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Removing the Capital Cost Barrierto Low Energy, High PerformanceBuildings in the Public Sector

Marlon KobackerDirector, Sustainable Future Group

E [email protected]

W www.sustainablefuturegroup.com.au

Removing the Capital Cost Barrier

Removing the Capital Cost Barrier to Low Energy, High Performance Buildings



Traditional Outright Purchase

($60,000)

($40,000)

($20,000)

$0

$20,000

$40,000

$60,000

$80,000

$100,000

0 1 2 3 4 5 6 7 8 9 10

Net Financial Position Comparison50kW Solar PV System

Business As Usual

50kW Solar PV System -Outright Purchase



($60,000)

($40,000)

($20,000)

$0

$20,000

$40,000

$60,000

$80,000

$100,000

0 1 2 3 4 5 6 7 8 9 10


Business As Usual


Traditional Outright Purchase

Capital Cost Barrier



($60,000)

($40,000)

($20,000)

$0

$20,000

$40,000

$60,000

$80,000

$100,000

0 1 2 3 4 5 6 7 8 9 10


Business As Usual


50kW Solar PV System - 5yrClean Energy FinancePurchase

Cash Flow Positive Outcome

Clean Energy Finance Removes the Capital Cost Barrier

Clean Energy Finance Purchase

Clean Energy Finance Explained



Clean Energy Finance – A Global Trend


Clean Energy Finance – A National Trend


Clean Energy Finance Overview

• Typically medium-term loan (3-7 years) provided by a financial institution to fund efficiency projects




• Loan rate lower than market rates due to government subsidisation via Clean Energy Finance Corporation (CEFC)





• CEFC funding currently offered by ANZ, NAB, Westpac, CBA, Macquarie (blended rate)






• Operational cost savings can cover up to and in excess of 100% of loan repayments (depending on cost effectiveness)







• Loan term typically the length of simple payback period, and can be adjusted to create a cash flow positive outcome








• More cost effective initiatives = shorter loan period








• More cost effective initiatives = shorter loan period

• Once loan is repaid, 100% of savings banked

Project Examples


1. Museum

2. Affordable Housing

3. Remote Indigenous Community

4. Schools Program


Project Example – Museum

Execute Strategy

Clean Energy Loan

Design

Engage with CEFC & Funding Partners

Detailed Costing

Carbon Neutral Strategy

Carbon Footprint



Execute Strategy

Clean Energy Loan

Design


Detailed Costing


Carbon Footprint

-$6.00

-$5.00

-$4.00

-$3.00

-$2.00

-$1.00

$0.00

$1.00

$2.00

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Co

st p

er

ton

ne

of

CO

2 a

bat

ed

(1

0yr

NP

V)

Marginal Carbon Abatement Cost Curve

Time clock controls Replace motors

LED lighting upgrade PV System

Chiller replacement Trigeneration system

Battery storage system for peak load lopping Purchase Carbon Offsets



Execute Strategy

Clean Energy Loan

Design


Detailed Costing


Carbon Footprint

($1,500,000)

($1,000,000)

($500,000)

$0

$500,000

$1,000,000

$1,500,000

0 1 2 3 4 5 6 7 8 9 10

Net Financial Position Comparison

Business As Usual

Outright Purchase

Clean Energy FinancePurchase

Outright Purchase (IncludingAdvisory Fee)

Clean Energy FinancePurchase (Including AdvisoryFee)



Execute Strategy

Clean Energy Loan

Design


Detailed Costing


Carbon Footprint

Targets are “science-based” if in line with level of decarbonisation required to keep global temperature increase below 2°C



Execute Strategy

Clean Energy Loan

Design


Detailed Costing


Carbon Footprint

($1,500,000)

($1,000,000)

($500,000)

$0

$500,000

$1,000,000

$1,500,000

0 1 2 3 4 5 6 7 8 9 10

Net Financial Position Comparison

Business As Usual

Outright Purchase


Outright Purchase (IncludingAdvisory Fee)

Clean Energy FinancePurchase (Including AdvisoryFee)



Execute Strategy

Clean Energy Loan

Design


Detailed Costing


Carbon Footprint


Global & National Context

2050 Targets0%

-20%

-40%

-60%

-80%

-100%NSW, VIC, SA, ACT

Net Zero Emissions by 2050

Australian State GHG Emissions Breakdown & Reduction Targets, 2050

TAS -60% from 1990 levels

NT -60% from 2007 levels



2050 Targets0%

-20%

-40%

-60%

-80%

-100%NSW, VIC, SA, ACT

Net Zero Emissions by 2050

Australian State GHG Emissions Breakdown & Reduction Targets, 2050

Source: Australian Greenhouse Emissions Information Systems and the Independent

Review of the Climate Change Act

TAS -60% from 1990 levels

NT -60% from 2007 levels



Numerous Councils Certified Carbon Neutral for Operations

(NCOS)

2011

2012

2013

2012

Australian Cities Emissions Reduction Achievements & Targets, 2010-2050



City of Sydney MunicipalityNet Zero Emissions by 2050

City of Melbourne MunicipalityNet Zero Emissions by 2020

Brisbane City Council Certified Carbon Neutral for

Operations by 2017

Numerous Councils Certified Carbon Neutral for Operations

(NCOS)

Adelaide City Council MunicipalityWorld’s First Carbon Neutral City by 2025

2011

2012

2013

2012

Australian Cities Emissions Reduction Achievements & Targets, 2010-2050

-30%



Source: Australian Department of the Environment

2005 2010 2015 2020 2025 2030

150%

100%

50%

0%

-5%

-10%

-15%

-20%

-25%

-30%

-35%

0%

US & CAN-17%

NZ -25%

-25%

Global GHG Emission Reduction Targets, 2020-2030

-26%

-30%




2005 2010 2015 2020 2025 2030

150%

100%

50%

0%

-5%

-10%

-15%

-20%

-25%

-30%

-35%

0%

150%

Japan -3.8%

Korea -2%

US & CAN-17%

NZ -25%

China +139%

-4%

-25%-26%


-30%




2005 2010 2015 2020 2025 2030

150%

100%

50%

0%

-5%

-10%

-15%

-20%

-25%

-30%

-35%

0%

150%

Aus, EU -13%

Japan -3.8%

Korea -2%

US & CAN-17%

NZ -25%

China +139%

-4%

-25%-26%-28%

-34%

-26%



Project Example – Affordable Housing

• $20M Affordable Housing Development in Westmead

• 70 Apartments

• Ground floor retail

• Basement car park

• $200k CEFC funding to improve NatHERS rating to 8 Stars, install 100kW PV, 50kW battery, LED lighting, regen lift braking



Capital Cost Increase

$0

20-yr Life Cycle Cost Saving

$716,358

Net Green Star Score Impact

+ 1 Star

GHG Emissions Reduction

56%

Annual Saving Per Apartment

$510

Property Owner Annual Saving

$23,852

Environmental Impacts Reduction

26%



Net Green Star Score Impact

+ 2 Stars

Capital Cost Increase

$45,662

20-yr Life Cycle Cost Saving

$670,080

GHG Emissions Reduction

73%

Annual Saving Per Apartment

$510

Property Owner Annual Saving

$23,852

Environmental Impacts Reduction

30%


Project Example – Remote Indigenous Community

• $20M Infrastructure Plan for a community of 500-600 Indigenous Australians living on 20ha

• Currently no running water, sewage, drainage or electricity

• Govt tasked with providing electricity, potable water, sewage, stormwater drainage and roads






• Conventional infrastructure would dramatically increase cost of living at significant cost to QLD Govt






• Conventional infrastructure would dramatically increase cost of living at significant cost to QLD Govt

• Proposing to use CEFC funding to deliver a truly sustainable, off-grid solution that can allow them to sell electricity and earn revenue


Project Example – Primary School

Develop EducationalMaterials

Monitor Energy &

Cost Benefits

Implement Upgrade Package

Obtain Clean

Energy Finance

Clean Energy

Upgrade Costing

Site Visit & Energy Audit

($60,000)

($40,000)

($20,000)

$0

$20,000

$40,000

$60,000

0 1 2 3 4 5 6 7 8 9 10

Clean Energy Upgrade PackageNet Financial Position Comparison

Business As Usual

Outright Purchase



Project Example – Primary School

Develop EducationalMaterials

Monitor Energy &

Cost Benefits

Implement Upgrade Package

Obtain Clean

Energy Finance

Clean Energy

Upgrade Costing

Site Visit & Energy Audit

($60,000)

($40,000)

($20,000)

$0

$20,000

$40,000

$60,000

0 1 2 3 4 5 6 7 8 9 10

Clean Energy Upgrade PackageNet Financial Position Comparison

Business As Usual

Outright Purchase


Increase PV + Battery + Sellto Community

Scale of Opportunity




• CEFC has access to funding of $10 billion ($2 billion annually 2013 -2018)

• Enough to provide more than $15M to each council in Australia, or more than $6M to each hospital in Australia





• CEFC future uncertain





• CEFC future uncertain

• Unprecedented opportunity for buildings in the public sector to conduct a clean energy upgrade and help Australia transition to a low carbon future

Removing the Capital Cost Barrierto Low Energy, High PerformanceBuildings in the Public Sector

Marlon KobackerDirector, Sustainable Future Group

E [email protected] www.sustainablefuturegroup.com.au

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