Meeting at Sydney Council, 28th August

Neil and Alex met with Nik Midlam and Chris Barrett for the third time.

Neil’s reflections

It was Chris who, at our first meeting in May, 2017, went out of his way to warn us that what we were thinking of was likely to be a very difficult thing to pull off.  If we weren’t exactly intimidated then our enthusiasm was certainly somewhat tempered.  They started by providing a general indication of the situation with regard to the Demonstration Grants, to whit, that there will be significant competition for funding this time as there are more bids totalling more than the funds allocated in the budget. They also appeared to indicate that ours was a quality bid so would likely be supported but probably at a lower level than we were hoping.

It would be fair to say that at this meeting Chris delivered the same message, albeit in a more friendly almost benign, wise uncle kind of way.  Basically, his message was that what we have been considering is too costly and we need to start looking for less costly ways of delivering the emissions abatement/reduced reliance on coal-fired electricity that has fired our zeal. However, along the way he also gave us some very valuable advice.

First, that we should think seriously about keeping our Solar system provision below 30Kw  because there is a significant additional cost charged by Ausgrid (?Alex) for systems larger than 30Kw.

Second, he questioned whether we really need to replace our current switchboard if we lower our ambition to a more modest but better affordable installation.  In the same context, he also questioned the value of introducing smart meters.

Third, he said that to be cost-effective and feasible the benchmark figure we should aim for was $1500-$2000 total cost per Kw installed.  (?Alex)

Fourth, he suggested that aiming to be electric vehicle ready was at this stage premature because the initial extra cost would not deliver any benefit until we actually have a demand and that may still be some years away.

In summary, his advice was that we would have great difficulty getting our preferred project ambition through existing owners because the cost now would not be sufficiently balanced by benefit now.  To me, the impact of this advice was to lead me back to Wattblock’s Model 4 recommendation in their first Feasibility Study report that we start by limiting ourselves to just the minimal size of solar installation generating 18.2 Kw.

Nik also pointed out to us that there is a very strong chance that the Small Scale Certificate scheme will be phased out quite soon.  This would reduce the contribution to installation costs by about a third.

Alex’s reflections

The meeting was very valuable as it confirmed that the Council Officers value our work which is providing a very detailed case study of the opportunities and challenges posed by trying to implement renewable energy in Strata complexes. It was also useful in that the discussion suggested to me a way forward in the face of the financial challenges that Luci and I identified.

Our separate financial analyses identified a major funding gap even if we win the full $80,000 Council grant and the EC agree to fund separately the main distribution board upgrade. Chris’s rule of thumb of $1,500-$2,000 per kilowatt (or up to $2,500 if the main goal is environmental benefit) underlined that problem: we are at $5,000 or more per kilowatt at present.

We won’t be able to convince even the supportive owners to proceed unless we can significantly reduce that gap. There are two ways to do so: bring in more funding through other grants (although that would weaken the initiative’s value a# a demonstration project) or reduce the cost through careful cost pruning and/or descoping.

Also likely to affect the financial analysis to the detriment of the project are the mooted 25% reduction in electricity costs over the next 12 months and the possible removal of the Small Scale Certificate Scheme. They will lengthen the payback period by respectively reducing the savings that can be achieved and increasing the net capital cost.

I think that we need to meet to discuss the next steps as soon as the three of us in Sydney can get together. It seems to me that our strategy might include:

– revisiting our principles to be very clear about our goals and their priority (eg is a reduction in electricity bills more or less important than a reduction in carbon footprint?)

– identifying a small number of ways forward and what we have to do to achieve them. I would think three:

  1. The full project with 34-38 kw panels on Block A, MDB upgrade and batteries – what can we do to reduce the cost of that? Talk to Wattblock and suppliers, limit MDB upgrade to 100A (thereby limiting electric car charging potential), …. ?
  2. A three stage project with up to 30 kw  panels on Block A, minimal MDB upgrade and no batteries in stage 1 with  batteries to be implemented in stage 2 when prices come down and a further MDB upgrade and possibly more panels and batteries in stage 3 when justified by electric vehicle uptake.
  3. A multi stage project starting with 18 Kw panels on Block A and Block A meter upgrades to feed willing participants in Block A. That to be followed by the next willing block (probably Block D) then (I think) MDB upgrade and batteries followed by Blocks C and D (if there are sufficient willing participants). This strategy could be more affordable and would gain some immediate environmental benefits but would delay the full benefits and raises the question of who should pay for the various elements.

Regarding planning some information sessions with our community – I think we might start by further exploring their motivations for supporting the initiative, financial or environmental, and the amount they would be willing to pay to see the project realised.

Meeting to consider action while awaiting Council decision on the Grant

Alex, Luci and Neil met on 7th August to think through how to further inform our Owners, follow up with Wattblock and the short-listed tenderers, engage with the new Strata Managers, and take up the offer of further support from the local MP. Inevitably, we found that most of our discussions and, indeed, our concerns centred on the viability of the project, its financing, and the likely reaction of our owners to the long-term nature of the pay-off from the solar infrastructure asset.

What has emerged through the tender process is the hard reality that the costs incorporated in the responses are significantly higher than those on which the Feasibility Study was based. This has been outlined in a detailed Cost-Benefit Analysis carried out by Jacky of Wattblock. In it he has shown the key differences between their original estimates and the tendered quotes from our two short-listed contractors. Examples of some of the key differences include Embedded Network costs $27K higher while the full Solar+ Battery option is $56K higher. Explanations for the difference in the former centre on the need for major upgrade of the site Power-board and Distribution Boards which was not allowed for in the estimate. Explanations for the latter centre on the much higher cost of the German-made batteries because they have a life-span twice as long as the Tesla batteries included in the estimate.

While these explanations are reasonable and there is little doubt that the proposed network would provide a sound long-term investment for our Blackwattle Mews community, there is also little doubt that the larger amount required and the additional pay-back time will present a serious challenge and might dash our hopes. What we are now certainly faced with is the need to explore a range of financing options over and above the important Council Demonstration Grant.

One of the important issues that we need to work on with the Executive is the up-grade of the Power and Distribution Boards and installation of Smart Meters. Our view is that this capital expenditure should be treated as part of the normal Strata budget process, particularly as two of the tenderers stressed that the current Board is non-compliant with current regulations. Removing this significant cost from the project will assist us to build a more viable case for the Owners to make the embedded network investment.

In addition to meeting with the Executive, we decided that our next steps should include meeting again with the Council officers and Wattblock, chasing up ENM Solutions to find out what they have found with regard to Power-board costs, meeting with the new Blackwattle Strata Manager, Paul Culbi, and accepting the offer of further support from the local MP, Jamie Parker.