the Strata 10 year Capital Plan.  Alex agreed to draft an Amendment to be put to the AGM.

Discussion about a communication program for the residents concluded that it was most likely that one session of 1-2 hours would be preferred so Neil agreed to include this option in his information update letter to be sent out this weekend.  If possible, we will provide at least one information session before Xmas.  We also decided to invite our strata community to a pre-Xmas drinks party.

We had a lengthy discussion about the issue of GST costs for our project after noting that the Council letter said that “GST is not included in your grant amount. It is payable in addition if your organisation is GST registered.”  Bo undertook to look into this issue in more detail and has provided the following:

“I have done further research about whether it is beneficial to register GST for our strata. My research shows we are unlikely to gain any benefit from GST registration for these reasons.

First, if an owners’ corporation is registered for GST the fees or levies it charges its members will include GST – for example, for car parking, ongoing maintenance or administration. Our current strata levy is around 60K per annum without GST. Following GST registration we would be required to collect an additional 6K GST from owners and pass this to the ATO. This would offset the net GST credit from our capital expenditure of the solar system.

Second, I also considered whether it is possible to register the GST just for the period when the capital expenditure is incurred and cancel the registration (e.g. deregister GST after claiming back the GST credit to avoid future GST liabilities). The answer is no. Under GSTR 2000/24, if the entity cancels its GST registration and still has assets for which the entity previously claimed GST credits, the entity may need to repay some of those credits. For our body corporate, unless we keep the GST registration for five years, we would have to repay the GST credit to the ATO.  

Our body corporate’s turnover is currently under the GST threshold which is why we are not required to register GST. It is better to keep this way.  

Thus, it was worth considering the GST registration scenario due to the size of the capital expenditure involved. At least we know we don’t have to worry about GST when working out our budgets which is one less thing to worry about.”

Notes from Neil’s meeting in Melbourne with James Pearce of ENM Solutions on 29th October

James had offered to meet several weeks ago so Neil took up his offer with the following agenda: to clarify the basis of an offer to our fellow owners that spells out (a) each item of cost involved in the setting up of our first stage embedded network, (b) the most advantageous/feasible formula for financing it with associated pay-back period, (c) how its billing system would work including relative returns to owners/occupiers c.f. to the Body Corporate, (d) a first-cut description of timing and costs of a second stage.

Initial capital costs                                          $

Solar Panels                                                        46K [being $69 – $23 Small Scale Certificates]

Upgrades required                                          36K [cabinets, CT Chamber, new MDB] for Embedded Network                                could be $3k less

Smart Metering                                                <$5K

Setting up Embedded Network                  $9K [meetings with Owners to gain consent, Negotiation with AEMO, etc]

TOTAL                                                                   $96K

EN Running Costs

$15/customer/month= $270×12=$3240 pa

Financing

Annual profit                                                      $7-8K  [p.11 of Tender – Est Annual Benefit Table]

James thinks feed-in tariff revenue would be negligible

Potential sources of funding:

                Sydney Council Grant                                     $25K

                Strata Capital Fund                                          $20K [cost of new MDB]

                Borrow from Strata                                         $20K [repaid from annual profit over 3 years]

                TOTAL                                                                   $65K

Shortfall                                                               $96-65K=$31K [could be funded via <$2K Owners’ levy, i.e., $430/quarter for 1 year]

 

Potential benefits to Owners/customers

James notes the following Preliminary Owner Benefits to consider:

  • Lower than best in market electricity prices
  • Value of customer receiving clean energy without paying a premium
  • Value of generating clean energy
  • Property Value increase
  • Reduces tenant electricity rates to below ‘best in market’
  • Strata law makes Individual owners unable to incorporate solar independently
  • Ability to view and manage consumption (through the incorporation of smart metering).
  • Potential for Battery storage and EV Charging in future.

We didn’t get to (c) and (d) of my agenda but we discussed the possible process from here.  I asked whether it would be feasible for him and the SolarPro staff to contribute to a series of information sessions to brief the owners and tenants on the proposed technology and its installation, the operation of the embedded network, and the billing and customer service arrangements.  James affirmed that this would be feasible, noting that he and his partners see this as a very important breakthrough project that they want to support.  In addition to this information sharing process, AEMO regulations require that James conduct meetings to enable potential customers to each informed consent to the retrofitting of an embedded network.

 

Attendance at Sydney Council Committee meeting, 15th October

As noted above, we learnt earlier that our request for a Demonstration Grant of $80K was not granted but the recommendation going to Council was for $25K.  Applicants are advised that the Council, sitting as a Committee, is prepared to listen to submissions from Grant Applicants so Alex and Neil decided to take up this opportunity even though the submission time is limited to three minutes.  As it turned out we were the only applicant under the Environmental Programs category to attend and speak for our bid.

Alex spoke to the following points:

  1. This is an important initiative that will potentially open up the three quarters of City of Sydney dwellings in Strata schemes to renewable energy installations, a development that has been blocked to date.
  2. We have travelled a long and complex journey which has been thoroughly documented to inform others. Our innovation is to demonstrate a roadmap for other Strata schemes that has not existed previously.
  3. Being the first to retrofit solar and an embedded network in a Strata scheme has proved to be challenging and involved a big time and cost commitment.
  4. The proposed $25,000 is not enough. We really need the $80,000 we budgeted but, if that is not available, we could deliver a staged project with a grant of $50,000.

After he finished the Lord Mayor asked one of the officers to comment and he reinforced Alex’s point regarding the difficulty involved in getting Microgrid approval and that this was an important initiative.  The Chair then informed us that they would seek further information and re-consider the decision at the Council meeting next week.  We thought that this was as good an outcome as we could have hoped for and that it was worth the trouble of attending and waiting nearly two hours.