New property development has expanded our sprawling cities.  Quaint suburbs have been sub-divided into units and town houses.  High rise apartment living is dotting the skyline.  It should be no surprise that infrastructure struggles to keep pace.

SGS Economics & Planning economist Terry Rawnsley’s view is that high density living needs to be more strategic, with growth focused in clusters of activity centres, where infrastructure and shopping already exist.

With this in mind, cost and environmental & social impact are key considerations when it comes to energy supply to high density property.   Areas owners should focus on are:

Contract Negotiation

Traditionally, the building owner has only been responsible for public lighting and power.  This can be very low energy usage, for example hallway lighting.  Property managers have learnt that tendering a volume of properties together is of more interest to an electricity retailer and use this buying power to negotiate lower rates.

Dedicated shopping centres and high density living are now typically supplied through what is called an “embedded network”.  Under this structure there is one supply point from the electricity grid servicing the whole facility.  This is supported by an internal network with tenant metering, which is managed and billed by the owner’s agent.  With the electricity use of public facilities and tenants combined, the owner is effectively now a large energy consumer, which provides buying power for negotiation.  There have been concerns over the rights of the tenant under this structure, which have been addressed through the Australian Energy Market Operator’s (AEMO) Power of Choice legislation. This legislation enables a tenant to opt out of their embedded network’s retail supply agreement by installing a second meter and contracting directly with an electricity retailer, though this can be cumbersome to put into practice.

Network Tariff Optimisation

Network Operators charge customers for providing and maintaining the infrastructure (poles and wires) that allows distribution of electricity to their property.  These charges (tariffs) can be structured in many ways, for example, single or time of use rates for kWh’s used, kW or kVA demand rates for the highest demand value over a particular time period and or a daily supply charge.  For large electricity users the charges are itemised, but for small users, they are bundled together with retail and government charges.  As tenancy and energy usage changes at a property, a network tariff optimisation review is recommended to ensure that the lowest cost option is maintained.  The network operators review tariff rates every financial year.  Therefore, it is recommended to review network tariff at least annually as this has proved to reduce electricity bills for some customer by thousands.

Energy Management

Many new facilities install a building management system (BMS) which automatically monitors and controls many things, such as room temperatures within set points by time, water temperatures at set points by time, light levels based on ambient light, movement and time.  Where faults are detected they can also automatically determine the problem, create maintenance jobs and schedule a contractor to attend.  Buildings that do not have a BMS can install a simpler Energy Management System (EMS), which enables circuit level and power point monitoring and control.  This can also significantly reduce electricity bills by turning equipment off when not in use, controlling set points for heating and cooling, as well as timing equipment use to lower cost charging periods - coinciding use for example, with solar generation or off-peak tariffs. Being smarter about how and when electricity is used can significantly reduce costs.

Heat and Cooling

Significant advances have been made in the energy efficiency of heating, ventilation and air conditioning systems (HVAC), particularly gas and heat pump systems. Entry points and windows are typical areas of focus for reducing a building’s areas for energy loss or transfer.  Many buildings now have automatic and self-closing doors.  Windows can be double or triple glazed and thermally broken (isolated).  For a lower cost option, owners have installed window tinting. More recently, a Japanese nanotechnology has been introduced into Australia at a comparable cost to tint. This is a clear coating, painted onto glass and bonds at a molecular level.  It blocks infrared radiation and UV radiation, but is transparent and does not impact the view or the window appearance.

Lighting

An LED lighting retrofit can immediately reduce lighting costs by up to 80%.  In several states, government incentives are in place to reduce the cost.  This is a quick win for lighting cost savings, with typical payback periods ranging from 6 months to 2 years.

Smart LED lighting is new technology that has recently been introduced to Australia for commercial premises.  This brings further benefits to an LED install as light levels (lux) can be automatically varied for one, or many grouped lights, based on the environment, motion detection and time of day.  This technology also brings added benefits, for example fault detection alerts and reports on high or low traffic areas in a facility.

Car Parking

With 2.1 million electric vehicles sold globally in 2018 the move to electric vehicles seems inevitable.  Though not quite as fast to adopt this technology in Australia, installation of charging stations is attractive to tenants and will become a necessity in the future.  Many shopping centres have already invested in this technology, offering free charging to incentivise longer time spent in the centre.

Technology already works seamlessly with charging stations, with mobile apps and car navigation systems showing drivers available spaces to top up at.  They also enable an owner to monitor the performance and use of their fleet of chargers and charge a fee for usage.  In the not too distant future, bi-directional charging stations will be rolled out, where car batteries can be utilised on site to reduce grid demand.

An energy saving measure for underground car parking areas is to install carbon monoxide detectors where ventilation systems are in use.  The detectors work to moderate the use of the ventilation fans based on CO2 levels.  Recently, a car park in Melbourne upgraded their system and reduced their energy usage by 92%.

Solar

The reduced cost of solar products and rising cost of electricity makes the business case for solar installation very appealing.  The residential space in Australia has already seem a significant uptake.  Many big businesses have signed power purchase agreements with large scale solar farms to offset their carbon footprint.  As well as generous federal incentives, there are now many installation and finance options available to further improve the business case for owners.  For example, low interest loans, rental agreements and power purchase agreements are all available.  Infrastructure can also be setup to monitor and bill tenants for their use of solar generated power.  Of course, the business case is also improving for investment in solar combined with battery technology to further remove dependency on the grid.

Conclusion

With uncertainty over grid supply, all of these solutions should be considered in parallel and delivered through a comprehensive implementation strategy.  Empower are an independent energy consultancy, who specialise in assisting Australian businesses to tailor an energy strategy that utilises buying power to keep costs low and make investment decisions that reduce risk and provide optimal returns.

The Australian Energy Regulator (AER) conducts a compliance check annually to ensure that distributors comply with the distribution determination price controls and that the total revenue recovered from consumers is no more than required for a safe and reliable electricity supply. As a process, AER requires distributors to submit a pricing proposal each year for the next regulatory year. Distributors provide detailed information on network tariffs along with the eligibility criteria with respect to each network tariff.

We, at Empower, have performed a detailed analysis on network costs AER approved for distributors in Victoria which was effective from 1 January 2021. The new distribution charges will be valid for 6 months until 30 June 2020, as AER changes for the first time to review Victorian distributor rates on 1 July each financial year in line with other AER states.

The following table presents the average network price changes for various tariffs under respective distributors*.

The Australian Energy Regulator (AER) conducts a compliance check annually to ensure that distributors comply with the distribution determination price controls and that the total revenue recovered from consumers is no more than required for a safe and reliable electricity supply.

We, at Empower, have performed a detailed analysis on network costs AER approved for distributors in Victoria which was from effective 1 January 2019. The following table presents the average network price changes for various tariffs under respective distributors.

If you've had issues with billing in the past, you would know that it can take considerable effort and money to resolve a dispute with an energy provider.  Empower can save you that time and money by advocating the case on your behalf.  We have the market knowledge and contact network to help you resolve your issues efficiently and achieve the best possible outcome.

Think about it….you may have used hot water for washing dishes, hands, clothes, sterilizing equipment or cooking. Now, how much do you think it costs on your energy bill? 5% ,10% or 15%? Unsure? Don’t worry, you are not alone, most businesses would struggle to answer this question. Hot water costs can contribute up to 21% of your electricity bills^1,2 and with the use of conventional hot water systems, you are literally flushing your money down the drains, when you could be using it to reinvest in your business.

Sustainability Victoria suggests that you can save up to 74% by switching over from conventional electric storage hot water systems to heat pump and 39% from gas hot water systems³. To find out more, we met with Ben Cole, distributor for Sanden heat pumps. Ben talked about their new range of hot water heat pump systems which are currently the most energy efficient on the market. Sanden Eco Plus Hot Water Heat Pump System employs ozone friendly -R744 CO₂ refrigerant technology that consumes 1kW of electricity to generate 4.5kW of heat (COP~5) which can save up to 80% of your conventional electric storage system, making it the most efficient system in the market, clearly beating the industry averages identified by Sustainability Victoria. This also works seamlessly with Solar PV as it draws only 0.9kW of power.

On top of that, As the Sanden system is highly efficient, you will receive the highest amount of Small-Scale Technology Certificates (STCs) which can be used to discount the purchase price. This is an absolute no brainer as Sanden provides you with the rare trio combination: saving money, protecting the environment and a stable on demand hot water supply.

Now for the boring bit, if you want to understand more about how heat pumps work, keep scrolling down.....

Heat pumps are an efficient storage water heater that draws heat from air, water or ground to heat water. The most common types are air-sourced heat pumps. An air-sourced heat pumps absorbs heat from surrounding air and transfer it to heat water in the storage tank. They run on electricity but is about three times more efficient than a conventional electric water heater. It uses less energy  as it just transfers heat rather than generating heat. Instead of using an element to heat the water directly, electricity in heat pumps is only used to run the compressor and to move refrigerant around the system which absorbs heat from the surrounding and transfer to the water.

References

1.  http://yourenergysavings.gov.au/energy/hot-water/about-hot-water

2.  http://www.energyrating.gov.au/products/water-heaters

3.  http://www.sustainability.vic.gov.au/You-and-Your-Home/Save-energy/Hot-water/Hot-water-running-costs

The University of Melbourne, ACCC chair Rod Sims, Grattan Institute’s Tony Wood and Dr Leslie Martin from The University of Melbourne’s Department of Economics and the Centre for Market Design presented to an audience of energy enthusiasts and professionals the state of National Electricity Market; problems and potential solutions. The discussion included:

·  ACCC report and its recommendation to government on solutions.

·  Grattan institute Report on causes for current high wholesale prices.

·  Retail price and influencing factors

Electricity prices have increased by 56% in the last 10 years and today customers are paying more than they should due to excessive regulated network asset base; one proposed solution on ACCC’s report is to write down the excessive regulatory asset bases in Queensland, NSW, Tasmania and remove the network tax in Victoria.

Excessively generous solar feed-in tariffs have resulted in customers without solar panels subsidizing  excessive benefits for those with solar panels. ACCC’s report recommends government to take the cost of feed-in tariffs in its budget. However, this cost will ultimately will come from tax payer’s money. So, a balance in equation would be required.

Considerable  market power in generation has led to higher wholesale prices. ACCC recommends limiting the future generation market share to 20% for any entity, creating an environment for a competitive market in electricity generation and government to provide price support for generation by small players.

To meet the Renewable Energy Targets (RETs), providing high subsidies for generation assets which may not be able to provide energy when the markets need it, has added to the increase in wholesale prices. A properly designed National Energy Guarantee (NEG) scheme can do the job.

Tony Wood discussed the Grattan Institute’s report on the causes for increase in wholesale prices and concluded that:

·  Increase in gas prices has resulted in increase in the price of all generation.

·  The closure of Hazelwood and Northern power plants added to the impact in supply, increasing the prices.

·  Gaming: Generators can create artificial scarcity resulting in market to respond on spot pricing through rebidding. Gaming is against the intent of the market which creates profitable outcomes for some players.

Dr. Leslie with her team of PhD students carried out a survey where they hired actors to call  to switch retailers. The study concluded that:

·  Retailers offered cheaper rates when customers said they want to switch retailers rather than when they said they are moving to a new house.

·  Large variation in prices

·  Complex bills

·  Marketing based on discounts

Simpler and easy to understand bills should be provided by retailers to customers and  default tariff should be set by AER to not let the retailers market based on discounts.