Reflections on where we are up to

It is 18 months since we initiated this project.  I think it would be fair to say that it has provided us in the Project Team with many more highs than lows.  I think when we started it seemed quite straight forward – we would install renewable energy and reduce emissions for the planet and electricity costs for us the owners of Blackwattle Mews.  Our early success in obtaining a grant from the Sydney Council to carry out the Feasibility Study and subsequent link with WattBlock was a huge boost to our confidence.

The possibilities revealed by the Study served to reinforce and expand our ambition as a team.  Now, we didn’t want to settle for just an Embedded Solar Network which reduced emissions and costs we wanted to future proof our Mews against the inevitable advent of Electric Vehicles, possibly even servicing public EV charging stations.  Just as Wattblock moved to our second stage of seeking tenders for the technical provision and management of an embedded network we met over breakfast with many of our fellow owners, answered lots of questions, and received strong support to proceed.

We were then challenged by the OC Executive to defend some of our claims and began to recognise how much more complex the project had become.  I think we met this challenge satisfactorily but it forced us, with Wattblock’s help, to focus more closely on both the detail of the technical installation and costs and, particularly, how this would all be financed.  It would be fair to say that this better prepared us for the examination of the eight tender responses.  Today’s meetings with our two shortlisted prospects have reinforced just how difficult it is going to be to eventually arrive at a persuasive case to present to the other owners.  Because we could be seen in a way as participant-researchers, we have come to see that, unless we collectively feel sure of what we are proposing, we just cannot mount a case to the other owners for the development.

This said, it is encouraging to know that everyone wants us to succeed.  Although we can’t yet be completely sure, probably most of our fellow owners are behind us.  Our consultants at Wattblock have been wonderful going way above and beyond their duty and what they are being paid for.  Even our potential network supplier/managers want to do what extra they can to help us pull it off, partly of course because it would be good for their future business, but also because they see it as being pioneering for Strata communities everywhere.  People in the sustainability movement, as represented by The Fifth Estate article, are keen, as is our local MP.  Hopefully, the environmental sustainability staff at the Sydney Council are also still behind us.

So, assuming we are able to get on top of the complex detail in the operation and financing of the initiative, we face the human challenge of finding attractive ways to inform and where necessary educate the decision-makers, the Blackwattle owners – we have to get both the figures and the participation processes right.  As I am now seeing this vital piece of the jigsaw, to a significant extent we face a kind of bi-polar balancing challenge: the dollar costs in the now against the potential savings in the longer term, the interests of the owner/occupier against those of the  owner/investor, the near present needs against the future needs electric vehicles will bring.

We have learnt a great deal.  Serendipitously we found that we have a diverse, capable and reasonably available team which has found ways of working together which have got the job done and provided enjoyment in working together.  This blog, our website, the regular up-dates and the face-to-face brekky meeting have kept our fellow residents informed; there will need to be much more of these. The sustainability goals and programs of the Sydney City Council have not just provided essential funding but their officers have been the source of helpful advice and encouragement.  The expertise of our consultants has guided and educated us and, to a certain extent, perhaps we have helped them to learn useful lessons that will further enhance their expertise.

Now we look forward to persuading, implementing, monitoring, reporting and advocating so that very many more Strata communities undertake their own journey.  But, I’m getting ahead of myself. It’s time to take the next, extremely important step of writing and submitting our application for a Demonstration Grant.

Meeting with our short-listed network suppliers, 18th June

Brent had arranged for us to meet on site with the Company A team at 10 am and then to hold a Skype call with Company B at 4 pm.  Brent and Jackie joined Luci and Neil at 9 am to help us prepare (Alex had gone interstate and Paul is overseas so our team is down to two); over the weekend Jackie had done a lot of work crunching the numbers on costs, rates, returns etc.  It would be fair to say that at this point we were feeling quite daunted at how to handle these interviews since there seem to be so many variables that we need to both understand and be reassured about.

Notwithstanding our anxiety, I thought our two hour meeting with the three Company A representatives was very valuable on both the technical and the network operation aspects.   Though by no means simple, the technical (solar panels, inverters, batteries, cabling, Powerboard, meters etc.) aspects seem comparatively simple.  It is the on-going operation and cost of the embedded network which will be the key to our success – assuming that at the start we make the correct technical decisions.  I felt confident that the Company A  guys were both well experienced and competent in their technical expertise and, being based in Sydney, they would be readily available to support us if needed.

Thus, it was that we ended up probing more closely Company A’s embedded network expert We made the point that our project was an important test case for the City of Sydney and, as such, was being closely observed witness last week’s The Fifth Estate article.  We were assured that this was well -understood and these potential suppliers were keen to be involved and would do us the best deal they could.  He undertook to get back to us with key rates figures.  He also said that he thought that the unexpected extra cost incurred in installing a new Powerboard was potentially one that could be improved form their initial estimate.

A brief note on the Powerboard issue.  Several of the tenderers noted that it would have to be replaced, first, because it was no longer compliant and, second, because an upgrade would be required to enable the operation of the new smart meters and the embedded network gate mater to the grid.  In other words, from the point of view of our solar project, this cost was one which should be seen as one the Owners Corporation had to cover irrespective of the embedded network.

While there is clearly still a way to go on bedding down the final figures in their offer, I felt encouraged by the quality of the Company A team.  We now had to go through a similar exploration with Company B, based interstate, and therefore to be interviewed by Skype.  This time we started with our outline of the context of our project before discussing panels, inverters and their warranty periods.  Perhaps inevitably, we spent only half the time with Company B that we had spent in the morning.  A key element in the future network is going to be the cents per kilowatt hour rate at the meter and Company B undertook to get back to us with his likely best figure on this.

I found it difficult to come to a definitive judgement between the two bidders.  As Luci says, there are so many interacting variables in play that the complexity can be more than somewhat overwhelming.  Nevertheless, we must find ways of getting on top of them in order to proceed.

It would be also worth noting that while we have selected two runner up companies to further engage with (both supplying a complete solution under a single umbrella), we also have as a backup another solution which would be implemented by two different suppliers, a third solution that we can fallback on if required.

Receipt and Analysis of Tender Responses

At last, late in the afternoon of the 6th June, the email from Brent at Wattblock arrived enclosing all of the tender bids for our project.  Now we had real data to inform us about our possibilities and challenges to come.  Bearing in mind that Wattblock had distributed out Request for Quote to 50 potential suppliers, in the end only 7 submitted bids and, of those, only 2 offered to provide the whole system we would need, including finance options.

When stacked up the reading required to sift through these bids was about two inches deep so there was a lot of reading.  Much of it was specification information about meters, solar panels, inverters and batteries, pretty mystifying to this correspondent but, hopefully, grist to the mill for Alex, our resident electrical engineer.  In general terms we could now see that the upfront costs of installing the embedded network, including the replacement of our Powerboard and meters ranged between $55K and $62K with an annual fee around $4K; the installation of solar panels ranged from $44K to $52K; and the battery between $74K and $108K.

The two offers covering the whole system were clearly more thoughtful and customised than the others and came from two medium-sized partnerships, one based interstate and the other a NSW/Vic combination.  Two others, both from subsidiaries of large electrical retailers, could have covered the whole system if combined which gave us a third point of comparison with regard to costs.

At this point we were encouraged by the officers at Sydney Council to apply for a Strata Community Environmental and Engagement Award which “recognises strata schemes that are working to reduce their impact on the environment by means of sustainability initiatives and projects”.  After a quick meeting another day was spent putting this submission together.

On Tuesday, 12th June, Alex, Luci and Neil headed to UNSW to meet our consultants and discuss the pro’s and con’s of what was on offer.  Jackie had prepared a very helpful summary table on which we based our discussion.  Right at the start Luci noted that one of the two whole system bidders was proposing a battery with a life of 20 years, twice what had previously been available.  This has the potential to change the economics of our development considerably.

About half the discussion focused on technical possibilities such as type and size of panels and batteries and half addressed the financing issues. Our thinking has modified about electric vehicles and charging stations partly due to the apparent lessening of interest in them by the Council and partly because of the additional cost required in the new Powerboard.  Part of the financing discussion considered our chances of success in receiving a Demonstration Grant from Sydney Council and what size that would be likely to be.  Our hopes in this regard have become much more modest which means the owners’ capital investment will be higher than we had initially anticipated.  This reality meant we were now much more interested in the availability of financing from our bidders and the terms being offered.

After a couple of hours we came to the conclusion that the two whole system bids, hereafter called Company A and Company B, were best value for us and Brent undertook to let them know that they were now on our short list.  He sought to arrange follow up meetings with them in the coming week.  At this point we were probably slightly favouring the NSW based bidder because of their ready availability if needed once our network was in operation.  We expect that after these meetings we will be in a position to settle on our preferred provider enabling us to fill out our network details.

Our next step is to prepare our bid for the Sydney Council Innovation Demonstration Grant which will need to incorporate three provider quotes.  Once this is done and submitted we will have to draft the motion seeking conditional support from our owners to be put to the Annual General Meeting on July 23rd.

Addendum to the above.  Over the next day or so Alex re-worked the figures he had produced after receipt of the Feasibility Study.  The result was sobering.  He concluded that The result isn’t encouraging. It looks like we could only afford the solar plus embedded network without batteries IF the OC undertakes the Powerboard replacement AND we get a $20K grant. There’s still a gap but I think that can be covered through some economies and better tariffs.  As Luci pointed out, the $4000 pa for the ENM soaks up a lot of our gains but I doubt that we could dispense with it, at least during the first year. One option might be to include it in the capital cost for year 1 and then exclude it.  But even with those changes, the full system looks unachievable especially if we can only get a $20K grant.”

I passed this on to Brent at Wattblock for his comment and the next day we had a long phone conversation in which he provided a different, much more positive perspective to Alex’s.  I then had a chat with Alex who was pleased to hear Brent’s view noting that his analysis should be reviewed by Wattblock because they have access to data he doesn’t have.  He and I then agreed that, in these circumstances, we would not be in a position to put anything to the Owners Corporation AGM on July 23rd but should instead wait until we know the outcome of our Demonstration Grant application to the Council.  I wrote to everyone outlining the above and concluded with “There is a good way to go yet but we are still in the game and a long way from surrender.”

Strata Community Environmental & Engagement Award

Strata Community Environmental & Engagement Award

BlackwattleSolar has entered a submission for the Strata Community Environmental & Engagement Award which recognises strata schemes that are working to reduce their impact on the environment by means of sustainability initiatives and projects and/or are utilising products and services that have positive environmental outcomes. We will post updates once we receive feedback for our submission.