Yet more evidence that the world is changing emerged last week when Sydney Renewable Power Company launched its bid to create a community owned power station on the roof of the new International Convention Centre at Darling Harbour in Sydney, currently under construction.
If you’re quick you can snap up one of the 520 shares in the company at $2700 a pop when the offer makes its way through the Australian Securities and Investments Commission, expected sometime before Christmas.
But at a return of 4-5 per cent, fully franked, with banks offering rates verging on the negative after CPI, you might need to elbow your way to the front of the queue.
Community owned solar idea is an idea rocketing around the country. Embark, which advised on the Sydney deal, says community solar installations are underway in Lismore, Parramatta and Shoalhaven in NSW and at the Melbourne Markets. It says it’s advised up to 70 community groups on various solar proposals.
Driving the trend, you might say, is “solar envy”, from people who want to be part of the renewable energy revolution but don’t have the appropriate real estate hardware such as a roof with the correct orientation or sometimes any roof rights at all if they rent.
Community solar is a way to share the love (of saving the planet) at a rate that looks very attractive indeed, its promoters hope.
Andy Cavanagh-Downs, who is a director of Sydney Renewable and also the executive director of Embark, says there’s a lot of interest in the Darling Harbour project.
The launch event attracted more than 100 people at the Credit Suisse office in Sydney, which doesn’t play a role in the deal but liked what it saw and offered its space. Guests included government representatives, community, potential investors and engineers.
The offer will be 519 shares in the company offered to the public and one to be retained by Embark.
Cavanagh-Downs says he has already had a couple of offers to take out all the shares on offer.
But while the share offer might seem like a no brainer getting this particular solar project off the ground was far from it.
According to sources we spoke to for background, the project was highly complex and broke through many of the rules and regulations that govern regular development projects.
First was the nature and number of relationships that needed to be managed.
The deal would have been tough enough with a single developer, but in this case Darling Harbour is a Public Private Partnership between the NSW government, Lend Lease HOSTPLUS, Capella Capital, AEG Ogden and Spotless.
It’s a testimony to enormous goodwill and persistence of all these partners that the deal was done, Cavanagh-Downs says. He congratulates Lend Lease in particular for sticking the course and especially its sustainability manager for NSW and ACT, Matt Williams who was central to the process.
Cavanagh-Downs recalls the early conversations with Lend Lease at the very start of the public/private partnership process to redevelop the site, “while they were still bidding”.
“They were keen to have a community solar project in the rooftop and to their credit they included it.
“I’d say they’ve been a really good partner.”
It was a hard deal to get done, he says, because of the way PPPs are contracted. Key is to identify any kind of risk or obligation or delivery tasks, making sure someone is assigned responsibility to either manage or deliver.
“It’s out of the box because something like this is a 25-year project.”
A major complication is that it’s not a solar installation sitting atop an asset owned by the owner of the building, it’s owned by another entity. So the owner and the occupant of the building need a level of security that the installation delivers the energy level that’s expected.
“When Sydney Renewables takes the risk in terms of how much power is generated then you need to ensure high degree of quality parts,” Cavanagh-Downs says.
“What it means is that right from the start you have to negotiate into the contract all those conceivable matters. We had to have the rules of engagement.”
Finance was another big deal. From the developers’ perspective they’re dealing with a start up community entity, Cavanagh-Downs says. How can they be sure the money will be there when they need it?
“Obviously they have to get comfortable with that”. The answer was escrowed amounts of funds to prove the money was available when needed to proceed with construction.
Anticipated total cost is around $1.4 million, with the installation expected to deliver about 500 kW of energy and to be completed at the end of 2016.
The project is being installed by Canadian Solar who is the subcontractor panel manufacturer.
Positive industry signals
Cavanagh-Downs says above all it’s been heartening to see the economic rationalist business case for solar emerge at commercial scale. He pointed to Stockland in particular for its “huge” PV array on top of its shopping centre at Shellharbour.
Because it’s certainly there at the community scale.
“What we’ve seen is huge take up in terms of community participation in renewable energy – in Denmark and Germany and the UK and also in wind and in the US in solar,” he says.
“My opinion is it’s part of a broader movement of people in the supply chain who want to know ‘where do my clothes come from? Where does my food come from?’ Farmers markets and so on.
“People are also very interested in where power comes from.”
It’s a sector that’s slated to grow substantially.
“We feel we’re on the cusp of that change.”
There’s been a huge take up of rooftop solar in Australia, which is “really impressive,” he says, “but what if you’re a renter or apartment dweller? You don’t have a rooftop.”
That’s the opportunity and demand that Sydney Renewable can tap.
What it’s about says, Cavanagh-Downs is “people getting together to fund the installation of a future renewable energy.”
“This is a way to create that capacity but it’s also aiming to make an investment return for people.”
Embark is also working with Lismore Council on a solar installation on two council buildings in association with Starfish Enterprises.
The organisation is also investigating other ways to provide low-income housing with energy efficiency and solar installation. One of these projects is on the way in WA and another is in NSW.
Embark was set up in 2009 with chair Simon Holmes a Court to help community groups with renewable energy after a flood of interest in the Hepburn community windfarm Holmes a Court helped establish.
So how is the Sydney Renewable project and others like it starting to change the game? Because you have to suspect that’s exactly what it will do.
“You start looking at roofs differently,” Cavanagh-Downs says. “And you also start looking at load capacity too, imagining how much power that hospital or data centre is using”.
