The City of Sydney today re-affirmed its commitment to slash carbon emissions after deciding not to pursue a development agreement with its preferred trigeneration energy services provider Cogent Energy due to economic and regulatory hurdles.
Changes to the regulatory environment and the Federal Government’s decision to lower the future carbon price have reduced the commercial case for some of the City’s trigeneration precincts.
The City has decided the first trigeneration project planned for Green Square does not currently meet performance targets necessary for the project to progress. Instead the City will continue with plans to install trigeneration systems in its own buildings starting with a plant to provide electricity, heating and cooling to Sydney Town Hall, Town Hall House and the Queen Victoria Building.
Cogent along with other companies will be invited to tender for this project.
“This changed environment, while unfortunate, is only a small roadblock,” City of Sydney CEO Monica Barone said.
“The economics of trigeneration at Green Square don’t stack up now, but we will do everything we can to lobby the state and federal governments for regulatory reform. All the research, technical material and scoping we have done so far will be used to pursue trigeneration systems in our own buildings and for future trigeneration precincts across the city.
“We still believe a future trigeneration network in Green Square is viable and we will ensure the development is ready for trigen, as it progresses. Council will soon consider a development application by Cogent for the building that will house a future trigen plant in Green Square, that if approved, will be valid for up to five years.
“The City will revisit trigen in Green Square once the regulatory environment makes it more attractive for large scale precincts. We believe climate change is the most pressing issue for every government, and our resolve on cutting carbon emissions is as strong as ever.”
Other factors that influenced the decision include restrictive electricity network regulations and the state and federal government rule changes that remove incentives for the development of trigeneration precincts, gas distribution regulation, and the gradual take up rates for energy from trigen as Green Square develops.
While city-wide trigeneration networks provide low carbon electricity and zero carbon heating and cooling to buildings in cities including London, New York, Paris, Berlin, Copenhagen and Seoul, in Australia one of the key incentives for establishing similar trigeneration precincts has been removed through recent rule changes by state and federal governments.
Trigeneration is an extremely efficient way of producing reliable, low carbon electricity and zero carbon heating and cooling.
In addition to some of the specific challenges with the proposed Green Square project, regulatory changes to the National Australian Built Environment Rating System (NABERS) last October reduced the appeal of precinct-based trigeneration.
While NABERS has been an excellent tool in driving efficiency improvement in the property sector to date, the change in October removed incentives to establish precinct- based trigeneration. These changes mean that even when a trigeneration plant supplies power to a building next door, the property owner can no longer get the all-important increase in environmental star ratings from using low carbon power for the Commercial Building Disclosure Scheme.
Instead, precinct scale trigeneration and renewable energy is treated as power sent from the Hunter Valley even though it is produced locally with less than half the carbon emissions of coal-fired power. Forecasts for gas prices over the next few years also added to cost uncertainty.
The City will continue its fight to reduce carbon emissions while lobbying to reverse the regressive changes to NABERS and remove the regulatory barriers to trigeneration.
These barriers include a pricing regime that fails to reward people consuming locally-generated power even though that saves the community money that would otherwise be spent transporting electricity great distances from where it is generated.
Already the City is rolling out the largest concentration of building mounted solar panels in the country, replacing all its street lights with energy efficient LEDs and completing a major energy efficiency retrofit of its buildings. These measures will slash greenhouse gas emissions from the City’s own buildings and operations by 29 per cent by 2016.
The City’s renewable energy master plan, soon to go before Council, contains a blueprint for how 100 per cent of the City of Sydney’s Local Government Area electricity, heating and cooling can come from renewable sources by 2030.
To make existing, privately-owned trigeneration plants more efficient, the City is also planning to lay pipes to nearby buildings where known customers are keen to access the waste heat trigeneration produces to provide zero carbon heating and air conditioning.
At Prince Alfred Park, the City will also install its first fuel cell to supply low carbon electricity and heating to its new outdoor pool.
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