We were pleased to welcome Bo from Unit 7 to our team at this meeting. Bo’s professional expertise is in Finance and, as we have certainly arrived at the point where this has become our major preoccupation, his support will be very helpful. Thus, the subject of project costs and methods of financing was the sole focus of this meeting. In addition to bringing Bo up to speed on the project so far, the email we had received from James Pearce of ENM Solutions on 24th September was the subject of most of our discussion because in it he provided a breakdown of retail energy costs, network charges and market charges.
We made two major decisions about our approach from this point; first, we will limit our projections horizon to 10 years on the assumption that longer than this would be too far for the Owners to see relevance to their interests, and second, in the immediate term we will adopt a staged approach as follows.
Stage One will be limited to
- the installation of solar panels and microinverters to the whole of Block A providing 35 kW of generation capacity (although this size is significantly bigger than was recommended by Wattblock in their Feasibility Report we have decided that it makes sense to install the larger number of panels while we have the crane required on site);
- the replacement of the existing main switchboard to increase its capacity to 100 amp, adopting James’ suggestion of using the current cable from the substation and the current meter cabinet for sub switch boards;
- the replacement of the existing meters with Smart meters for all Units and the installation of a parent meter interface with the Grid.
The above would enable the establishment of our Embedded Network. Stage Two would involve the installation of a Battery in two or more years when they are projected to have dropped significantly in cost. Stage Three would involve up-grading the main switch board to 200 amps to increase the Network capacity to provide electric vehicle charging when a demand has been demonstrated.
It has become our view that the upgrading of the Main Switchboard capacity and installation of Smart meters should properly be seen as a necessary capital expenditure for the Body Corporate since several of the tenderers noted that our current system is not compliant with current regulations. Thus, we will recommend to the Annual General Meeting that the upgrade costs be incorporated into the Strata’s on-going capital expenditure budget.
We endeavoured to identify the range of potential project financing sources. These include:
- Obviously, the most important is the Sydney City Council’s Demonstration Grant which we reckon will be between $20 and 80K. Our new team member, Bo, sees this as crucial if it can be at the upper end. [Stop Press. At the time of writing an email has just been received saying that the Council officers have recommended that we be granted $25K – less than we had requested but still the highest of the four groups recommended for funding. We expect the Council to endorse this recommendation at its meeting on 29th October.]
- The second source could be a proportion of the Strata’s current Capital fund which stands at about $97K at present; certainly we would hope that this would be the source of the finance for the new Main Switch Board. From our perspective, since this capital earns only a bit over 1% pa at present, putting a proportion of it toward the Embedded Network with its benefits amounting 5-10% makes good sense.
- A third possible source of finance could be a modest levy on each Owner (in this regard, in a recent email James Pearce of ENM made the following point “Realistically for 18 owners an investment of approximately $4,000.00 each would be the same as all 18 owners putting their own 2.5 kW system on their roof (from a cost point of view)”.
- Perhaps the least desirable possibility would be to borrow the capital and Luci’s investigations for the Council Grant Application revealed this cost to be 7% of the borrowing.
- Further discussion led us to ponder the idea of asking the Owners to pay, say, the next four years of the capital component of their quarterly levy in advance.
Calculating and quantifying the potential benefits for Owners, over and above the environmental benefits, is extremely complex but critical to the case for introducing the embedded network. In essence, we have to produce and advocate for a Business Case that justifies the introduction of a solar energy embedded network. This case must identify potential savings, the payback period, cost estimates, our benefits measurement plan, and the implementation and impact plan.