By Tina Perinotto

15 April 2011 – It could be a tale of two cities. Again.

Sydney City Council last week rejected the tender for its deep sea plunge into the brave new world of large scale trigeneration – the gas-sourced, low-carbon energy that it eventually wants to roll out for the entire CBD. Instead it will now enter private negotiations.

We’re talking 360 megawatts of power to reduce carbon emissions by a massive 70 per cent by the year 2030.

Kicking off the process was to be a cluster of seven of the council’s buildings around Town Hall, and later the remaining buildings from its total portfolio of about 200 properties.

But the City’s ambitions may have been too grand and too hard … for now, at least. The City denies this and says the plan can still be made to work. Nominated technical and economic impediments are more about perception than reality it says. They can be resolved.

The tender was to be the first stage in a master plan mapping out the way the infrastructure can, and should, evolve.

The scheme’s architect is Allan Jones, who hailed hero-like from Woking in the UK where he took the entire borough off the grid. Jones says a final trigen supplier can still be selected by mid year and the first trigen plant can be in operation within 18 months.

The City of Sydney will now continue negotiations with the sole tenderer, Origin Energy’s Cogent Energy, whittled down from a field of eight energy companies that expressed an interest in the original idea, and any other appropriate companies.

City of Sydney chief executive officer Monica Barone says: “The Local Government Act allows Council to reject all tenders, and then to open up wider negotiations, and that’s what we’ve decided to do here.” (Read Ms Barone’s full media release below.)

The cogeneration/trigeneration industry is not at all pleased. It’s worried that bad press over such a laudable, but difficult, ambition will spoil the image of this emerging energy source, which already trigen provides power to a range of building types from offices to hospitals and universities at emissions one third that of coal and with 80 per cent energy efficiency compared with 20 per cent from coal fired power.

Meanwhile, Melbourne is officially investigating options for trigeneration in some precincts (see its full statement below). Unofficially, it’s full steam ahead on an even bigger scheme than Sydney’s.

So what’s gone wrong for Sydney?

Much of the finger pointing last week centred on the difficulties of distribution ¬and energy licences: was the existing grid available to new energy suppliers? If so, at what cost, and would this be prohibitive? Was a new type of distribution licence necessary?

The City says the licence issues can be resolved. Industry sources say the problems are more fundamental.

Partly, they say, the difficulties are tied up in Sydney’s past, and the city’s “rabbit warren” infrastructure. (What’s new?)

Melbourne, meanwhile, is about to reap the fruits of its regimented (if a little boring) founding planners, who provided its solid and roomy grid with north-south, east-west streets. Perfect for energy traffic as well as cars, it seems.

Even better for Melbourne is that its gas pipelines were laid in the 50s by the rather heavy handed Gas and Fuel Corporation which, when confronted by the need to dig in a new network of eight inch pipes, decided to make them 22 inches instead, “so that they wouldn’t have to dig them up again”. As you do.

In Sydney, the gas pipes were laid by a private company, AGL, which did what any private company would do: exactly what was necessary. Too bad now that the pipes won’t be big enough for the huge quantities of gas a 360 MW trigen system needs.

Then there are the harsh commercial realities of the numbers game. Our industry source Simon Helps (see his full comments below) reckons it will cost $1.1 billion to create the new trigen power grid, and about the same again to connect it to the buildings because they will need new plant and technology.

Sydney also has problematic typography, which makes it prone to collecting atmospheric gasses in a kind of “bowl”, says chief executive officer of Cogent, Blair Healy. That will make site selection tough because trigen gas gives off NOx, or nitrogen oxide, which is quite toxic. So you can’t put a plant near a childcare centre for example, or a block of apartments.

Even the Australian Consumer and Competition Commission has been brought up as a possible stumbling block. Would new legislation be needed to enable property owners to sign long-term contracts – maybe up to 15 years – in order to create the economies of scale for the energy suppliers? The ACCC tends to not like people signing away their right to re-negotiate a contract, sources say.

The City of Sydney knows all this. Sustainability director Chris Derksema says none of these issues is insurmountable.

If the current owner of the gas pipelines, Jemena Gas Networks NSW, knows there will be bigger demand for gas, it can build a new system.

“This is about market transformation,” he says. It will give the energy suppliers certainty and it will give the building owners certainty. Several have indicated they are very interested to go ahead with proposals. Many owners have “maxed” out their building sustainability, he says. This will give them a kicker into the next star level.

The chief executive

Cogent’s CEO Blair Healy says his company is sitting back and waiting for negotiations to start with the City of Sydney.

“We have not started negotiations with the City of Sydney,” told The Fifth Estate in an interview last week. “We’ve seen all the statements and the outcomes. We’re still standing here with our hands in our pockets waiting to be contacted by the City of Sydney.

“We provided a tender response that we thought provided a number of options. Their core issue was around energy efficiency and carbon reduction, and we had a number of options in the original tender. And we provided our own options.”

As well as the challenge of finding appropriate places to locate plants and equipment, another is how to deal with electricity faults and synchronise to the triplex (high security) electricity network.

How much of a premium this will add to the cost, compared to in Melbourne where Healy says trigeneration would be an easier option, is “difficult to answer until you do the engineering, and it is dependent on the connection point,” he says. “But there is a premium.”

Another issue that Healy points out is that it’s easier to provide heating than cooling, which is why cogeneration is more widespread in Europe and the UK, and will be easier in Melbourne.

On the question of equipment for buildings, modern building management systems or BMS, facilitated a better transition to trigen.

Overall, Healy says, Cogent is not overly disappointed that the tender was cancelled. “It didn’t surprise us. It’s a very complex tender and the [people at the] City of Sydney are still trying to get their heads around what they want and the best deal for Sydney.

“We respect that, and that they need to take their time.”

Simon Helps

The industry expert

It’s difficult to find people with a definitive knowledge of how to integrate this relatively unknown energy source into the modern city, but Simon Helps is one of them.

Helps started out in the waste industry in the late 90s in Vietnam and then teamed up with energy efficiency crusader, the late Peter Szental, in a business called Carbon Partners. They tried to engineer a way to divert waste from landfill to create energy. Helps also project-managed Szental’s outperforming office refurbishment, 40 Albert Road in South Melbourne.

Today Helps is national sales manager for MWM, which manufactures trigeneration engines, is director of the chair of the Energy Efficiency Council and chairs its cogeneration round table.

Helps bemoans the poor signal that could emanate from the cancellation of the Sydney tender.

“There are no silver bullets with this,” he says. “No one thing is going to fix everybody’s problem.”

Cogen and trigen is great technology, Helps says, but it doesn’t necessarily work for every site. For some, he says, it gives “very good outcomes”.

Helps thinks part of the problem with Sydney’s tender might have been the process rather than the concept.

“The city controls only a tiny percentage of what it was trying to do,” he says. “It went out to tender on power and heating on seven sites. But those seven sites had a very small amount of heat and power requirements – somewhere around only one megawatt across all the sites – and they were trying to leverage that to get someone to build a significantly bigger asset and use that asset to supply other buildings.”

Economic pressures and the complexities of existing infrastructure mean it is difficult to integrate systems.

With a master plan that requires more than 300 megawatts, “you’re talking about plants capable of working in 10-30 MW chunks, and each of those chunks needing between five and 50 facilities to supply heating or cooling to,” Helps says.

This means that, essentially, “little power stations” will need to be integrated into a variety of requirements such as different temperatures and different cooling environments, and flow rates of energy.

Around Town Hall House, the first target facility would supply seven buildings in the cluster.

“The council has some control over those but they were talking about tapping into all the buildings across the street and around the corner,” Helps says. “From an engineering perspective, that’s hard work and a lot of upfront capital. And none of those owners are going to sign up for a contract for 15 or 16 years, which is what you need to make it work.”

But, Helps says: “We support the concept, the council has done a fantastic job to bring the potential of cogen and trigen to the public space.

“It’s possible that 300 MW can be achieved with no trouble, but the drivers need to be in place. A carbon price might help.”

In Sydney, the distribution system is at the “very edge of its capacity” in terms of channeling high voltage energy into its usable lower voltage.

“Melbourne’s power networks were privatised in the 90s, and handed over in very good shape, and Sydney’s have never been privatised and they’re not built very well,” Helps says.

Ironically, Sydney City Council was the original power supplier to the city and owned the distribution network.

“They effectively gave the rights to the distribution network to EnergyAustralia, who have continued to run it and operate it today.

“SCC are talking about changing the fundamental way electricity is made and they need a lot of runs on the ladder to generate that.

“We’re talking about billion of dollars. It’s not a small project. It’s very complicated and very hard.”

But trigen can work.

Helps is impatient with the idea that trigen is somehow to be avoided in the search for alternative energy because it still has emissions (albeit lower).

He says the lifespan of green trigen plants is about 15-20 years.

“We’re talking about a technology that is perfectly suited to cut emissions by 50 per cent, and the equipment itself will only last 20 years.” After which, “you won’t be replacing it with the same thing. It could be fuel cells, or cold fusion”.

Chris Derksema

The sustainability director

The City of Sydney’s sustainability director Chris Derksema does not dismiss difficulties pointed out by critics in the plan to make Sydney a trigeneration star.

What frustrates him is the that what is on the table is a masterplan and that the issues can be worked through. Such as the technical barriers of potentially “lumpy” or interrupted energy supply from the less than ideal energy distribution system, for instance.

“These barriers can be overcome if we take a more precinct-based approach,” Derksema says. “We can smooth out the lumps and bumps in the load to have a more efficient system.”

What the council wanted in the original tender was to use a cluster comprising seven of the 200 or so buildings it owns to “seed” an oversized trigen plant that could then provide power to other buildings, and begin the process of transforming the CBD’s energy and carbon profile, Derksema says.

The master plan involved working with key stakeholder EnergyAustralia on how to integrate the new system with the city’s triplex network, which provides a highly secure electricity grid that Derksema says few cities in the world enjoy, but which adds to the challenge.

“Cogent was the first to break through that barrier [with trigen] at Stockland’s building in Castlereagh Street. Stockland is already connected up, so it’s done.”

Derksema says many of the perceived problems with the council’s plans were based on “opinion rather than technical fact”.

The “rabbit warren” issue can be worked through, he says. Similarly the challenge of the small pipelines.

What about the difficulty of some buildings connecting to the new energy supply?

“They don’t have to connect tomorrow,” Derksema says. “What is being offered is a plan for the future so that asset managers can plan ahead with their infrastructure and know this will be an option.”

Derksema says there is significant interest from a few large customers. “This is a way for them to reduce their footprint by 40 to 50 per cent.

“That’s a quantum shift and a lot of buildings have maxed out on their sustainability. This is a way for them to take it to the next level. If they have four stars [Green Star rating] they can take it to a five star. This is about market transformation.”

In spite of the numerous challenges, a big advantage in Sydney, Derksema says, is that the council has a massive database of every building and its use in the CBD, and can make educated assumptions about needs.

“What we did is put that information into classification of 12 different building types and we put energy-use profile against building types, and then generated a model of how energy is used across the city.”

The council also has access to energy use in 15 minute data sets across every sub-station in the city.

What about the regulatory difficulties?

Derksema concedes it is difficult for a trigen provider to hook up to the main grid unless they have a distribution licence. What is needed is a decentralised energy licence.

“At the moment the only people who have these are the big energy retailers,” he says. “They have a licence to operate in the national energy market and that’s a lot of overhead to have for those who want to put in a trigen in a building and want to export electricity to the guy next door.

“They don’t want to distribute to the national market. So you might have a small class of licence.”

The plan is not just about gas. “It’s about looking at other sources of energy, synthetic gas from waste products, for instance, or syngas,”, Derksema says.

“It’s not just one alternative [energy source]. It’s where we’re looking into the future. We get a greenhouse gas reduction but ultimately, we need to move into the future so that’s why we’re doing a renewable master plan for the city.”

This means looking at every viable option: from photovoltaics and solar energy to wind, and searching for resources near the city that could supply commercial or farming waste to convert to synthetic gas.

This is just one component of five in the master plan, Derksema says.

The official view from the City of Sydney

The City of Sydney is progressing the installation of a low-carbon energy system at Town Hall House in the first phase of a network that will slash greenhouse gas emissions and stem rising electricity costs in buildings across the City.

Building the trigeneration energy system in close proximity to the Town Hall – one of Sydney’s most iconic buildings – is the precursor in a project that will see Council connect its own buildings to a network of low-carbon energy systems.

The City ultimately aims to connect up privately owned buildings in the city to its low-carbon electricity network, which will also provide heating and cooling, while slashing greenhouse gas emissions by 40 to 60 per cent by 2030.

“As cities are the biggest contributors of carbon emissions, it is essential that we take decisive action now to carbon-proof our office buildings,” City of Sydney CEO Monica Barone said.

“Bold initiatives like our trigeneration network will ensure that Sydney is one of the world’s leading green cities in the race to address climate change.

“We’re so committed to trigeneration as the most efficient means of producing clean energy, and reducing carbon emissions, that we’re going to lead by example by supplying our own buildings, beginning with the Town Hall precinct.

“We’re excited to be turning this important project into reality as it is one of the first big moves in delivering our Sustainable Sydney 2030 energy and climate change targets.”

In July last year, the City of Sydney invited energy companies to tender for the build and operation of a network of trigeneration systems to supply electricity, heating and cooling to the City’s five aquatic centres, the Town Hall precinct and Customs House and the remainder of its 200-plus buildings.

The City aims to take most, if not all, of city buildings off the coal-fired grid as part of its 2030 goal to cut carbon emissions by 70 per cent.

The request for tender also included an option to supply trigeneration to privately owned buildings in the city, with the aim of eventually providing 360 megawatts or more of trigeneration to buildings throughout the city.

However, due to the complexities surrounding the building of Australia’s first ever network of trigeneration systems, and the rigidity of local government tender processes, no bids conformed to all tender specifications.

Council will tonight accept the Tender Evaluation Panel’s recommendation to reject all tenders and delegate authority to the CEO to open up detailed negotiations with suitably qualified companies to reach a successful conclusion. Individual tenders are commercial in confidence.

“The Local Government Act allows Council to reject all tenders, and then open up wider negotiations, and that’s what we’ve decided to do here,” said Ms Barone.

“Once negotiations are completed, and a contract is accepted in principle, this will go to a full meeting of Council for approval.”

Trigeneration systems use natural gas to produce low carbon electricity and zero carbon heating and cooling. They capture waste heat from electricity generation and use it locally for the heating and cooling of buildings. They are nearly three times more energy efficient and emit less than half the greenhouse gas emissions of a coal-fired power station.

The City’s interim Trigeneration Master Plan, released last December, estimates that a trigeneration network will slash greenhouse gas emissions in city buildings by 40 to 60 per cent by 2030.

And as trigeneration energy systems will be located in the city where electricity is most needed, they will avoid some of the high costs of transporting electricity from the country to the city, and the need to upgrade the grid to cope with future demand.

“The carbon abatement cost of trigeneration is about four times cheaper than other carbon emission reduction strategies such as coal-fired power stations with carbon capture and sequestration, or widespread installation of household solar PV,” Ms Barone said.

The official view from the City of Melbourne

“The City of Melbourne’s Zero Net Emission strategy and Southbank Structure Plan both identify opportunities for developing district scale and embedded cogeneration and trigeneration as a means of reducing dependence on coal-fired electricity,” the City of Melbourne said in a prepared statement.

To date, these recommendations have been conceptual, and work has not yet been undertaken to determine the economic or engineering feasibility of the proposals. Consideration has, however, been given to testing the feasibility of the recommendations identified in the Southbank Structure Plan.”

Similar opportunities are being investigated through the City North and Arden Macaulay Draft Structure Plans, currently being prepared for two of the City of Melbourne’s identified ‘Urban Renewal Areas’, which will be planned as energy, water and waste efficient precincts.

Both draft structure plans have a long-term vision for the sustainable delivery of utilities, including distributed energy and the reuse of stormwater. This shift away from traditional delivery of infrastructure will be implemented at a precinct scale. New and upgraded energy, water and waste systems in the urban renewal areas will deliver energy, water and waste efficiencies.

Progress to delivery of such will require an integrated, collaborative and committed approach with service providers, key businesses, and stakeholders.

The City of Melbourne has also had conversations with energy companies to develop an approach for understanding and mapping the technical network infrastructure constraints as a first step towards determining the technical feasibility of connecting such systems to the electricity distribution network.

Finally, we have also had discussions with neighbouring councils about undertaking this mapping work at a regional level and undertaking work to identify possible commercial models for giving effect to the recommendations.”

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