5. What Can Noosa Do?

Renewable  energy  will  be  an  important  community  priority  for  reducing  the  impact  of increasing energy costs and East Gippsland Shire Council has a number of options to support that goal.

1.     Information  and  education  provider  –  a  source  of  information  and  expertise  for community members and businesses wishing to benefit from renewables.

2.     Advocate  –  putting  the  case  to  government  for  funding  and  supporting  renewable energy projects.

3.     Facilitator  –  Assisting  with  grant  funding  sources,  project  development,  and  pre- feasibility processes for community and business initiatives.

The  aims  of  this  particular  project  and  report  are  to  investigate  the  most  appropriate renewable energy technology options for East Gippsland and so identify priority projects based on technical expertise and feedback from consultation with the community. In the next stage, once priority projects have been identified, they will have detailed business cases developed to help attract  and  facilitate  new  investment  in  the  region.  Thus,  this  report  doesn’t  describe  all  the possible actions that EGSC can undertake, but rather identifies the highest priority projects for the area. It is unlikely that EGSC currently has sufficient resources to implement these proposals, and so their success is dependent on EGSC obtaining dedicated funding. Given the community focus of this undertaking, the projects have been categorised into residential, commercial-scale, large- scale, end-of-grid and community-owned. Because the provision of information and education is important across the board, we first briefly identify some key sources of information.


5.1.  Information & Education

EGSC  is well placed  to be seen  as a reliable  source  of information,  not only  during  the community info sessions, but also on an ongoing basis. Indeed, council already has a general Energy Use and Savings website:

http://www.eastgippsland.vic.gov.au/About_Us/Our_Environment/Energy_Use_and_Savings

As identified  in Section 3.2, increased  uptake of energy efficiency  can significantly  reduce costs faced by customers and can help integrate renewables into customers’ load profiles. Energy efficiency and demand side management can also be used to shift and reduce evening loads – thereby increasing the level of local energy self-sufficiency. Thus, the following firstly focuses on energy efficiency then on renewable energy. 

5.1.1.     Energy Efficiency

There is no shortage of actions that can be taken to reduce electricity use through energy efficiency, and potentially through demand-side management. The range of actions that can be taken is well documented on a range of websites and other reports – for example, see Table II.

Table II Some Sources of Information on Energy Efficiency Actions


Type of information    
Source

Household general    
http://yourenergysavings.gov.au/guides/reduce-your-energy- bills?page=3

Household appliances    
https://www.victorianenergysaver.vic.gov.au/residential-efficiency- scorecard and  http://victorianenergysaver.vic.gov.au/more-ways-to- save/energy-saver-incentive

Household fridges &
freezers    http://www.fridgebuyback.com.au/fridge-energy-saving-tips/ & https://www.ergon.com.au/retail/residential/home-energy- tips/appliances/fridges-and-freezers

Air conditioners    
http://www.currentforce.com.au/CompareAirConditioners.aspx

House design    
http://www.yourhome.gov.au

Renew Economy    
Online free articles on renewable energy and energy efficiency, http://reneweconomy.com.au

ATA Renew Magazine    
Magazine for ATA members,  http://renew.org.au

A Green House
Around the Corner    
Interesting stories about the energy efficiency journey!
http://www.agreenhouse.net.au

Business general    
http://www.environment.nsw.gov.au/business/energy-efficiency.htm and  http://www.sustainability.vic.gov.au/services-and- advice/business/energy-and-materials-efficiency-for-business   and https://www.solaraccreditation.com.au/dam/cec-solar-accreditation- shared/guides/Guide-to-improving-electricity-use-in-your-business.pdf


Information  on  the  available  options  can  be  made  available  to  the  community  through  a variety of sources:

a.   Full-page newspaper spreads. These can provide simple tips for ways to reduce energy use, along with links to useful sources of information.

b.   Online Energy Info Hub: An East Gippsland-specific  website, where the most relevant information is collated. This would pull together, vet, and provide access to reliable information and tools that are most relevant to East Gippsland Shire. It could include, for example, detailed reports; easy to read, well presented information on energy efficiency and     renewable        energy        for        households        and        businesses        (e.g. http://www.yourhome.gov.au/);  one or more public discussion forums on different topics; 

a  brief  description  of  the  various  groups  in  East  Gippsland  Shire  and  links  to  their websites; and summaries of current projects and campaigns.

c.   A Community Energy Information Hub: This would be a shopfront where people could drop in for authoritative  impartial advice. It could cover general information  as well as targeted   advice   suitable   for  builders,   architects,   electricians,   council   officers   etc. Although volunteers could staff such a centre, there would also be a need for trained staff. Its purpose is to provide information on renewable energy technologies, help raise energy awareness in the community, enable better communications through a ‘hub’ and could even act as a base for energy coaches (see below) to operate from and where people can request energy audits.

Energy efficiency  actions typically have a simple payback time of less than 4 years, often much less. This means they are like taking out a term deposit set at almost 25% interest, and yet it can be quite difficult to get households and businesses to take them up!

There is a range of reasons for this: lack of interest; lack of time to investigate the options; lack of good information (not only on the options that exist, but even on energy efficiency’s effectiveness); although the payback is high, the total amount of money saved can be quite low, and so not worth the effort; the split incentive problem (where a landlord would have to pay for the energy efficiency but the tenants get the benefit); for larger items such as SWHs the upfront cost may be too high; etc.

It is because  of this  variety  of reasons  that  passive  provision  of information  is often  not enough  to maximise  the uptake  of energy  efficiency.  The following  summarises  activities  that could be used to help convert simple information into the adoption of energy efficiency options in East Gippsland Shire.

ATA’s Sustainable House Day

The Sustainable House Day is run by the Alternative Technology Association and is where people can open up their sustainably designed homes to the general public – ones that are not only environmentally friendly, but cheaper to run and more comfortable to live in. It gives visitors a chance to inspect houses that have been designed, built or renovated with sustainability in mind as well as the opportunity to talk to owners and receive unbiased advice. https://sustainablehouseday.com

Energy assessors

Energy assessors can be used to carry out home energy audits, and give talks at events and to local community organisations. Although they can generally be sourced from volunteers, they will need  some  form  of formal  training.  GELLEN  may be a suitable  starting  point for training energy assessors, possibly with the help of existing local technical energy experts e.g., the U3A environment sustainability group in Bairnsdale. This could be based on the use of the Victorian government’s  Residential  Efficiency  Scorecard.  This  is  a  program  where  trained  assessors provide  a  star  rating  for  a  home  based  on  its  construction,  the  running  costs  of  the  fixed 

appliances  and  other  features  such  as  PV  or  SWHs.32 Training  is  provided  by  DELWP.  The Victorian  Energy  Efficiency  Target  (VEET)  Scheme  offers  incentives  for  installation  of  high efficiency equipment. This program is also called the Energy Saver Incentive33. Local accredited installers  could install a range of low cost measures  like weatherstripping,  seals and chimney dampers. The program also covers replacement of hot water and heating systems as well as the
purchase of high efficiency appliances.

Community Engagement

There are many ways to actively engage with the community:

a.   A  competition  or  community  workshop  for  ideas  to  drive  energy  efficiency.  With  the uptake of energy efficiency being such an intractable problem, it may be that the best solutions will come from the community and businesses themselves.

b.   East Gippsland Energy Saving Challenge: This could be a competition run by EGSC that includes a high quality fact sheet that could form the basis of the full-page newspaper spread outlined above.34

c.   Sustainability Street: This is where an entire street undertakes energy education, energy efficiency and renewable energy actions in order to maximise cooperative benefits. It can include ‘weatherisation programs’ that aim to improve the building envelope, especially in low-income  homes.  A  particularly  powerful  aspect  of  activities  such  as  Sustainability Street is peer group support. Once households see what other households are doing, and benefiting from, they are much more likely to do these things themselves.

Solar water heaters and heat pumps

About 25% of households in East Gippsland Shire currently have solar water heaters or heat pumps, and the scenarios described above result in significantly higher uptake, and so here we cover SWHs in a little more depth than other energy efficiency options.

Where a significant amount of electricity is provided by solar PV, a large amount of electricity will be drawn from the grid overnight. Water heating generally uses off-peak electricity (overnight), and so SWHs can be very effective in reducing the amount drawn from the grid.35 However, as discussed above, the effectiveness of SWHs can vary greatly. The amount by which they reduce the electricity used to heat water can vary between 20% and 90%. It is generally not possible for
a householder to assess the performance of their solar water heater from their energy bills and other readily available information. A recent study regarding the installation and use of SWHs in
Australia found that:51

32  https://www.victorianenergysaver.vic.gov.au/residential-efficiency-scorecard
33  https://www.victorianenergysaver.vic.gov.au/more-ways-to-save/energy-saver-incentive
34 An example of a fact sheet can be found here  http://www.byron.nsw.gov.au/publications/fact-sheets
35 PV diverters can also be useful in this regard. Instead of excess PV electricity being exported to the grid, it is diverted to a storage hot water tank. 

a.   Households generally lack the information to buy the right type and size of SWH to suit their needs, as well as where to place it.36 This can act as a barrier to uptake.

b.   Households  generally don’t know how to either use their SWH or adjust their habits to maximise its ability to reduce electricity use. As a result they are unsure how much money they have saved, if any.

c.   SWH installers generally provide limited, if any, advice on how to use the SWH.

d.   There is a clear need for independent unbiased advice for both purchase and operation, and community groups/events and word of mouth from friends are considered the most reliable sources.

e.   Households  can  be  classified  as  either  active  or  passive  users  of  their  SWHs,  and information should be sculpted to these different groups.

Thus, there is a need for options to encourage uptake, such as the ‘Farming the Sun’ solar water heater bulk buy in the Northern Tablelands,37  but also a need for complementary measures such as:

-    A pamphlet on how to operate a SWH that is provided along with all installations38

-     Information, both online and as a pamphlet, on how to choose a SWH of the correct size, type etc

-     Possibly  some form of training  of SWH installers  on what customers  really want. This could include a low-flow showerhead (that has a payback time of less than 6 months).

Heat pump systems can offer a more flexible option to SWHs and their performance is usually comparable, if not better, for efficient systems. Heat pumps can overcome issues of shading, roof orientation  and  roof  strength  that  often  create  major  issues  for  solar  thermal  water  heaters. However, it is important that heat pump water heaters have a high rating under Victorian climatic conditions if they are to perform well in East Gippsland, and they can be quite noisy and so need
to be located away from neighbours.

36 The report found a wide variety of problems with installation, including solar panels shaded by trees, solar panels facing in the wrong direction, lack of proper insulation, tanks or panels that were undersized, water pipes that were sub- optimally routed or positioned, and panels supported on vulnerable structures.
37  http://farmingthesun.net/bulk-buys/solar-hot-water-package/
38 This can include simple advice such as the benefit of showering early in the day (so the sun has time to reheat the water before the overnight boost). 

5.1.2.     Renewable Energy

Financial assessment tools

There  are  various  tools  that  households  and  businesses  can  use  to assess  the financial outcomes of solar PV systems. For example:

Solar Potential Tool

The Australian PV Institute (APVI) has developed the Solar Potential Tool,39 which is a free online tool for estimating  the potential  for electricity  generation  from PV on particular  building roofs.  The  tool  accounts  for  solar  radiation  and  weather  at  the  site;  PV  system  area,  tilt, orientation; and shading from nearby buildings and vegetation. Host sites potentially interested in installing PV can do their own preliminary assessment on the optimal size and financial return. Currently it only applies to capital cities (eg. Sydney City, Melbourne City, etc) but is currently being applied to Ku-Ring-Gai and Willoughby council areas.

Sunulator

The  Alternative  Technology  Association’s  Sunulator  is  free  and  is  similar  to  the  Solar
Potential Tool above, but also allows the user to take account of their own energy use and tariffs
– which is useful if the PV system is likely to have significant amounts of export. In this case it would provide a more sophisticated and accurate estimate of the financial outcomes. It can also model  a  battery  storage  option.  However,  it  does  not  incorporate  local  solar  radiation  and shading, and is more complex and so more difficult to operate.40

Information booklets

There  are  also  various  information  booklets  available  on  solar  and  batteries  for  both households and business. For example:

Guide for Installing Solar PV for Households

This is produced by the Clean Energy Council and includes the following topics.41

•   The different types of solar PV systems
•   How much will it cost?
•   Government incentive schemes
•   Feed-in tariffs (the amount your electricity company pays you for excess power)
•   Choosing the right size solar system
•   Things to watch out for when signing a contract
•   Installation and connection to the grid
•   Maintaining your solar system


39 It can be found here  http://pv-map.apvi.org.au/potential
40 It can be obtained here -  http://www.ata.org.au/ata-research/sunulator.
41  http://www.solaraccreditation.com.au/consumers/purchasing-your-solar-pv-system/solar-pv-guide-for- households.html 

•   What to do if something goes wrong

Guide for Installing Solar PV for Business

This is also produced by the Clean Energy Council and includes the following topics.42

•   Is solar PV the right choice for my business?
•   Grid-connected vs stand-alone systems
•   How much will it cost?
•   The business case for solar PV
•   Building and planning permits
•   Advice for businesses in leased premises
•   Government assistance and financing options
•   Choosing and installing your solar PV system
•   What do if something goes wrong

Home Solar Battery Guide

Although this is produced in NSW it is still a useful guide for anyone considering batteries for their home or business. It has the following chapters.43

1.   Your home solar battery guide - energy system insights; key messages in the guide;
common motivations for buying batteries; how to use this guide.
2.   Understanding your energy use - how to access energy information; making sense of energy tariffs; easy alternatives to batteries; making more use of existing solar.
3.   Your home power station - how a home power station works; battery basics; battery chemistries; environmental benefits and impacts of home solar batteries.
4.   Designing  a  home  power  station -  three  main  options  for  adding  battery  storage;
battery sizing; backup power; future proofing.
5.   Will a battery save me money? - calculating the ‘payback period’ for a battery; typical payback periods in 2017; the bottom line on investing in a battery.
6.   Buying a solar battery - what to expect from a quote; choosing an installer; assess your purchasing options; grid connection.
7.   Owning a battery - manage and operate your battery; monitoring  and maintenance;
safety; consumer rights and protections.
8.   Additional information - frequently asked questions; glossary of battery-related terms;
links to more information; assumptions for our calculations.

42  http://www.solaraccreditation.com.au/consumers/purchasing-your-solar-pv-system/solar-pv-guide-for- businesses.html
43  http://www.resourcesandenergy.nsw.gov.au/energy-consumers/sustainable-energy/home-solar-battery-guide 

5.2.  Proposed Projects for East Gippsland

The  following  proposes  some  specific  projects  that  can  be  used  to  enable  uptake  of renewable energy in the residential and commercial sectors in East Gippsland, as well as large- scale  and  end-of-grid  systems.  For each  of these  types  of projects  this  section  also  outlines opportunities for community ownership (CORE). The proposed projects are summarised in Table III.

Table III Summary of Proposed Projects

    Proposal    Benefit
Residential- scale    Solar Bulk Buy    Reduces prices, maintains revenue for installers, provides trusted source of information, makes decision process easier.
    Solar $avers    Assists with up-front costs of installation, provides trusted source of information, makes decision process easier.
    Landlord/tenant agreements    Helps overcome the split incentive problem where the landlord would pay for the PV system but the tenant benefits.
Commercial- scale    Multi-site Feasibility
Study    Overcomes the ‘lack of time’ barrier, provides trusted source of information, makes decision and installation process easier.
    Solar lease arrangements    Provides certainty for tenants, makes decision and installation process much easier.
Government buildings    Solar for Schools    Overcomes the ‘lack of time’ barrier, provides trusted source of information, makes decision and installation process easier, and provides teaching materials.
Large-scale    Facilitation    Helps introduce landholders to potential developers, fast-track planning and environmental approvals, support with community engagement and grant applications.
    Proactive assistance    Helps overcome ‘lack of time’ barrier, provides trusted source of information, reduces likelihood of time wasted on non-viable projects, makes decision process easier.
End-of-grid    AusNet/CORE/EGW    Integrates and provides benefits to multiple stakeholders, and facilitates community ownership.
Community
Ownership    RePower Shoalhaven’s CORE model    Suitable for size of systems likely to be built, existing successful model that can be replicated, assistance available.
 

5.2.1.     Residential

Household-scale solar PV systems should provide a good investment return – see Table IV. Although the installed cost of PV systems in East Gippsland has historically  been higher than
$1,200/kW, prices at or below are now starting to enter the local market, and as discussed below, the intention of this project is to increase the rate of uptake so that the installed cost can be lower. Indicative  electricity  tariffs  have  been  used  and will of course  vary between  households.  The export tariff of 11.3c/kWh has been by the Victorian Essential Services Commission and applies to systems up to 100 kW. The amount of exported electricity depends on both the size of the PV system and the load profile of the household. The more electricity used during the day, the better the financial return. Although this is only a simple payback time calculation, and so does not take into  account  the  fact  that  the  money  used  to  buy  a  PV  system  could  have  been  invested elsewhere, this is counteracted by the fact that electricity prices are likely to increase over time (note that the recent increase in electricity prices means that retail tariffs have effectively doubled in the past 10 years).

Table IV Likely Financial Outcomes for a 3 kW Household Solar PV System

    
Value

Installed cost    
$3,600

Annual generation    
3,450 kWh

Retail tariff    
25c/kWh

Export tariff    
11.3c/kWh

Amount of export    
30%

Annual income    
$720

Simple Payback Time    
5 years

Simple Rate of Return    
20% pa

Solar bulk buys

ITP recommends that EGSC facilitate a solar PV bulk buy in the Shire. The installed costs of PV systems in East Gippsland are higher than the average for Victoria. The aim of the bulk buy is to offer cheaper systems but lift the rate of installations  so that a smaller margin for installers won’t reduce their income. If this can achieve a degree of momentum even after the bulk buy is finished, will allow prices to stay low. The bulk buy will also educate people so that they are less likely to fall prey to overpriced offers from external installers. 

The main points to note are:

1.   Running a solar bulk buy is not a trivial task. It requires a central organisation that takes full responsibility for running the bulk buy, is skilled in project management and has a high level of knowledge of solar technologies. At the moment it is not clear there is such an organisation in East Gippsland that has the capacity and time to devote to a solar bulk buy. As such, ITP recommends that EGSC contacts organisations such as those listed in Table  I.  The  best  organisation   to  contact  is  likely  to  be  MASH  since  they  have successfully  run  bulk  buys  with  three  Victorian  councils  (Macedon  Ranges,  Mount Alexander and City of Greater Bendigo). ITP has spoken with MASH and they are more than happy to help run a solar bulk buy in East Gippsland using local installers. MASH is mostly run by volunteers but they do take a small commission on installs to cover their costs.

2.   Local installers should be used. As many of the existing local installers should be used as possible. Any installers left out may undermine the bulk buy. A bulk buy should also be seen as an opportunity to up-skill local installers who may not yet quite make the grade. Increased   competition   will   reduce   prices,   which   should   increase   demand,   which, combined with the other recommendations in this report, should create more than enough work for all the local installers. Instilling an ethos of high quality work and the use of high quality  components  will give the scheme  high credibility  and will lead to greater  local confidence in the scheme, which will further build installation rates.

3.   Both a higher end PV system and a cheaper option should be made available. There may be a need for optional microinverters or power optimisers,44  which are more expensive but help a PV system to maintain its output despite shading. Use of good quality components installed  by  trusted  local  installers  with  suitable  warranties  of  performance  is  a  key
element.

4.   Batteries could also be considered, however it is very important that the community is well informed regarding their financial payback. In most situations, at current prices, batteries are unlikely to pay themselves off during their warranty period.

5.   Solar water heaters (SWHs) should also be considered. Some of the solar PV installers in East Gippsland are also SWH installers, and so they could be involved in this offering. Farming the Sun has experience with SWH bulk buys. The use of high quality heat pump systems may be a more flexible and cost effective for the supply of hot water in many

44 Most inverters are what are known as ‘string inverters’, where the electricity from a string of panels is all channelled through a single inverter. If one of the panels in a string is shaded then the output from the entire string is significantly reduced. Microinverters are smaller inverters that are placed on the back of each panel. In this case, if one panel is shaded, only the output from that panel is reduced. Power optimisers are similar in that they are connected to each PV panel and maximise the power output of that panel. 


6.   The community should be consulted on what sort of community benefit they would like, be it a cash donation to certain charities or free solar systems for community organisations.

7.   Maximum  use  should  be  made  of  all  the  local  community  organisations’  networks  to spread the word. This should extend beyond those with an environmental focus (eg. to sporting groups).

The main issues likely to be faced are:

1.   Obtaining  the help of a reliable coordinator  to run the bulk buy – although,  as above, MASH have said they would like to be involved. However, this would have some external costs.

2.   Getting  the local installers  to cooperate  and agree on a limited  number  of technology options. Installers generally prefer to use their own distributors and technologies.

Solar $avers

As  discussed  in  Section  5.1.2,  East  Gippsland  Shire  Council  is  currently  considering engaging in a version of the Solar $avers program being run by Maroondah  City Council and coordinated by the Victorian Greenhouse Alliance. The current proposal for East Gippsland is to install solar on 50 qualifying low-income households, who would receive free advice on the best solar  system  for them.  The households  will pay back  the cost of the systems  through  a low interest loan, with the proviso that they must be at least $100 per year better off. Local promotion would begin in Feb 2018 with installations in May 2018.

Unfortunately,  despite requests from EGSC that local installers be used, it is likely that the work will go to installers from outside East Gippsland. This is because the program is being run centrally and it would have been very difficult for them to coordinate installers in so many different areas. Fortunately, the very nature of this program means that these systems will be installed on households who most likely would not have taken them up otherwise – and so it shouldn’t reduce the sales for local installers.

In fact, this should be seen as a learning opportunity so that a local version of a Solar $avers program can be run at a later date.

Landlord/tenant agreements

Of the three different  approaches  to enable landlords  to install solar PV (or a micro wind turbine  or micro-hydro  plant), ITP recommends  that EGSC  provide  information  on the ‘simple agreement’  approach.  This  does  not  necessarily  involve  a  real  estate  agent,  but  will  require
cooperation between the landlord and the tenant. We have provided a simple spreadsheet that


45  http://www.cleanenergyregulator.gov.au/RET/Scheme-participants-and-industry/Agents-and-installers/Small-scale- systems-eligible-for-certificates/Register-of-solar-water-heaters 

can be downloaded and used for this purpose. We have also provided a simple Memorandum of Understanding that can be adapted depending on the circumstances – see Appendix A. EGSC could also provide information on the private options that are currently available.

Solar access rights

Solar  access  rights  for buildings  are important  not only for solar  PV,  but also for energy efficiency technologies such as SWHs and even for naturally lighting and heating passive solar designed buildings. It is important to ensure that buildings and other structures do not infringe on the solar access provisions of a neighbouring property. The height of buildings, especially those located on a property’s northern boundary, can be a critical factor in ensuring good solar access. Neighbourhood agreements, such as covenants, may be entered into between property owners to protect PV solar access.

In  the  Victorian  Building  Regulations   2006,  S.R.  68/2006,  Part  4  includes  provisions stipulating minimum levels of solar access to adjoining buildings. This is included in regulations
416 (Daylight  to existing  habitable  room  windows),  417 (Solar  access  to existing  north-facing windows), 418 (Overshadowing  of recreational  private open space), 420 (Daylight to habitable room  windows),  and  429  (Fences  and  solar  access  to  existing  north-facing  habitable  room windows).

The East Gippsland Planning Scheme also includes provision for maintaining solar access to windows  (54.04-4  North-facing  windows  objective)  and open  spaces  (54.05-3  Solar  access  to open space objective).

However, because these relate only to windows and living spaces, they don’t necessarily help with maintaining access to solar PV systems and solar water heaters, which are typically on the roof. Overshadowing  could reduce the financial returns from what could be a significant capital investment.

5.2.2.     Commercial-scale

Discussions with businesses in East Gippsland that use large amounts of energy indicated a healthy  appetite  for solar  PV.  Some  businesses  were  already  fairly  well progressed  and had obtained quotes from installers, and some already had solar already installed. Other businesses were interested in solar but didn’t have the time to look into it because it is not part of their core business, and also lack the expertise to really know what the options are and what is best for their particular circumstances.  There was also varying degrees of interest in including some level of community ownership of a solar system through a CORE project.

Commercial-scale  solar  PV  systems  should  also  provide  a good  investment  return  – see Table IV. Businesses generally have a better match between their load profile and PV generation than do households (both higher in the middle of the day), which results in less export to the grid compared to household systems. The businesses ITP consulted with in East Gippsland could be divided  into  those  whose  electricity  tariffs  included  demand  charges,  and  those  that  did  not. Demand charges are applied to the customer’s maximum monthly demand during specified time 

well  reduce  the  demand  charges,  this  is  not  certain  without  some  additional  internal  load management  system and batteries,  and so we have conservatively  assumed it does not. This reduces the financial return but still results in very reasonable payback times.

Table V Likely Financial Outcomes for a 30 kW Commercial Solar PV System

    
Value

Installed cost    
$36,000

Annual generation    
34,500 kWh

Retail tariff    
12c/kWh (with demand charges)    
25c/kWh (no demand charges)

Export tariff    
11.3c/kWh

Amount of export    
5%

Annual income    
$4,130    
$8,390

Simple Payback Time    
8.7 years    
4.3 years

Simple Rate of Return    
11.5% pa    
23% pa


ITP has identified three different types of opportunities for commercial-scale systems.


1. Local industry

All manufacturing sites, including the large food producers in East Gippsland, have significant manufacturing  and  refrigeration  loads  and  so  are  very  high  energy  users.  They  also  have significant amounts of roof space that would be suitable for solar. ITP recommends that a two- stage approach be used to assist these businesses. The aim is to help the businesses to decide whether to install, and, where they proceed, to ensure that they end up with a high quality system at  a  good  price.  The  costs  of  each  of  these  stages  would  be  spread  across  participating businesses. Of course, grant money may be available, but even without grant support, this would be money well spent given the high likelihood that solar would be a good business proposition.

The first stage would be to help these businesses assess the financial viability of solar PV using an approach similar to that taken by EGSC for its own buildings. That is, a consultant who does not have a direct interest in convincing a business to install solar, but that has a very high level of technical knowledge of solar, should be contracted to provide a ‘Multi-Site  Feasibility Study’ that would assess the viability of solar for these businesses en masse. This would result in a series of reports (a separate assessment for each business) that would detail: 

1.   The recommended system size(s)

2.   A detailed estimate of the installed cost

3.   The estimated annual generation and income

4.   The estimated simple payback time

5.   A brief description of any relevant issues such as shading or roofing restrictions (eg. any requirements for structural reinforcement), proposed alterations to operations in order to better align load with PV output, and any metering or switchboard limitations.

Sites  should  also  be  given  the  option  of  a  more  detailed  assessment  including  load monitoring, and/or an energy audit, which could be provided at an additional cost. This would be important for businesses that have a demand charge included in their electricity tariffs because their  per  kWh  rate  could  be  quite  low  and  solar  may  not  reduce  their  demand  charges  (for example if their peaks occur in the early morning or late evening).

The second stage would be to help interested businesses to install an appropriate solar PV system. Either the same consultant from stage 1, or a different consultant, would be contracted to project-manage a call for tenders for installers and an assessment of those tenders, and then to perform quality assurance on the completed installations.

Community Ownership

Businesses that ITP spoke with were open to the idea of community ownership of all or part of the solar system. Options for CORE projects are discussed below in Section 6.3.5.

2. Community organisations

There is a large number of community organisations in East Gippsland that occupy buildings owned by either EGSC or the Department of Environment, Land, Water and Planning (DELWP). They are generally under a licence or lease arrangement, but where multiple organisations may use a particular building, then each may operate under an agreement which includes the cost of electricity.

Where a licence or lease arrangement is used, there is an opportunity for the tenant to own a solar system to reduce their electricity costs. The main issue here is that when the lease expires the tenant may either lose their PV system or be required to remove it (and have nowhere for it to go). However, both EGSC and DELWP understand this issue and said it is quite unusual for a licence or lease to not be renewed. Leases generally go for 21 years, and can be up to 65 years with Ministerial approval. Solar systems generally pay themselves off in 5 to 10 years.

Another issue relates to the requirements placed on tenants regarding significant changes to their site. In ITP’s experience in other jurisdictions, since the installation of solar PV on buildings leased  by  government  is  new,  there  are  no  processes  in  place  to  deal  with  it.  Tenants  are required to go through a very convoluted process, which may be being developed ‘on the run’, and involve multiple sections or departments.  Thus, ITP recommends  that EGSC and DELWP 

This should culminate in a Memorandum of Understanding (MOU), which could be incorporated into the lease agreement if necessary.

A proposed process is outlined below. It is based on a process developed for Byron Shire
Council and so some aspects may not be relevant for EGSC or DELWP.

1.   Identify potential building (either by tenant or EGSC/DELWP)
2.   Assess building/land category:
a.   Operational Land
b.   Leased Building (either Council or Crown owned)
c.   Council owned asset
3.   Consult with relevant asset manager to determine:
a.   Further relevant stakeholders
b.   Tenure status (this will determine who the MOU needs to be with)
c.   Potential renovation plans
d.   Most recent roof condition report
e.   Any known barriers to completing a solar project
4.   Identify if energy efficiency improvements can be made first and suitability of solar for the current use.
5.   Table a draft MOU for the project
6.   Complete a structural engineering assessment of roof supports
7.   Procure and install solar PV systems


Steps 4, 5, 6 and 7 are areas where assistance  could be provided  to tenants. As for the
‘Local industry’ proposal above, this assistance could be provided en masse.

Step 4: The tenant could pay for an energy efficiency audit, an audit could be incorporated into an existing or new community energy group activity, or council could apply for grant funding to do a number of community buildings at the same time.

Step 5: Council and/or DELWP  could develop a template  MOU that would meet the legal requirements of their lease agreements. It need not be complex and so only include things such as  who  owns  the  PV  system,  who  is  responsible  for  operating  and  maintaining  it,  who  is responsible for disposing of it (both when the lease ends and at the end of life of the system). In most, if not all, cases the responsibility for all of these would lie with the tenant. Note that all PV systems come with three warranties: an installation warranty (generally 5 years and covers the installer’s  workmanship),  a product  warranty  (generally  10 years and covers  any faults  in the panels, inverter etc), and a performance warranty (at least 20 years and warrants a certain level of performance over time – generally 80% of original output).

Step 6: Council/DELWP could coordinate a group assessment of their buildings, which they could even pay for themselves as part of their responsibility to their tenants. 

Step 7: This could follow exactly the same two stage process described for the Food Cluster above.

If the tenants operate under an agreement where they don’t pay their own electricity bills, it would be in EGSC/DELWP’s interest to install a solar system themselves since it will reduce their own operating costs. They could also choose to pass on some of these savings to the tenants. They could follow essentially the same process as described above for leased buildings.

One issue that was raised during the consultation process was the need to avoid ‘profiteering off crown’, which is where crown assets are used by groups to generate a profit. However, it was thought that this is unlikely to be an issue as long as the profit is going back into the organisation and not being dispersed to external for-profit organisations or businesses.

Community Ownership

These sorts of solar systems are of course perfect candidates  for community  ownership – that is, ownership not just by the community group, but by individual community members of that group. Options for CORE projects are discussed below in Section 6.3.5.

3. Government buildings

The installation of solar PV systems on government buildings (for example East Gippsland Water (EGW), Bairnsdale Regional Health Service (BRHS) and DELWP) tends to occur through standardised government procurement processes. All these organisations are also currently investigating  solar options. This means there is less opportunity  for EGSC to assist. However, through discussions  with these organisations  two opportunities  were identified. These relate to end-of-grid systems (specifically for EGW, and is discussed in Section 6.3.4) and CORE projects (discussed in Section 6.3.5). There is also an opportunity to help public schools to install solar.

Solar for Schools

Solar systems at public schools do represent an opportunity where EGSC can assist. Public schools in Victoria pay their own electricity bills, and so the installation of solar can significantly reduce their operational costs. Solar Systems can be installed with an online descriptive live data interface that allows school children to understand how and when electricity is being produced. This can be combined with relevant curricula material from kindergarten through high school and serve  as  a  valuable   means   of  increasing   familiarity,   knowledge   and  acceptance   of  the technologies, which can be carried into later life.

The  National  Solar  Schools  Program  (NSSP)  closed  in  2013  but  offered  primary  and secondary schools the opportunity to apply for grants of up to $50,000 to install solar and other renewable  power  systems,  solar  hot  water  systems,  rainwater  tanks  and  a  range  of  energy efficiency measures. It was a very successful program but due to budgetary constraints, about
40% of eligible schools did not receive a grant. 

Sydney.46 It is currently  being run jointly by Waverley,  Randwick  and Woollahra  councils,  and helps schools install solar PV through a free solar assessment,  advice on funding, assistance selecting a quality PV system, teaching materials and promotion of what the school is doing. ITP recommends that EGSC contacts the coordinator of the Solar my School program, and models a similar program for local primary schools. School solar systems are also excellent candidates for CORE  projects  because  they can draw on members  of the school  community.  Such  projects provide ongoing financial benefits to the community owners long after their children have left that school.

5.2.3.     Large-scale

In a regional area such as East Gippsland there is scope for the installation of larger-scale ground-mounted PV systems (ie. measured in terms of 1 MW to 5 MW, or even larger). For such systems, EGSC can take on either (i) a facilitating role, or (ii) a more proactive approach.

The financial outcome for large-scale PV systems is more complex to calculate than for household  and commercial-scale  PV systems (which are generally  less than 100 kW). This is partly because large-scale PV systems come under the Large-scale Renewable Energy Target (LRET), and so instead of receiving certificates that provide a discount on the installed cost, they receive Large-scale Generation Certificates (LGCs) each year for each MWh of electricity they generate. With the LRET no longer increasing  after 2020, the value of LGCs is uncertain and likely to approach zero. The reverse auctions through the VRET are likely to support much larger projects than would be built in East Gippsland, which would also be built in areas of maximum sunshine – and so they are unlikely to support local projects. Still, large-scale PV projects are currently  being  built  elsewhere  in  Australia  and  are  reporting  generation  costs  at  less  than
$80/MWh, making them viable in their own right.

As shown in Figure 8, the construction cost can also vary greatly depending on the distance from, and cost to connect to, the electricity grid. Thus, the financial outcomes for large-scale PV systems must be calculated on a case-by-case basis. However, with the many GW of large-scale solar currently being constructed in Australia, it is certainly financially viable.

Opportunities  for large scale PV have been identified at potential commercial  sites around Bairnsdale where the network is strong, and there may be several more sites that provide these opportunities. The Council can have various roles in facilitating these opportunities, but in the end
it will be the commercial decision of the site owner.

46 More information can be found here -  http://reduceyourfootprint.com.au/projects/solar-my-school/ 

Facilitation

Where  EGSC  wishes  to only  facilitate  the development  of a large-scale  PV  array  by the owner of a site that has already expressed an interest, there are four main factors that need to be taken into consideration:

(i)         the availability of land at a suitable price,

(ii)        the availability of sufficient capital for the project,

(iii)       the ability of the electricity grid to absorb the output of the PV array, and

(iv)       an off-take partner to buy the generated electricity.

EGSC  could  provide  an  ‘Introduction  Service’  and  maintain  a  database  of  landowners interested in participating in solar farm projects. The database would be used to match developer enquiries  with  suitable  landowners,  reducing  the time  taken  to identify  willing  participants.  Of course, council would have to bear the costs of establishing and maintaining the database and fielding enquiries from landowners and developers.

Ideally the project proponent would own enough land to host the PV array, and this land has no other, or limited, commercial value to them. With regards to access to capital, EGSC can also play a valuable role in facilitating community ownership of all or part of large-scale systems. This can be useful where the availability of capital is an issue, or simply where the proponent wishes to benefit from positive community engagement. Community ownership is discussed in more detail in  Section  6.3.5.  For  information  regarding  access  to  the  grid,  the  proponent  can  simply  be directed to contact AusNet. The off-take partner would normally be organised by the project developer, but in some cases (for example Patties) the project proponent would also be the off- take partner.

EGSC can also facilitate large-scale solar projects by:

i)          Fast tracking planning and environmental approvals

As one of the approval authorities for projects such as solar farms, EGSC may be able to simplify and expedite  the approvals  required.  By creating a pro-forma  approval or designating specific  areas  or types  of development,  the development  process  can be sped  up and costs reduced. This could involve the creation of designated solar farm zoning overlays with the specification of screening and site requirements. This would ensure that applications are close to being compliant from the outset. It may need to include prior agreement with the local network service provider and the State Government on the conditions they would also consider necessary.

ii)         Support of Grant Applications

EGSC  can  directly  support  developments  that  are  seeking  financial  support  from  other sources by writing letters of support to the funding body.  The letter of support would express the Council’s support for the solar farm development,  and highlight the benefits and the innovative aspects of the projects. Development of a template letter of support would reduce the time and 


iii)        Council Initiated Development

EGSC could attract investment  by identification  of a suitable  site and negotiating  with the landowner on access arrangements, costs for a solar farm, (ie the $/Ha/year rental rate) and any restrictions required. Council could then facilitate the approvals for a solar farm and then seek a developer to finance, deliver and own the project.  This would reduce the upfront cost and risk for a developer and makes the site attractive, however council would risk the development costs they expend.

Proactive approach

Where EGSC wishes to be more proactive, it can commission  a first-stage assessment  of particular  sites.  EGSC  is  in  fact  currently  considering   doing  this  for  a  major  local  food manufacturer.   This  could  be  similar  to  the  ‘Multi-Site  Feasibility  Study’  proposed  for  the commercial sector above, but for a more limited number of sites, possibly only one. In this case it would  essentially  be a technical/financial  assessment,  but with greater  detail on the metering options and potential grid impacts.

Alternatively, a higher-level multi-criteria analysis could be undertaken for a large number of potential sites. This would be more complicated, and in addition to proving a detailed estimate of the breakdown of the installed costs, could include:

-     Identification  of exclusions (national parks, native vegetation, land use, planning zones, bushfire risks)
-    The ability of the network to accept the solar array and the connection costs
-    Terrain slope and shading
-    Solar resource assessment

If desired,  the outcomes  of this criteria  analysis  are then  combined  into what  is called  a
‘raster’ map, which provides a visual representation of the suitability of different areas for large- scale PV, and an estimate of the associated costs. An example of such a map is shown in Figure
8. Such a report can also extend to further options for the development of these projects – which could also be made available to proponents referred to in the ‘Facilitation’ approach described above. 
Background Technical Study: East Gippsland Bright Futures Renewable Energy Project

Figure 8 Preferred Areas for a 1 MW Solar Farm (note that the costs are very out of date and are currently much lower) 

5.2.4.     End-of-grid

Again,  in rural and regional  areas,  there  may be communities  located  at the end of long sections of the electricity grid who suffer from unreliable supply. In East Gippsland this includes communities  such as Mallacoota,  Bemm  River, Gelantipy,  Cassilis  and Benambra,  as well as others in outlying areas (red lines indicate AusNet high voltage power lines in Figure 9 below). In these  situations  solar  PV  can  help  improve  power  quality  by  providing  voltage  support  and frequency  control.  However,  during  times of blackouts,  solar alone is not sufficient  to provide back-up power. Blackouts can occur when there is a fire or simply because a branch (or even just bark) has fallen across the lines. In this case some form of battery or diesel generator backup is required.

Figure 9. High Voltage Lines in East Gippsland (2012)

Although a privately owned battery is generally not financially viable in this situation, AusNet could own a battery to manage short-term supply interruptions, the community could own/operate a solar PV system, then EGW may be able to provide the land at the local water or wastewater 

treatment facility and purchase the electricity.47  This would be dependent on the location and the availability of suitable land. The financial outcomes for the community-owned  PV system would be the same as for the commercial-scale systems in Section 6.3.2.

AusNet is already considering the use of batteries at end-of-grid locations in East Gippsland. Batteries  can  be  included  in  their  Regulated  Asset  Base,  and  so  fit  within  their  financial accounting obligations. Although, strictly speaking, a solar PV system is not needed for a battery to bridge short-term supply interruptions, it can help extend the life of the battery, and can also help EGW meet their emission reduction obligations if they purchase the PV electricity.48

In order to count towards meeting  EGW’s emission  reduction  obligation  it is likely the PV system would need to be less than 100 kW (ie. if it is greater than this size it would come under the Large-Scale Renewable Energy Target, and so would be used to meet that legislated target). This is also a size suitable for a small community CORE project, and should readily fit on the land available at a wastewater or water treatment facility. It could be ground-mounted  or behind-the- meter  (either  on  a  building  or  floating  on  a  raw  water  storage  pond)  –  which  may  provide additional benefits such as reduced evaporation and the potential for storages to be operated at a higher level due to reduced risk of erosion due to wave action.

Note  that  systems  that  can  operate  as  stand  alone  generators  and  can  also  be  grid connected (e.g. can inject power back into the grid) need additional safety and protection systems to ensure the safety of distribution system workers by ensuring that power cannot be exported to the grid where there is currently no mains voltage or frequency during a grid outage.

5.2.5.     Community Ownership

For all the above project types (apart from the large-scale ground-mounted  PV arrays), ITP recommends that RePower Shoalhaven’s CORE model be used. Alternatively, the Farming the Sun approach  may be suitable.  Each involves  a proprietary  company  limited by shares being established for each solar system (or group of solar systems). The main difference between the two is that under the Farming the Sun model the private company doesn’t own the PV system but just loans the money to the host site.

In the first instance, RePower Shoalhaven (or Farming the Sun) should be contacted to see if they  are  happy  to  provide  assistance,  and  what  sort  of  assistance  they  would  be  happy  to provide. The best option is likely to be that one of these groups coordinate the establishment of the first ‘CORE company’ with on-the-ground assistance from East Gippsland community groups. Once a local community group has developed more internal capacity, it could then set up the next CORE company, and so on.

The  same  general  approach  would  be  used  for  all the  CORE  opportunities  discussed  in
Sections 6.3.2 to 6.3.4 above. Once a specific project has been identified and a financial analysis

47 Of course, the PV electricity could also be purchased locally by any other entity, but this would then most likely have to be exported to the grid, and so the owners of the PV system would receive less for the electricity.
48 The Victorian government has set targets for emission reductions of 25% by 2025 and 100% by 2050. This has been translated into a 21% reduction by 2025 for EGW. 

completed  (ie.  installed  cost,  expected  annual  income,  return  on  investment),  it  would  be advertised as a CORE project to people who are likely to want to invest. Businesses, community organisations and public schools can use their own networks to make the project known to the public. The end-of-grid projects would use the local community networks, and if more investors are required, could extend their invitation more broadly.

The  large-scale  ground-mounted   systems  are  different  to  the  above  types  of  projects because:

i)          They cost more and so would need more investors.

ii)     They would not necessarily have their own networks, although they are likely to have enough employees to buy shares.

One way to overcome the need for more investors is to have a cornerstone investor establish the project, then have only a proportion of the total project sold off to community investors. The cornerstone investor could be either the host site or a third party investor.

Another option is to use either an unlisted  public company  limited by shares (as used by Sydney  Renewable  Power Company)  or a cooperative  structure  (as used by Hepburn  Wind). However, these are complex entities with significant accounting and reporting obligations, and so should  only be undertaken  by people  with  sufficient  experience  in establishing  and operating them, as well as the time to do so.