The Newstead Energy Feasibility Study was prepared by Michael McCartney and released in September 2011.
Click here to access a PDF of the final report.
The magnitude of the task
Our modelling suggests that the usage for the district is in the order of 1.6GW of electricity per annum. We have modelled this usage over a 15 year period.
To generate the equivalent energy from renewable sources Newstead would require a 200kW capacity power station operating at 90% efficiency (i.e. a geothermal plant), or a 570kW power station operating at 32% efficiency (i.e. a wind farm) or a 1.12MW power station operating at 16% efficiency (i.e. a solar park). Indicative pricing for each of these projects range from $800,000 to $6,700,000.
If viewed from the perspective of buying Greenpower over the project life of 15 years, the total cost is expressed as $1.32m. If the equivalent emissions from current use were to be offset through the purchase of Offsets over the project life, then this would cost $756,240 on current day estimates. As a direct comparison, sequestration through local projects is estimated to cost $920,640.
When scenario modelling is undertaken, and assumptions are made about the uptake of various energy efficiency and generation interventions, the task looks more manageable, but not easy.
Approaches that can be taken
We do not believe that there will be one single approach taken. The task outlined above can be broken down into a number of approaches. There will be a combination of reduction in use, substitution of generation from renewable sources and sequestration. Some answers to GHG abatement are very simple and obvious. Subject to householders satisfying themselves that the general conclusion outlined in this report is appropriate to their circumstances; energy audits, retrofitting, solar hot water and household PV should be taken up at household level.
This would make a substantial contribution without resorting to a generation project. GreenPower represents a different approach. Unlike the aforementioned measures that have an investment return, GreenPower represents an ongoing commitment to buy a solution at market rates. Unlike solar hot water and PV, there is no notion of an asset being purchased or any hedge against future price rises being obtained. Aside from purchasing GreenPower on a customer-by customer basis, we have flagged the notion of forming a buying group that may deliver a better value proposition, and not just for green energy. Generation at a medium or larger scale represents a challenging proposition but delivers high rewards if successful. Generation potential is constrained due to the unsubsidised nature of these generation projects and\or existing network parameters.
Sequestration or the purchase of offsets has been treated as a residual solution in the accounting model, but should not be dismissed merely by this accounting treatment.
Newstead’s natural advantages appear to centre upon goodwill with high community spirit. From a generation perspective, geothermal appears to be the most interesting, but at the same time is the least developed. Sequestration with woodlot harvesting will be an integral part of the solution in the absence of a generation project delivering a complete solution. Some other ideas were examined, including household wind, micro-grids, behind the meter solutions and biomass. They were briefly evaluated but little work expended due to either poor resource or lack of critical mass.
Carbon Accounting Model
At first glance, modelling a transition to zero emissions from stationary energy consumption is a simple concept, but in reality it is not so simple. The initial problem is building a robust model to account for emissions and to account for the benefit of any intervention or action undertaken. This is a difficult process due to the risks in double counting and dealing with the concept of ‘additionality’. It has the capacity to be “de-motivating” to a community unless an equivalent “attribution” model can be run in parallel. We have made comments on this approach and understand the Newstead community wants to pursue a model where action undertaken is recorded rather than modelling an outcome based on where the environmental credit is accounted.
Putting these issues to one side, the model has been built to cater for either the strict carbon accounting principles or the attribution approach and it provides a framework for options to be considered and evaluated. Various scenarios have been modelled that involve following a number of initiatives in combination.
- The task is manageable but not inconsequential;
- Household sector initiatives can contribute to the solution and make financial sense, providing a better financial return than generation projects, based on current market parameters;
- Further works are required to evaluate various generation projects. Positioning of such projects and their agreements around the sale of power are critical to their financial viability;
- Subsidisation as a policy trial for government may be an option whilst we operate in a marketplace where there is little or no recognition for the benefits of generation at distribution level;
- Further work is required to develop a sequestration project augmented by a community woodlot;
- All these initiatives are likely to become more attractive if power prices rise higher than our estimates over the project period.
Having scoped the nature of the problem and the various models towards achieving an answer, it must be stated that a journey towards eliminating emissions from stationary energy is a complex but not unsurmountable proposition.