20 March 2013 – The City of Sydney, ANZ, Eureka and Low Carbon Australia have struck Sydney’s first Environmental Upgrade Agreement with a $26.5 million package to fund a trigeneration plant at Central Park, the $2 billion mixed-use development by Frasers Property and Sekisui House.
The EUA is the second agreement to be signed in NSW.
Signatories were the City of Sydney, landowner Frasers Property (whose parent company was recently taken over by Thai billionaire Charoen Sirivadhanabhakdi) and Eureka Funds Management as trustee of The Australian Environmental Upgrade Fund No2, a fund established specifically for this EUA, with funds from ANZ and Low Carbon Australia.
The funding will provide for the construction of a central thermal and trigeneration electrical plant, which uses low-emission natural gas engines to produce thermal and electrical energy, efficiently using the bi-products of energy generation to provide centrally reticulated heating and cooling for air and water.
Electricity will be delivered to the site’s historic buildings and may also be exported to neighbouring buildings offsite.
The trigeneration plant, now under construction, was approved by the NSW Department of Planning and Infrastructure in February 2012.
Frasers Property and Sekisui House are seeking expressions of interest for an owner/operator of the plant.
The plant will benefit 4000 residents expected to live on the project when completed.
Lord Mayor Clover Moore said the buildings were responsible for almost a quarter of Australia’s greenhouse emissions, and one of the most promising places to start cutting those emissions.
“It’s good to see Frasers take advantage of the smart, cheap financing now available to pay for new technologies that can dramatically reduce carbon emissions,” Ms Moore said.
“This is the first environmental upgrade agreement the City has signed, but hopefully we will soon be part of many more of these voluntary agreements, delivering great results for business and for the community.” Another trigen system is planned for Green Square near Mascot.
Frasers and Sekisui will use the EUA funding to install two megawatts of trigeneration capacity, running on natural gas and producing low-carbon thermal energy, providing heating and cooling for 3000 residences and 65,000 square metres of retail and commercial space in 14 buildings at Central Park, the City said in a statement.
“The stage one trigeneration energy centre will also supply low-carbon electricity to the multi-storey Clare Hotel and the mixed-use Brewery Yard building.”
The trigeneration plant is expected to be completed and commissioned by December. It will be housed in a multi-level subterranean bunker, which is part of the existing heritage Brewery Yard building.
Environmental consultants for the project is WSP Group which said that Central Park’s two megawatt plant could reduce greenhouse gas emissions by 190,000 tonnes over the 25 year design life of the plant.
“This has the same effect on combating greenhouse gas emissions as removing 2,500 cars from our roads every year for 25 years,” the council statement said.
Chief executive officer of Frasers Property Australia, Guy Pahor, said: “We are delighted to work with the City of Sydney to take this first step into a greener future for Sydney.
“In this way, Central Park will act as a model of environmental standards for future large-scale mixed-use urban regeneration projects.”
Low Carbon Australia chief executive officer Meg McDonald said the project demonstrated the power of “a new finance solution to help create urban transformation and low carbon innovation at scale”.
Eureka director Niall McCarthy said: “This unique funding mechanism is a first for funding precinct trigeneration projects, and Eureka has sufficient capital to finance similar opportunities in the future.”
Meanwhile ANZ commercial property global head Eddie Law said the ANZ was pleased to have played a role in pioneering Australia’s environmental finance market through this innovative agreement.
“We will continue to consider other opportunities involving Environmental Upgrade Agreements in the future.”
Environmental Upgrade Agreements
EUAs are a funding mechanism that provides the building owner with funds for an environmental upgrade, which are then repaid by a charge on the land, called an Environmental Upgrade Charge.
These are issued each quarter by the council in its rate notices and who then forwards the money it receives to the financier.
The City of Sydney said the EUA program, partly funded by the NSW Office of Environment and Heritage, is part of the City’s commitment to reduce carbon emissions across the LGA by 70 per cent by 2030, based on 2006 levels – “one of the most ambitious targets of any Australian government”.
The City has signed a development agreement with Cogent Energy, fully owned by Origin Energy, to design, build, operate and jointly finance the City’s proposed precinct or district trigeneration networks to supply council and privately-owned buildings across central Sydney.
The district trigeneration networks will reduce greenhouse gas emissions from connected buildings by 40 to 60 per cent compared to coal-fired power.
Central Park is a joint venture between Frasers Property Australia and Sekisui House Australia, occupying a 5.8 hectare parcel of land bounded by Broadway to the north, Kensington Street to the east, Abercrombie Street to the west and O’Connor and Wellington streets to the south.
The $2 billion mixed-use urban regeneration project includes approximately 255,000 square metres of new floor space comprised of:
- About 2100 apartments across seven residential towers
- Student housing
- 50,000 square metres of commercial office space across two towers
- 20,000sqm of retail facilities
- Restoration and adaptive re-use of 33 heritage items
- A 6400sqm public park
Central Park is under construction and being completed in stages from May 2013 to 2018.
- Finance value: A$26.5 million
- Financiers: ANZ, Eureka Funds Management, Low Carbon Australia
- Finance type: Environmental Upgrade Agreement
The Environmental Upgrade Works under the proposed EUA will meet the Stage 1 costs of building a 2megaWatt central thermal and electrical plant to be constructed at Central Park – the former Carlton United Brewery site.
The EUWs include fitting out the first of two subterranean bunkers with two megawatts of a total proposed six megaWatt of trigeneration plant and equipment, sufficient to supply thermal energy (heated and chilled water) to the residential and commercial buildings being constructed or refurbished at Central Park.
In later stages of development, Central Park’s trigeneration plant is intended to provide electricity to:
- Neighbouring existing buildings via Ausgrid’s low voltage electrical distribution network, or via private wire
- University of Technology Sydney, located across Broadway
- City of Sydney’s yet-to-be-constructed thermal reticulation network.
The plant was designed by WSP Projects, and is being built by Total Constructions under a design and construction contract.
The Central Thermal and Electrical Plant will produce:
- Low carbon electricity
- Heating hot water used for space heating and domestic hot water heating
- Chilled water for comfort cooling
Trigeneration is the simultaneous production of three forms of energy: electricity, heating and cooling. A trigeneration system can provide power, hot water, space heating and air conditioning from a single system.
Generators lose heat as they create electricity. A trigeneration facility captures this heat that would otherwise be lost and uses it to generate both hot and cold water.
The chilled water is created by an absorption chiller, which ?is generated by the excess heat and operates like a refrigerator. It creates water at sufficiently low temperatures to be used for air conditioning.
Trigeneration facilities are efficient for two reasons:
- They avoid the losses associated with the transport of electricity
- They capture waste heat which is normally ?lost. Trigeneration facilities can achieve overall energy efficiencies of 80-90 per cent, compared to only 35 per cent on average for conventional supply of electricity from the grid.
Trigeneration is about twice as efficient as a coal-fired power plant. The proposed 2MW trigeneration plant at Central Park, using natural gas engines, could reduce greenhouse?gas emissions by 190,000 tonnes over the 25 year design ?life of the plant. This has the same effect on greenhouse gas emissions as removing 62,500 cars from the roads.