Powering the Precinct

Australia is well behind many of our global counterparts when it comes to the diversification of energy production, infrastructure, and distribution. In this insight, Tony expresses that our insatiable hunger for energy is still primarily fed by coal, and our infrastructure still clings to the centralized hub-and-spoke model of the electricity grid.

Large-scale coal-fired energy plants form the hubs of our network, feeding the cities, towns, factories, and homes at the end of countless spoke routes. However, our electricity grid is ageing, and the fuel we use to keep our energy wheel turning is rapidly running out.

According to the International Energy Agency, Australia’s electricity production from coal in 2012 equated to 171 terawatt hours, or 1.8 percent of global electricity production.

Sure, 1.8 percent doesn’t sound like much—until you consider that Australia’s population represented a mere 0.32 percent of the global population. On a per capita basis, our reliance on coal is disproportionate in the extreme.

It’s even more alarming when coal energy generation is compared with estimates of our overall energy consumption. More than 70 percent of our energy in 2012 came from this carbon intensive, non-renewable fossil fuel.

We are at a point where our energy sector must diversify or become extinct. University of Newcastle researchers have estimated that global coal production will reach its height at eight billion tonnes (8.8 billion tons) a year in 2034. Energy production from coal will peak even sooner—as early as 2026. As researchers Steve Mohr and Geoffrey Evans say, “the notion that coal is widely abundant appears to be unjustified.”

It’s true that energy use in Australia is declining, with consumption in 2020 tipped to be six percent less than what it was in 1990. We have energy efficient buildings and appliances to thank for this. However, as our population continues to expand, we need more sustainable, decentralized models of energy production and supply. Distributed energy projects have been operating successfully in Europe for decades, and projects here are also testing the theory and engineering behind the precinct energy approach.

Australia’s first real foray into precinct energy for commercial buildings involved the 2011 partnership between Investa Property Group and Cogent Energy to develop the nation’s first tri-generation precinct energy network. The gas-fueled tri-generation plant installed in the basement of Coca-Cola Place in North Sydney supplies lower-carbon energy, hot water, and cooling to both Coca-Cola Place and the Deutsche Bank building at 126 Phillip Street in the Sydney central business district via a virtual private energy network.

The benefits are many. Firstly, the energy supplied by the tri-generation plant is cleaner. In fact, by using this decentralized energy generation system, up to 1,000 tonnes (1,100 tons) of carbon dioxide are saved between the two buildings each year—the equivalent of taking 211 cars off Sydney’s roads.

Secondly, by exporting the excess energy generated at Coca-Cola Place to another building, the network’s viability increased exponentially. While many other tri-generation projects face the issue of energy wastage and infrastructure laid idle by supply outstripping the demand of a single base building user, the precinct approach enables the Investa-Cogent system to operate at optimum levels of efficiency.

The arrangement provided additional financial benefits to building owner, Investa, which was able to capitalize its investment by leasing the tri-generation plant infrastructure back to Cogent for a fixed fee.

Perhaps the biggest benefits of Australia’s first example of precinct energy in action are not those that it has delivered for Investa and Cogent, but the lessons it has taught us about the economics and implementation of decentralized systems, and the opportunities of precinct energy technologies to minimize risk and buy as time in the race for 100 percent renewable energy solutions.

Co- and tri-generation solutions play an important role in our transition to a truly sustainable energy future by demonstrating how we can integrate and grow a new system of energy supply and distribution within the old.

Precinct energy projects are steadily transforming the electricity grid from the old hub-and-spoke model to an interconnected network in which environmental and economic risk are more broadly distributed.

Australia is fortunate to have an abundance of renewable energy sources. Geoscience Australia estimates that just one percent of the geothermal energy that is 150°C or above, and that lies less than five kilometers below our country’s surface, could supply us with energy for the next 26,000 years.

And that’s to say nothing of Australia’s renewable solar, wind, and hydro energy potential.

Savvy businesses are exploring new ways to capture and commercialize these opportunities, yet we still have work to do on many fronts—technical, political, and social—before Australia can rest easy on the issue of energy.

In the meantime, let's minimize our risk and prepare our energy infrastructure in the most sustainable way we can—by adding more decentralized, low-carbon precinct energy options to the grid.