26 March 2013 – [UPDATE 27 March 2013 ]If you’ve doubts that district trigeneration gas-fired energy systems are worth the effort, ask Guy Pahor, chief executive officer of Frasers Property Australia. He will tell any developer with a mixed-use site that this is the future.
At the 5.8-hectare Central Park residential, office and retail project on Sydney’s busy Broadway, Frasers and joint-venture partner Sekisui House announced on Wednesday that they had signed an Environmental Upgrade Agreement to finance Australia’s biggest centralised precinct trigen (See UPDATE note below) energy system.
- See our detailed report, City of Sydney’s first EUA at Central Park announced
It’s a coup for sustainability. The deal has been strong enough to bring to fruition Australia’s largest Environmental Upgrade Agreement finance deal to date, worth $26.5 million.
It was strong enough to entice ANZ into the scheme – along with Eureka Funds Management and Low Carbon Australia – which joined early adopters NAB, Macquarie Bank, and more recently Bankmecu, which says it can stretch funding to 20 years.
Overseeing the arrangement at Broadway will be the City of Sydney, which will ensure that the financing is repaid via a charge on council rates.
This may well make the deal one of the safest property loans in the country, because council charges rank ahead of mortgagees in case of failure. This lowers risk and therefore has the potential to be a cheaper source of funds.
The deal elicited a celebratory mood all around: from WSP Group, the engineers who structured the technical side of the tri-gen plant to Lord Mayor Clover Moore, who has been dealing with flak on her CBD-wide district tri-gen plans for Sydney because soon she will be able to show the naysayers what a functioning district trigen system looks like.
Long term savings on plant and equipment
Just as happy were the Central Park developers, because as well as delivering a more sustainable, lower-carbon product, the project promises substantial long-term savings on plant and equipment.
Pahor sums it up with a simple fact: 12 cooling towers.
That’s 12 cooling towers instead of the 30 or so that typically pepper the roofs of buildings on such a site, and 220,000 square metres of floor space, which represents big savings on some big-ticket development items.
Pahor says he can’t give a dollar-figure comparison on what the savings might be but that fewer cooling towers mean lower construction, operation and maintenance costs. Ongoing energy costs are yet to be determined but Pahor says they will be “very cost-competitive with retail prices currently being charged”.
“On a [total] cost basis,” he says, “it’s probably not dissimilar to more traditional plant and mechanical scenarios. But there are some inherent efficiencies in the way the plant is maintained and designed.
“Imagine that every building would normally have its own cooling tower sitting on the roof. This way, we can aggregate the plant into a central facility, which reduces the size of the plant as well as the operation and maintenance [costs].
“We’ve found that it’s an efficient means of constructing plants. Given the focus on environmental issues and given the economics, it’s a natural progression.”
Stage one of the plant is for a two megaWatt plant to power hot and cold water for the 2100 residences to be built, and supply some electricity to historic buildings on the site. But stage two, which is set to generate six megaWatts of power to the Central Park complex, “gets really interesting”, Pahor says.
The energy from this second stage won’t go to residents; it will be for the commercial offices on the site, “potentially, student housing and potentially the retail facilities”.
“It enables us to centralise the plant and, more importantly, allows us to export electricity to UTS [University of Technology Sydney].”
A start on construction of this system is expected by the end of the year and it will take about 18 months to complete. Meanwhile, discussions about who should operate the plant are underway with “five or six” licensed electricity providers, including some international operators that are “extremely interested”, Pahor says.
“The motivation varies, but they’re in the business of managing renewable infrastructure assets, and this ticks a couple of the important boxes,” Pahor says. “It’s about as cutting edge as you can make it.”
Advice to fellow developers
Pahor has no doubt that for mixed-use sites, trigeneration is the future.
“I think this is the way forward for large, mixed-use developments. They don’t necessarily have to be five or six hectares. But it’s not so much the size; it’s the mixed-use nature that is the key.”
What’s important, he notes, is to have an even spread of demand: say, energy being used to power offices during the day and residential units at night.
Could it be done with fewer buildings?
“Scale is definitely a factor, and it’s easier when you can amortise the plant over 220,000 square metres of floor space,” Pahor says, “but you can still scale down the operation – say, with four buildings.”
What about the EUA finance?
How did the joint-venture team acquire EUA finance for a new project when this finance is designated for environmental upgrades to existing buildings?
The Central Park project qualified, explains Pahor, because the plant will be located in a historic brewery on site that is being redeveloped. And in stage two, the plant will be exporting electricity to existing facilities.
“So the key nexus is between the EUA funding for the existing building within our site, and that it will ultimately provide power to existing buildings.”
New owners, new goals
Recently, Thai billionaire Charoen Sirivadhanabhakdi bought the majority of Singapore-listed Frasers & Neave Ltd, Frasers Property’s parent company. So what’s the attitude of the new owners to the Central Park development?
- See our article
“The message is business as usual. Their ambition is to grow the business and grow the platform,” Pahor says.
“The key motivation is the real-estate capacity of Frasers.”
It’s early days, but the message Pahor is getting from Mr Charoen is that these are the markets in which the new owners want to operate. He hopes an impending visit from Frasers & Neave’s new top brass will shed more light.
In the meantime, he hints, the company is eyeing another residential site.
UPDATE NOTE* At Dandenong east of Melbourne there is a precinct trigen system which will provide electricity, and heating for about 20 buildings to be constructed, according to a consultant on the project, Jonathan Prendergast of Prendergast Projects. Commissioning of the electricity generator is expected to complete soon, with electricity to be supplied to local businesses ahead the mixed use precinct developmet.
Central Park will have centralised absorption chillers, so it will run cooling water from the centralised plant to the buildings, reducing need for each building to have its own chillers and cooling towers.
Dandenong, will have decentralised absorption chillers and only centralised cogeneration energy,
Both are Precinct Trigen.
See our articles on trigen at Dandenong: