local government electricity contracts …€¦ · behind the meter demand management –epc study...

LOCAL GOVERNMENT ELECTRICITY CONTRACTS

INFORMATION FORUM

September 2017

Large Scale Solar Feasibility Study Final

Report and Excel Tool

Key references

Discussion Paper: Electricity Procurement in the

Victorian Local Government Sector – Aligning

Council Money With Council Values

https://eaga.com.au/projects/large-scale-solar-feasibility-study/

Session overview

Item Lead Timing/end

Registration, tea and coffee, networking 9:30-9:45

1. Welcome Stephanie Ziersch 9:45-9:50

2. Introduction Fran Macdonald 9:50-10:00

3. Current procurement options and alternate pathways for councilsScott McKenry and

Adam Zaborszczyk10:00-10:40

MORNING TEA and discussions at tables 10:40-10:55

4. QuestionsDominique La Fontaine

and David Meiklejohn10:55-11:15

5. Focus on investment: Options to build, own and operate offsite FG Advisory 11:15-11.55

6. Workshop on procurement options for renewable energyScott McKenry and

Adam Zaborszcsyk11:55-12:55

Close David Meiklejohn 12:55-1pm

Contract timing

2015 2016 2017 2018

Large

market

Public

lighting

Small

market

Who is with who? See handout on tables or download the excel file

18

25

21

60

54

51

1

1

https://app.box.com/s/sdygoo5l0zwxkychkn54sl3gf92sbakf

Contract timing…. and historical wholesale prices

2015 2016 2017 2018

100

90

80

70

60

50

40

30

20

10

0

$/MWh

Source: AER (Victorian annual volume weighted average wholesale prices)

? X2Demand

Charges

Potential price impact on bills

Component of Council Electricity Bill

Network

Demand

Environmental

Other

Contestable $-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

Now Post tender

Typical cost impact to average Vic council ($/yr)

Minimising price risks

Demand side

Behind the meter

Supply side

In front of the meter

X2Payback

Period

Behind the meter demand management – solar PV

Site 2016/17 FYEstimated Supply

and Install Cost

Estimated kWh

Saving (Annual)

Estimated t-CO2e

Saving (Annual)

Estimated $

Savings (Annual)

Estimated Simple

Payback

Child Care Centre $143,406 130,086 155 $27,318 7.8

Community Centre $28,220 23,521 28 $4,939 5.0

Library $31,042 23,626 28 $4,961 5.4

Depot $43,500 39,420 47 $8,278 6.7

Library $98,756 85,357 102 $17,925 5.5

Library $64,662 52,429 62 $11,010 8.0

Library & Community Room $18,500 13,140 16 $2,759 6.7

Memorial Hall & RSL $15,475 15,768 19 $3,311 4.7

Aquatic Centre $36,456 39,420 47 $8,278 4.4

Aquatic Centre $29,079 32,850 39 $6,899 4.2

Community Centre $14,490 13,140 16 $2,759 5.3

Council Offices $49,046 36,792 44 $7,726 6.4

OVERALL $572,632 505,549 602 $106,163 5.4

↓7%

Behind the meter demand management – EPC study

AQUATIC CENTRES (x3) Av cost per elec saved 10 yrs ($/kWh) Av Payback (Yrs)

Pool Pump Control $0.04 5.15

Voltage Regulation $0.07 6.70

Solar PV $0.08 6.87

BMS Optimisation $0.11 7.64

Efficient lighting $0.11 7.29

Analytics $0.20 6.82

AC Replacement $0.43 37.90

ARTS CENTRES (x4) Av cost per elec saved 10 yrs ($/kWr) Av Payback (Yrs)

AC Optimisation $0.06 3.08

BMS Upgrade $0.09 5.13


Solar PV $0.16 6.91

Venue Scheduling Integration $0.17 6.51



CIVIC CENTRE (x1) Av cost per elec saved 10 yrs ($/kWr) Av Payback (Yrs)

Solar PV $0.08 7.41


Variable Speed Control $0.23 14.77


Behind the meter demand management – EPC study

AQUATIC CENTRES (x3) Av cost per elec saved 10 yrs ($/kWh) Av Payback (Yrs)

Pool Pump Control $0.04 5.15


Solar PV $0.08 6.87

BMS Optimisation $0.11 7.64




ARTS CENTRES (x4) Av cost per elec saved 10 yrs ($/kWr) Av Payback (Yrs)

AC Optimisation $0.06 3.08

BMS Upgrade $0.09 5.13


Solar PV $0.16 6.91

Venue Scheduling Integration $0.17 6.51



CIVIC CENTRE (x1) Av cost per elec saved 10 yrs ($/kWr) Av Payback (Yrs)

Solar PV $0.08 7.41


Variable Speed Control $0.23 14.77


30%Reduction

In front of the meter – ‘buy’ or ‘invest, own, operate’

Power purchasing agreements

Stockyard Hill (~55/MWh, until 2030)

Silverton ($65/MWh, capped for first 5 years)

Hornsdale wind farm ($73/MWh for 20 years)

Crookwell wind ($86.60/MWh for 20 years)

Sunshine Coast Solar Farm

Cost $50M

Forecast savings of $22M over 25 years

Seven years lead in time, including three

attempts at establishing PPA

Opportunities – deliver multiple policy objectives

1. Cost minimisation

Renewables are now cheaper than standard ‘black’ power, if you can

commit to a long term contract (~10 years)… but there are risks

2. Emissions reduction

23 councils with carbon neutral goals, 45 with targets to 2025

3. Procurement obligations under the LG Act

Best value means services such as data access, network tariff reviews,

billing faults, metering innovations

4. Regional economic development

Clean Energy Council estimates that 15 FTE are required for the

installation of 1MW of renewable energy capacity

Comparing options (see discussion paper)

OptionCost

minimisation

Emissions

reduction

Procurement

policies

Economic

development

Business as usual No No Partly No

Progressive purchasing Potentially No Partly No

GreenPower No Yes Yes Yes

GreenPower Connect Potentially Yes Yes Yes

Buy & Surrender LGCs Potentially Yes Yes Yes

Retailer aligned PPA Potentially Yes Yes Yes

Direct offsite PPA Potentially Potentially Yes Potentially

Reverse Auction/CFD PPA Potentially Yes Yes Yes

Synthetic PPA TBC TBC TBC TBC

Onsite solar Yes Yes Yes Yes

Invest, build, own, operate Yes Yes Yes Yes

Who is offering what?

Option

Business as usual Yes Yes

Progressive purchasing Yes Yes

GreenPower Yes

GreenPower Connect

Buy & Surrender LGCs Yes

Retailer aligned PPA Yes

Direct offsite PPA Maybe

Reverse Auction/CFD PPA Maybe

Synthetic PPA

Onsite solar

Invest, build, own, operate

Pros and cons

Pros Cons

• A council only procurement group

• Tendering processes appear to be more

competitive

• Only one contract option available - forward

contract model (fixed price, fixed term)

• Short time lines

• Three contracting options

• A decision to not accept the outcome of the

tender isn’t likely to impact other parties (for BAU

option)

• ‘Balancing’ needs of other users in the

portfolio

• Little information available on new PPA option

• Tenders appear less competitive (frustration!)

• Precedence in place

• Councils may be able to access contracts struck

under the State’s reverse auction (TBC)

• No option for public lighting

• Progressive purchasing only

Pathways – PA councils

• Splitting contracts across different models may be attractive to councils looking

to hedge their risks

• Public lighting has a flat, predictable load profile and may therefore secure a

better price for a PPA

PPA

Onsite solar (go hard!)

Progressive purchasing?

Business as usual?

Public lighting

Large Market

Small Market

Pathways – MAV councils

• TTEG (technical advisor to MAV) have cautioned against pursuing a long term

PPA in the current volatile market, but are happy to work with councils through the

next fixed term contract to develop a robust PPA option

Opportunities to influence the process

• Retail arrangement that supports ‘direct offsite PPAs’

• Tender should seek long and short term prices for

GreenPower

• Evaluation criteria should reflect the four policy

objectives of councils

Pathways – State Government

• State looking to extent their

current contract with Red Energy

for additional 12 months (mid/end

of 2019)

• Next auction rounds will address

the State Government own

electricity needs (target 40% by

2025), but no additional projects

until 2020

Case Study – Sunshine Coast Solar Farm

15MW solar farm – Owned by Sunshine

Coast Council

New Project

Retailer as intermediary

Sell LGCs that are not required for

compliance

Cost Minimisation – Yes

Emissions Reduction – No

Procurement Policies - ?

Economic Development – Yes

Case Study – Melbourne Renewable Energy Project

100 GWh/year

New Project

Bundled contract

Retail electricity purchase and

LGC purchase


Emissions Reduction – Yes

Procurement Policies - Yes


Case Study – UTS / Singleton Solar Farm

250kW solar farm – Leased by UTS

Existing Project, 2 year contract

Retailer as intermediary

Contractually a ‘behind the meter’

arrangement

No LGC purchase (developer retains LGCs)

Cost Minimisation – presumably yes (?)

Emissions Reduction – No


Economic Development – No

Case Study – ACT Gov Wind Auction

3x wind farms (200MW total)

New Projects

‘Contract for Difference’

‘share’ spot market revenue/loss with

generator

LGCs surrendered


Emissions Reduction – Yes



Case Study – ACT Gov Wind Auction

Activity - introduction

Melbourne Renewable Energy

Project

BUY VS INVEST, OWN, OPERATE



Melbourne Renewable Energy

Project

SUPPORTS NEW RENEWABLES

EMISSIONS REDUCTIONVS

SUPPORTS NEW RENEWABLES

LOWEST COST



Ararat, Wind Farm

WIND VS SOLAR

Queensland, Telstra


UTS SINGLTON

SHORT TERM (~2 yrs) VS LONG TERM (10-20ys)

State Gov Reverse Auction,

contract for difference

UTS Singleton, “Direct Offsite PPA”

Activity – Step 1

At your tables, spend 10 mins documenting the pros and cons of “buy” versus “invest

own operate” options

BUY INVEST, OWN OPERATE

PROS

CONS

Activity – Step 2

In groups, agree on the responses to the following questions (10 min)

Does the project need to reduce

emissions?

How does this align with your council’s

emissions reduction objectives?

Activity – Step 3

Staying in the same groups, note responses to the following questions (10 min)

Does the project have to deliver local

economic development outcomes?

What compromise on savings (%) would be

acceptable to ensure a local outcome?

What are the implications for the likely type

of generation technology?

Activity – Step 4

Staying in the same groups, note responses to the following questions (10 min)

What other requirements are most important

to ensure that councils are getting best

value?

i.e. data monitoring, netting off, fault

resolution, tariff reviews etc

Next steps - survey

• Webinar (1hr) for those who could not attend, 11am Thursday 5th Oct

• A survey of all Victorian councils to:

o collect information on the preferences of councils for developing new retail

procurement and contracting models

o quantify electricity consumption by contract type to assist in project scoping

o determine the extent to which Victorian councils have installed solar PV on

their own facilities to inform future bulk buy initiatives

• Establishment of a cross Alliance working group (self nominate via survey) to

progress one or more opportunities

Evaluation and close

www.sli.do

#viclg

http://www.sli.do/

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