31 August 2012 – The recent Property Council briefing on the City of Sydney’s trigeneration plans got people talking – there were issues with the absorption chillers needed to connect to the system; people didn’t like that it used gas instead of renewable energy, and there was the lack of incentive from NABERS.

Not many people seemed to be talking about its potential to reduce emissions or energy consumption.

It’s not as if precinct-based power networks are new. Neither is trigeneration, which involves the simultaneous production of electricity, heating and cooling by utilising the waste heat that in conventional coal-based power stations is expelled into the atmosphere.

Such systems are increasingly common around the world, countries such as Denmark, Korea, Germany, Austria and the UK, making them a key plank in their strategy to reduce greenhouse gas emissions and to fight climate change.

In Australia there is a sprinkling of decentralised power plants; the most recent large scale project currently being implemented is at Dandenong.

So why the level of concern over the City of Sydney’s Trigeneration Master Plan? After all it aims to have the city precinct drawing 100 per cent of its power from a decentralised power network by 2030?

In a submission to the City on the proposed energy network, the Property Council listed the concerns of its members. There was much emphasis on the fact that the system relied on fossil fuels.

Instead, said the PCA, the council should be focusing on improving energy efficiency in buildings and looking at renewable energy solutions. Another issue was the City’s push to have decentralised energy supply recognised under the NABERS ratings (something that is currently under review).

The Property Council felt this was “a false economy”:

“Owners are encouraged to connect to the trigen scheme as an opportunity to improve their NABERS rating but there is no real commercial value if everyone else does the same.

“Indeed, NABERS is meant to differentiate one building from another. The proposal seems to undermine the purpose of the NABERS scheme.”

But is NABERS there only to differentiate one building from another? Isn’t the point to encourage as many buildings as possible to reduce their energy consumption and to reduce greenhouse gas emissions in the built environment?

Monica Barone

Keeping sight of the big picture
In an interview with The Fifth Estate this week City of Sydney chief executive Monica Barone and chief development officer for energy and climate change, Allan Jones, both expressed concern that some in the property industry have become bogged down in technicalities and vested interests and are losing sight of the big picture – that of reducing greenhouse gas emissions and saving on power bills.

“We have all got a target to achieve and that is reducing greenhouse gas emissions as fast as possible,” Barone says.

“Maybe in 20 years we will have fabulous technologies that will be cheaper but we need to act now within our available budget. We have a certain amount of money and must do this in a set timeframe.

“We want to implement a plan that is actually viable now. If there is a better plan that is possible nobody has shown it to me as yet.”

Trigen is happening in most (other) places
Barone said trigeneration is already a reality. “Dandenong [city council] is doing it. There the government is paying the difference between what the private sector is charging and the end user can afford.

“Here we are trying to do the same – we can pay for a system that carries hot water from the generator to the buildings and we are trying to strike a deal with the property industry to do their part and enjoy the results. It is not compulsory. We’re hoping they’ll do the maths and see the benefits.”

The benefits, Allan Jones says, are numerous. Reduced power bills, greener buildings and thus increased building value and rental potential.

He points out that what the council is proposing is already being done in Seoul, where a similar system provides power to 832,000 households.

Allan Jones

In the UK, where Jones worked with both London and the borough of Woking to reduce greenhouse gas emissions by 80 per cent, there has been an explosion in the installation of decentralised energy plants. In London cogeneration plants increased from 25 to 200 in one year.

The question of why the council is not planning to pipe cold water as well as hot water into buildings, thus avoiding the need for property owners to install absorption chillers, has a simple answer. In theory it is possible – in practise it is far too expensive and logistically near impossible in Sydney, says Jones.

“It is true that you could have an absorption chiller offsite and then pipe both hot and cold water into buildings, but retrofitting old cities is very expensive. Parts of the CBD [where pipes could be laid] don’t have the depth required to put in two sets of pipes – we’re already at the limit because of underground railway stations and other infrastructure,” Jones says.

Regarding individual buildings replacing existing chillers, absorption chillers are not much bigger than electric chillers and are longer and thinner, so space should not be a major problem for most property owners, he says.

On the question of whether the system should be looking at renewable energy sources rather than a fossil fuel, both Monica Barone and Allan Jones insist this is short sighted.

“Our plan makes it clear that we want to move to renewable gas as soon as it becomes available. The infrastructure will have the capacity to do this and our contract with Cogent requires this,” says Barone.

Jones points out that in New York gas from landfill waste is already being used to generate power, while Austria and the Netherlands use agricultural waste to produce gas. Australia does not have this capacity as yet but it may not be too far away.

An advantage of trigeneration and absorption chillers is that the system does not use greenhouse gas emitting refrigerants used in electric air conditioners, instead using liquid salt and water for cooling.

“One tonne of refrigerants equals more than 4000 tonnes of greenhouse gases. This is often ignored when considering electric chilling versus gas,” Jones says.

NABERS and the precinct question
As for NABERS and the fact that the ratings scheme is currently considering changing the way it deals with precinct energy, Barone and Jones are perplexed.

They say precinct power networks will bring benefits to the wider property industry, including older buildings, rather than limiting them to single buildings.

NABERS is currently reviewing the way it deals with energy from a precinct power system. In its consultation position paper it proposes that low emission electricity from a system such as the City of Sydney’s should be treated the same way as high emissions grid electricity, but can be noted on the NABERS certificate in the same way GreenPower is.

This means building owners can achieve a NABERS star improvement by using low emission heating and cooling from a precinct system, but not from the electricity.

At the same time building owners with individual trigen systems in their basement can significantly improve their NABERS rating.

As Jon Prendergast, director of technical advisory firm Prendergast Projects, pointed out in a recent article in The Fifth Estate, this is likely to discourage building owners from co-investing in trigeneration systems and will hold back precinct scale energy efficiency projects

Monica Barone believes the NABERS proposal is misguided and goes against government policy to reduce emissions.

“They included it in ratings two years ago and now they want to take it out. One of the reasons building owners will support trigen is the NABERS point. If the federal government’s goal is to bring down emissions then this is not the way to do it,” says Barone.

“We need to incentivise the systems that are better than what we have now – they are taking away the incentive. This should not come about because of some ideologically-driven policy in one area. There needs to be policy alignment.”

Allan Jones points out that the proposed trigen system is the second most economic way to reduce emissions after energy efficiency measures in buildings. He believes NABERS is taking an ideological approach by making energy efficiency its core focus for buildings and ignoring emissions reduction.

“NABERS is about building efficiency but the precinct goes beyond this. In the UK the BREAAM scheme includes trigen and cogen. Originally Australia followed this but now wants to change,” says Jones.

“It is a matter of going back to policy. The government is trying to reduce emissions and so are we. This is the one we can afford,” Barone adds.

Matthew Clark, director Water and Energy Programs for the Office of Environment and Heritage, said that NABERS is not proposing to remove precinct trigeneration schemes from its ratings. It is proposing that such schemes be treated in a manner consistent to other imported energy schemes such as GreenPower.

“NABERS has always recognised the purchase of accredited off-site renewable energy generation through the GreenPower scheme.  Our proposal suggests that we treat the purchase of non-renewable but low-emission electricity sources in a similar manner, that is, through an accreditation scheme similar to GreenPower.

“NABERS Energy ratings would give full credit for the emission reduction achieved from this low emission energy import.  For transparency, when someone buys GreenPower we also provide information on the NABERS certificate of what the rating would have been had that electricity been purchased ‘from the grid’ – ie, without GreenPower.

“Similarly, we have proposed that the NABERS Energy rating certificate provide information on the purchase of any accredited off-site low emission energy.

“The purpose of this approach is to ensure that NABERS provides transparent information to the market to understand both the energy efficiency and emissions of the building,” Clark says.

But contradictions in policy abound. Unlike NABERS, the Federal Department of Climate Change and Energy Efficiency is considering changes to the national Building Energy Efficiency Standards that will see precinct networks included in the standards.

The Energetics report
A report prepared in May 2012 for the Department of Climate Change and Energy Efficiency by consultancy Energetics recommended:

Precinct level ZLEG [zero and low emission energy] systems such as district heating and cooling systems must be included, and their value for reducing national emissions is clear (IEA, 2011).

We suggest that the defining characteristic of precinct level ZLEG in this context is a physical connection between a building and the ZLEG system. This connection can take the form of a private wire network, a ‘virtual’ private wire network… or pipes carrying hot or chilled thermal fluid (for instance, water).

Energetics recommends that a definition states that a ZLEG system needs to be connected to the building by way of a private wire network, a ‘virtual’ private wire network or pipes carrying hot or chilled thermal fluid. The ZLEG system itself can be located on-site or off-site.

How about an open framework?
Jon Prendergast believes NABERS should be an open framework that encourages the whole property industry to reduce energy consumption and emissions.

“Ratings schemes like NABERS don’t have to build everything in at once. They can adapt just like GreenStar does and as new technologies become available the scheme can be adjusted.

“The objective of NABERS is not to promote renewable energy but to reduce emissions and promote energy efficiency. This should apply whether it is building by building or across a precinct.”

NABERS measures annual gas and electricity consumption. With trigen electricity consumption is reduced and gas consumption increased. A simple way of calculating the value of trigen for a rating, says Prendergast, is for trigen operators to provide bills that show how much gas is used for the energy provided to a building.

This data could be provided to NABERS auditors who could then apply the same calculation methods they currently use.

“It would have to be audited properly and there might be a few kinks at first but these could be ironed out over time,” says Prendergast.

Fossil fuel? Wrong focus.
Alan Davis, WSP Built Ecology associate director and a panel member at the Property Council briefing, says there is far too much focus on the fact that the trigen system uses a fossil fuel.

“People lose sight of the fact that once the infrastructure is in place the system can move to things like fuel cell technology. These things will become more commercially viable over time but it could be a decade or more before that happens,” says Davis.

“One of the key things I raised at the PCA meeting was that we can transition to renewable fuel.

“What we should be focusing on is what does a precinct energy system mean for Sydney and Australia. Having a greener energy network will attract investment – people will want to construct buildings here because they will have better asset value and will attract tenants.

“It is an investment win for Sydney, particularly when you look at the places we are competing with such as Thailand and Hong Kong.”

The cost of putting in absorption chillers to deal with the hot water from the council’s trigen system is more of an issue for those buildings that already have high NABERS ratings as there is little incentive from a ratings point of view. But for those with lower NABERS ratings it would be more cost effective because of the potential to uplift ratings through the heating and cooling benefits, Davis says.

“We’ve got to remember where trigen sits. The very first thing has to be energy efficiency, then the next step is trigen and renewable technology after that. The spin in the market is that trigen should be last.”

The value of the trigen energy could easily be included in NABERS, Davis says. In the UK the value of electricity and waste heat supplied by such systems, and attribution of greenhouse gas, is already well defined. There is no reason it could not be done in Australia.

“If it is not included in NABERS then we have to fall back on other things such as the cost benefits to tenants and higher building values. The City of Sydney will also recognise building owners who connect to the network through lower rates.”

Projects under way
And despite some of the negative reactions to the council’s proposal, numerous projects are underway.

At Green Square negotiations are underway between developer on the project, Mirvac, and energy supplier Cogent regarding the level of developer contribution to the capital cost of the trigen system. The more the contribution, the lower the tariff for end users. The first engine, to be installed by 2013, will supply 1.2 MW of power and two more will supply another 2.8 MW by 2015.

At the Frasers Property/Sekisui House Central Park development an application has been lodged for an Environmental Upgrade Agreement to help fund the trigeneration plant, with consultancy input from WSP Built Ecology and Pat Dale from Aeris Capital, a pioneer in EUA development when he was with NAB.

At Sydney Town Hall WSP is working with the City on the development of its energy centre, which will supply power to the Council.

Davis believes it won’t be too long before building owners see the benefits of precinct power.

Like electricity thermal energy will become a commodity. For building owners who become generators there will be a direct benefit and for those who connect they will reduce their exposure to increasing network prices and the carbon price. Carbon adds 13 per cent to electricity prices now and by the end of the decade network prices are likely to increase by 60 per cent,” says Davis.

City of Sydney’s Monica Barone is also confident the regulators are shifting in the attitude to decentralised power networks.

“We’re getting the impression as far as the regulators are concerned they are keen to open up the market. There has been a huge rise in network costs and it is predicted to keep rising.

“We’ve been chipping away at regulatory barriers. One significant change is that from May next year generators under 30 megawatts can be aggregated under one registration, so that where you used to pay $5000 for each generator they can now be aggregated under one. This removes one of the financial barriers and I think more could be on the way,” says Barone.