ReNu Energy CEO Chris Murray describes how his team is helping shopping centre tenants share the benefits of rooftop solar systems using behind-the-meter billing arrangements.
Surging prices for grid-supplied electricity have placed considerable pressure on Australian businesses, particularly in sectors such as retail and commercial property. Many of these businesses and the communities around them have a desire to reduce their carbon footprint with renewable energy.
For owners of commercial property such as shopping centres, higher energy costs mean there is a strong financial incentive to power electrical appliances in common areas from renewables and to make low-cost clean energy options available to tenants.
Shopping centres use a lot of power, with common areas including commercial-scale lighting systems (both indoors and in the car park), escalators, elevators, automatic doors, illuminated signage, interactive billboards, wi-fi and large air-conditioning units.
Meanwhile, the tenant stores and restaurants within the centre feature a mix of electronic sales displays, electronic display units, store signage, cool rooms, deep fryers, bain-maries, point-of-sales systems and countless other devices.
The electricity needed to run all those appliances that make your shopping trip such a pleasant experience – from the coffee machines and ovens in the food court to the projectors in the cinemas – has to come from somewhere.
As the price of conventional grid energy increases, so too does the cost of running all the electrical appliances that play such an important role in maintaining a comfortable shopping experience.
As a result, there is a strong financial case for controlling costs by reducing reliance on grid energy and making renewables a key part of the energy mix.
In addition to the financial benefits of adopting renewables, the simple and self-evident fact is that a store or a shopping centre powered by clean energy sources has a substantially smaller carbon footprint than one powered by grid electricity alone.
This is important for retailers and commercial property owners because there’s a growing awareness around the potential impacts of climate change.
Reducing the carbon footprint of a store or shopping centre through the adoption of clean technology is now a powerful selling point for a growing number of increasingly sophisticated and environmentally aware shoppers.
Sustainability has also become an important criterion for a growing number of investment firms and superannuation funds as investors wake up to the environmental risks and externalities associated with their investments.
As a result, making a lower-cost renewable energy option available to their tenants can potentially have a strong positive impact on the valuation of a shopping centre both through improved NABERS ratings and enhanced desirability for potential tenants.
The SCA example
With many shopping centres boasting large underutilised roof spaces, the best approach for adopting renewable energy is to install on-site photovoltaic systems through an embedded network arrangement.
A good example was the recent deal between ReNu Energy and one of Australia’s biggest shopping centre owners, SCA Property Group.
Under the agreement ReNu is deploying its solar PV systems at four major commercial sites across regional NSW and South Australia: Griffith and Lismore in NSW, and Murray Bridge and Mount Gambier in South Australia. About 2MW capacity will be installed across the four locations.
The agreement also contains scope for a roll-out to additional centres in the future, subject to a range of criteria.
How an embedded network works
In an embedded network, the solar provider (in this case ReNu Energy) is responsible for purchasing, installing, owning, maintaining and operating the rooftop solar PV system and embedded network, including all associated costs.
This rooftop PV system includes both the panels themselves and associated equipment including, for example, meters and inverters. In the future this may also include batteries for energy storage.
In addition to there being no upfront cost to the shopping centre owner in installing the solar system, ReNu actually pays the shopping centre a rental for the otherwise unused roof space. Along with getting access to cheaper and more sustainable power, the shopping centre operator also gets to monetise a space that would otherwise remain vacant.
The solar PV system is physically connected to the shopping centre’s main power supply behind the main meter for the shopping centre, allowing grid power to be used to cover shortfalls at times when the solar PV system isn’t generating sufficient electricity.
ReNu is then responsible for metering the tenants and the shopping centre owner for common areas through the embedded network, and then bills both the stores and the shopping centre for the energy they use.
Individual stores still retain the option to buy their electricity from a different retail provider if they wish.
By aggregating electricity consumption to a single bill, ReNu Energy is able to negotiate significantly better retail electricity tariffs for shortfalls than the retail rates individual tenants would be able to access themselves.
Lower energy costs can in turn be passed on to consumers in the form of lower prices, meaning that everyday shoppers win from the arrangement – even if they’ve never seen the impressive solar array on the rooftop.
Why these arrangements make sense
Typically, electricity retailers tend to charge peak rates during daylight hours when shopping centres are at their busiest. By happy coincidence, these peak trading hours are also when solar PV systems tend to generate the most power.
As a result, solar is typically used to power the building during the day, meaning grid power consumption and cost can be reduced for the centre owner and tenants.
Excess energy generated from the solar PV system can either be exported to the grid or stored in batteries.
Battery storage will allow excess energy collected during the day to be load-shifted to cover late-night trading, as well as appliances that operate overnight, including supermarket refrigerators, outdoor signage and car park lighting systems.
By the numbers
As an example of the scale of the financial and carbon emissions benefits a behind-the-meter arrangement can have, imagine a typical regional shopping centre with 30 speciality stores. The centre consumes 1,200MWh of electricity a year.
If a 360kW solar PV system is installed on the roof of the centre the system will produce 550MWh of renewable electricity per year, with the majority of this solar production during the trading hours of the centre.
All of this renewable electricity can be consumed within the centre, with the result that the amount of electricity consumed from the grid is about halved. Carbon emissions from the centre will be reduced by about 460 tonnes of CO2 a year, equivalent to taking 180 cars off the road.
The reduction in peak energy use, combined with the improved purchasing power that comes from aggregating electricity and network contracts, flows through to substantial savings for both the shopping centre owner and its tenants.
Given the rapidly escalating price of grid power, the continuing reduction in prices for renewable energy technologies and the community’s desire to use more renewable energy, it is highly likely you’ll see more behind-the-meter embedded networks and solar PV installations in the near future.