LOCAL GOVERNMENT ELECTRICITY CONTRACTS INFORMATION FORUM. September 2017

Transcription

1 LOCAL GOVERNMENT ELECTRICITY CONTRACTS INFORMATION FORUM September 2017

2 Key references Discussion Paper: Electricity Procurement in the Victorian Local Government Sector Aligning Council Money With Council Values Large Scale Solar Feasibility Study Final Report and Excel Tool

3 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 councils Scott McKenry and Adam Zaborszczyk 10:00-10:40 MORNING TEA and discussions at tables 10:40-10:55 4. Questions Dominique La Fontaine and David Meiklejohn 10:55-11:15 5. Focus on investment: Options to build, own and operate offsite FG Advisory 11: Workshop on procurement options for renewable energy Scott McKenry and Adam Zaborszcsyk 11:55-12:55 Close David Meiklejohn 12:55-1pm

4 Contract timing Large market Public lighting Small market 1 Who is with who? See handout on tables or download the excel file

5 Contract timing. and historical wholesale prices $/MWh ? X2 Demand Charges Source: AER (Victorian annual volume weighted average wholesale prices)

6 Potential price impact on bills Typical cost impact to average Vic council ($/yr) Component of Council Electricity Bill $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 Network Demand Environmental Other $200,000 $- Now Post tender Contestable

7 Minimising price risks X2 Payback Period Demand side Behind the meter Supply side In front of the meter

8 Behind the meter demand management solar PV Site 2016/17 FY Estimated Supply and Install Cost Estimated kwh Saving (Annual) Estimated t-co2e Saving (Annual) Estimated $ Savings (Annual) Estimated Simple Payback Child Care Centre $143, , $27, Community Centre $28,220 23, $4, Library $31,042 23, $4, Depot $43,500 39, $8, Library $98,756 85, $17, Library $64,662 52, $11, Library & Community Room $18,500 13, $2, Memorial Hall & RSL $15,475 15, $3, Aquatic Centre $36,456 39, $8, Aquatic Centre $29,079 32, $6, Community Centre $14,490 13, $2, Council Offices $49,046 36, $7, OVERALL $572, , $106, %

9 Behind the meter demand management EPC study AQUATIC CENTRES (x3) Av cost per elec saved 10 yrs ($/kwh) Av Payback (Yrs) Pool Pump Control $ Voltage Regulation $ Solar PV $ BMS Optimisation $ Efficient lighting $ Analytics $ AC Replacement $ ARTS CENTRES (x4) Av cost per elec saved 10 yrs ($/kwr) Av Payback (Yrs) AC Optimisation $ BMS Upgrade $ Voltage Regulation $ Solar PV $ Venue Scheduling Integration $ Efficient lighting $ AC Replacement $ CIVIC CENTRE (x1) Av cost per elec saved 10 yrs ($/kwr) Av Payback (Yrs) Solar PV $ Analytics $ Variable Speed Control $ Efficient lighting $

10 Behind the meter demand management EPC study AQUATIC CENTRES (x3) Av cost per elec saved 10 yrs ($/kwh) Av Payback (Yrs) Pool Pump Control $ Voltage Regulation $ Solar PV $ BMS Optimisation $ Efficient lighting $ Analytics $ AC Replacement $ ARTS CENTRES (x4) Av cost per elec saved 10 yrs ($/kwr) Av Payback (Yrs) AC Optimisation 30% $ BMS Upgrade $ Voltage Regulation $ Solar PV Reduction $ Venue Scheduling Integration $ Efficient lighting $ AC Replacement $ CIVIC CENTRE (x1) Av cost per elec saved 10 yrs ($/kwr) Av Payback (Yrs) Solar PV $ Analytics $ Variable Speed Control $ Efficient lighting $

11 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

12 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 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

13 Comparing options (see discussion paper) Option Cost Emissions Procurement Economic minimisation reduction policies 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

14 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

15 Pros and cons Pros A council only procurement group Tendering processes appear to be more competitive Three contracting options A decision to not accept the outcome of the tender isn t likely to impact other parties (for BAU option) Cons Only one contract option available - forward contract model (fixed price, fixed term) Short time lines 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

16 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 Public lighting PPA Large Market Small Market Onsite solar (go hard!) Progressive purchasing? Business as usual?

17 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

18 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

19 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

20 Case Study Melbourne Renewable Energy Project 100 GWh/year New Project Bundled contract Retail electricity purchase and LGC purchase Cost Minimisation Yes Emissions Reduction Yes Procurement Policies - Yes Economic Development Yes

21 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 Procurement Policies - Yes Economic Development No

22 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 Cost Minimisation Yes Emissions Reduction Yes Procurement Policies - Yes Economic Development Yes

23 Case Study ACT Gov Wind Auction

24 Activity - introduction BUY VS INVEST, OWN, OPERATE Melbourne Renewable Energy Project Sunshine Coast Solar Farm

25 Activity - introduction SUPPORTS NEW RENEWABLES EMISSIONS REDUCTION VS SUPPORTS NEW RENEWABLES LOWEST COST Melbourne Renewable Energy Project Sunshine Coast Solar Farm

26 Activity - introduction WIND VS SOLAR Ararat, Wind Farm Queensland, Telstra

27 Activity - introduction SHORT TERM (~2 yrs) VS LONG TERM (10-20ys) UTS Singleton, UTS SINGLTON Direct Offsite PPA State Gov Reverse Auction, contract for difference

28 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

29 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?

30 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?

31 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

32 Next steps - survey Webinar (1hr) for those who could not attend, 11am Thursday 5 th 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

33 Evaluation and close #viclg