‍Community Energy How-to-Guide

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This guide is written by passionate advocates of community energy, to inspire you and help you in your community energy journey. A community energy project is a challenging but exciting opportunity for communities to have ownership and control over something incredibly important in their life – energy.  

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We wanted to invite knowledgeable people to have an opportunity to share their knowledge for the benefit of others. So, we interviewed over 60 people and organisations in the process of writing this guide. Their views are embodied in this guide. This guide is written by passionate advocates of community energy, to inspire you and help you in your journey.

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Case studies can be found at the bottom of the page.

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Chapters

The guide is broken into chapters for easy access.

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• Chapter one: Identify your stakeholders, your iwi, and the value of sustainability, equity and resiliency. A community energy project has a wide group of stakeholders. They include all the people, organisations and companies involved in the planning, financing, building, and maintaining the project, including selling the excess electricity. Key stakeholders are also the hapū and iwi in which your community lives who have a deep understanding of the environment upon which your community Energy Project will be built. The values of sustainability, equity and resiliency are very much part of Te Ao Māori. Connecting with stakeholders is very important for the success of your project.

• Chapter two: Developing your overarching vision and defining success for your project. A vision is important – it is imagining the future, but concrete steps need to be put into place for that future to be realised. This section asks the questions why people want to create a community energy project. The section “Defining success for your project” will help define the vision. This leads to an initial scoping and feasibility assessment, which is like drawing the plans of a house and pricing it out. To see it on the ground, first you need to see it on paper. This can be a great motivator for a community group.

• Chapter three: Building community engagement, celebrate milestones and telling your story. Every project needs a cheerleader, an encourager who will find something to celebrate at every opportunity in the progress of the community energy project. Telling the story positively is important for your stakeholders who might be a bit more distant to the project than your community. Enthusiasm translates into commitment to them, and especially for funders, this is good news.

• Chapter four: Defining your governance structures and roles. You want the benefit of our community energy project to last for decades, so it is important to get the legal structure right. There are several structures that can be used. You will need some good advice as to which is best. And then your project will need people to fulfil different roles. This section will help you work through this important decision-making time.
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• Chapter five: Understanding the electricity ecosystem. The energy sector is complicated and electricity the most complicated part of it. It is marvellous once you start to understand it, but it takes while. This section will help you immensely when you are talking with people in the electricity sector. They will appreciate the effort you have made and they will respect you for it. Hopefully that will help you with your project.

• Chapter six: Plan an outline of your community energy project. You want to get it right the first time so unless you have some electricity sector professionals as part of your team, it may be helpful to bring in an expert to take you through this section. This section really help you see what a community energy project could look like.

• Chapter seven: Finance and contract options. This section takes you into the world of negotiations with financiers and contractors. Having someone experienced in these matters on your side of the table will certainly help. Don’t hesitate to talk to your solicitor about the financing agreements or contracts with contractors. Typically, financiers are hesitant to lend to groups or projects where there is little option to recover their funds if things go wrong. A community energy project could fall into that category, hence putting together an application for finance that has been vetted by your community energy project legal adviser is a must. Likewise financial advice from an experienced accountant on community projects would be highly recommended.
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• Chapter eight: Connecting to the grid. There is a lot to consider in this important stage of connecting to the grid. Not connecting to the grid is always an option, but then you lose the backup the grid offers you. And you also lose the opportunity to export your electricity and sell it in the electricity market. Selling your excess electricity will bring down the overall price of electricity for your community. There is a lot of opportunity and value in being connected to thegrid.

• Chapter nine: Developing your long-term operational and maintenance plan. It is now built and all in place. You’re enjoying renewable electricity from your own community energy project. It’s wonderful reaping the benefits of your dreams and hard work and you want this to continue year after year. That means you must plan for your projects ongoing operation. Someone must run it, monitor and maintain it. And of course, selling your electricity will require someone who can do this. You need to have a plan.

• Chapter ten: Selling your electricity. Reducing the price of electricity for your community energy project is one of the stronger reasons for a project. Selling your excess electricity will bring in revenue to off set your member’s electricity costs. There are some things to learn about selling to the grid. This section will assist you with understanding the options.

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Case studies

- 26 Aroha Sandringham

A customer owned network with solar hot water and solar PV

26 Aroha started with a vision: Create hubs of people that can live in a sustainable, affordable and friendly way with minimal impact on the planet and be positive to the neighbourhood. Founders Jules and Blair MacKinnon achieved this with a 13-unit apartment building in Sandringham, a suburb close to the Auckland CBD. The building, which has received a Homestar rating of 10, features a thermally optimised building envelope, solar PV, central solar hot water and a shared EV on a customer owned network along with a worm farm for composting, a community garden and water saving systems. They use about half the water and half the electricity as the average Auckland household while generating only half the waste.

One of the intentions is to provide people who are renting with similar quality of features as owners. They do this with a suite of amenities from roof top BBQ, kitchenette and laundry and a rentable guest room.

26aroha.nz/

Governance

Jules and Blair own the building through a trust. They manage the building operations and all the utilities (energy, water and waste.) This governance structure has enabled effective decision making and savings allocation during the construction and operations phase. It has enabled them to take advantage of scale on systems such as PV and solar hot water and contract relationships with utility companies. Savings are returned to residents through lower utility bills and, in the case of waste management, a slush fund for general use. They hold regular huis with the residents to solicit input and there is an online chat group.

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People and skills

Jules’ mother had built up a rental business over decades. When the business passed to Jules, this property was developed under an existing business framework along with Jules’ experience as a health care professional and family history of property management. 26 Aroha hired architects, builders and consultants such as Revolve Energy for the energy systems design and enablement.

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Project steps

Land acquisition:

The land was already part of the property portfolio so it was a matter of disassembling and upcycling the 1920’s bungalow materials into a 13-unit complex managing to meet their 90% recycling target for the old house.

The design:

The design was intended to offer long-term, quality rentals in a sustainable, low-carbon building. Parking was reduced to the absolute minimum of two rentable spaces and the one shared EV. The rentable carparks were prioritised for young families. Communal living is optional with the design allowing for shared space and private living.

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Sound financial decision making

As this building is a livelihood for Jules and Blair, they had to make sure that the capital expenditures made commercial sense over the long term. The savings had to be realized and shared by both the residents and the owners. One example is the hot water system. The central hot water system gets about 70% of its heat from a 30 m2 roof mounted solar hot water heater which cost about $80,000. This additional capital cost will be paid back over time in reduced energy use. The supplemental 30% of heating is from an electrical heater element powered by grid or solar electricity depending on the time of day.

The central hot water system freed up space in each apartment that allowed for additional storage room amounting to a collective savings of about $65,000 in alternate use floor space. While the $65K is not a direct one-for-one offset against the $80K, it certainly shifts the balance clearly in the direction of central solar hot water.

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The energy system

Consumer owned network

26 Aroha operates a consumer owned electricity network with a single grid connection to supply electricity to the 13 units and to all shared loads such as laundry, communal lighting, hot water and EV charging. Cold water is similarly distributed to apartments from a single Watercare connection. Hot water is completely internal to the site with a central on-site hot water plant delivering hot water via a circulating ring main.

The property has a single gate meter at the grid interconnection point. This means that Vector, the local lines company, only has one connection and one customer, and, Ecotricity, the energy retailer, only buying power to get a cost-effective energy rate of about 12 cents per kWh fixed for 3 years and a lines charge of just over 5 cents per kWh.

Within the property there are check meters for each unit and for most of the key loads such as the central hot water system and the shared EV charger. This enables 26 Aroha to monitor and allocate the cost of services to each unit.

Internal billing is managed by the owners using a software billing system designed by Revolve Energy for customer owned networks. The owners also manage the relationship with the retailer Ecotricity. This enables the residents to enjoy the benefits of low cost and self-generated energy without having to spend time managing it.

Having a single gate meter and operating a consumer owned network enables 26 Aroha to take full advantage of their on-site generation and controllable and flexible loads to generate savings without compromising comfort and convenience.

Photovoltaics

The 10kWp (peak) roof mounted PV system feeds the customer network and therefore all loads on the property. Given that 75% of the solar is used on site, the payback on the $40,000 investment should be faster than a single home PV system which often can only consume 50% on site. Energy consumed on site offsets against a flat rate energy tariff of 12 cents whereas they would get about 9 cents for exported energy. However, they still need to pay about 5 cents per kWh consumed in lines charges. While both the lines charge and the energy tariff are significantly lower than they would be for an individual house, there is a net benefit of ~8 cents for every kWh (12+5-9 =8) that they can consume directly from solar versus exporting and buying back later.

In the future there might be ways to further optimize the use of the PV to be used on site. The owners did not want to compromise the lifestyle of the residents by actively managing the EV charging times.

Central solar hot water

The central hot water system is set to maximise the use of the 30m2 solar heater using timers. A hot water system has to reach 60 degrees at least once per day to eliminate bacteria. This 60-degree peak is set to occur each day at 4pm which gives the solar heater as much time as possible to get the hot water up to temperature so as to minimize the supplemental heating needed. This also means that the water is hot for the residents evening activities. The temperature is then held at 55 degrees throughout the night until 9am, after which it is allowed to fall waiting for the solar heater to kick in and return the temperature back up toward the 4pm peak. This may be optimized further over time as usage patterns and solar PV self consumption is optimized.

Space heating

Since the units are very well insulated, the space heating requirements are relatively modest and could be served by small 1.5kW to 2kW space heaters in each apartment. Some residents hardly ever use the space heater.

EV chargers

The shared electric vehicle is charged with a smart fast charger. At present there is no active management of this load or attempt to have charging occur during solar generation. Since the EV is a Nissan Leaf with a range of 150km, it is not worth the risk that residents might experience the inconvenience of a half-charged car.

There is likely a way to optimize all of this with a booking system integrated to the charger that can be set up in the future.

Allocating costs fairly

The data acquisition, metering & billing solution ensures that the operational costs and future upgrade/replacement costs of the system are recovered fairly from the residents.

Interactions with the lines company

Since the property was shifting from a single 1920’s bungalow to a 13-unit building it was likely that a larger power supply would be needed. E-cubed, a services engineering company, developed an estimate of the capacity that would be needed and provided it to Vector, the local lines company. Vector concluded that the best way to supply the estimated power would be by connecting the property to a different distribution transformer 100 meters away. This did not require an upgrade to the transformer but did require a new conductor be laid at a cost of $100,000 to the project.

In retrospect, there might have been an opportunity for 26 Aroha to consider other mitigation strategies that might have reduced this cost but it could equally turn out that this was the most cost-effective solution. It also provides some degree of future proofing if more loads such as additional EVs or air conditioning is added.

Interactions with the retailer

Ecotricity provides energy to the property at a flat rate of 12 cents per kWh locked for a three-year period. Lines charges are separate and a pass through. This, in

combination with solar, makes the middle of sunny days the best time to use electricity and hot water.

Special thanks

Thanks to Jules and Blair MacKinnon for being willing to share their journey and for their time in discussing the project. Thanks to Shay Brazier of Revolve Energy for making the introduction and taking the time to describe the project and review the case study.

Extra information

• ‍stuff.co.nz
• ‍homemagazine.nz

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- Cohaus in Grey Lynn

A consumer owned network supporting a community housing project

Cohaus is an integrated housing project created, designed and financed by the people who call it home. The project incorporates five key elements of community, housing, transportation, water and energy. Cohaus started with a clear intention and a set of requirements to provide reasonably affordable, high-quality housing for 10 to 20 families within easy biking and public transportation distance from the Auckland CBD, and, to be ecologically minded within commercially sensible constraints.

The incorporation of these five elements enabled capital savings in one area be used to invest in long term savings in other areas so that, as a whole, the project was cost effective for residents of the community.

cohaus.nz/

Governance

The governance structure enabled effective decision making, collective consultation and individual ownership. Each of the families who would become owners set up a trust with shares in a development company that was managed by two directors, each of whom were community members and future residents. Once the project was constructed, the trusts converted to unit title with a body corporate and the development company would be dissolved. This allowed people the flexibility to participate from the start all the way through to being occupants or to swap out during the process. Ultimately most of the families that started became owner occupants and residents.

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People and skills

The project started from a series of meetings of the founding families. The two directors of the development company, one of whom is the architect, had the power to make decisions quicky. Cohaus would hire consultants for specialized areas such as Revolve Energy for the energy systems design and enablement.

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Project steps

Land acquisition:

First, they set about finding and purchasing a suitable site, which turned out to be in the suburb of Grey Lynn close to the CBD, bike friendly and well served by public transportation. The site had a single building which was no longer to be used for its intended purpose, making the property prime for redevelopment into co-housing.

The design:

The design was intended to maximize community green space and shelter it from wind and street noise with the buildings. The buildings would anchor the perimeter. Car parking was minimized to maximize green space.

The buildings were designed for living functionality rather than features that would might look good on a brochure but have minimal practical value. Where possible, amenities were shared. Reducing complexity reduced the capital cost.

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Sound financial decision making

Features and technologies that enhanced sustainable living needed to stack up economically. Financial models were used to evaluate options and make trade-offs. One clear example was the decision to go with a central heat-pump hot water system. Heat pump hot water systems are higher capital cost but, being three times more energy efficient, deliver a much higher net present value. One central hot water system is more cost efficient to purchase, install and maintain than 20 smaller hot water cylinders. In combination, this decision had a payback of three years which is very quick given the life of the project. In addition, eliminating the hot water cylinder from each unit, freed up space equivalent to a large closet per unit.

Since the solar PV system was of clear economic benefit but had a longer payback, it was financed separately with a loan from one of the families. This removed the capital cost burden from the project and the loan could be serviced from savings realized on energy over time. Once the loan is repaid, this additional fee can be put toward other uses or removed from the monthly bill for each unit.

Six shared vehicles offer a number of economic benefits. They reduce the amount of parking needed allowing for more green space and a shared garden or extra units. There are the savings from shared cost of maintenance, WOF, insurance and other fixed operational costs and well as the upfront capital cost. Currently two of the shared vehicles are EVs and four are hybrids with the goal to go to all EVs in order to maximize the use of day time solar production and sustainability.

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The energy system

Consumer owned network

Cohaus operates a consumer owned electricity network with a single grid connection to supply electricity to the 20 units and all shared loads such as laundry, communal lighting, hot water and EV charging. Cold water is similarly distributed to apartments from a single Watercare connection. Hot water is completely internal to the site with a central on-site hot water plant delivering hot water via a ring main.

The property has a single gate meter at the grid interconnection point. This means that Vector, the local lines company, only has one connection and one customer, and, Ecotricity, the energy retailer, only has one customer, rather than 20. This gives Cohaus buying power to get a cost-effective energy rate and allowed them to reduce the collective interconnection capital cost and operating cost.

Within the property there are check meters for each unit and for most of the key loads such as the central hot water system and the EV chargers which enables Cohaus to monitor and allocate the cost of services to each unit.

Internal billing is managed using a software billing system designed by Revolve Energy for consumer owned networks. One of the residents manages the internal billing and the relationship with the retailer Ecotricity including analysis for future energy strategies. Their renumeration for this part time work is modest compared to the energy savings. The rest of the residents enjoy the benefits of low cost and self-generated energy without having to spend time managing it.

Energy control system

Having a single gate meter and operating a consumer owned network enables Cohaus to take full advantage of their on-site generation and controllable and flexible loads to generate savings without compromising comfort and convenience.

The control system manages the demand so that the limits set by the lines company are not breached and the demand charges are kept to a minimum. In the event that the property is nearing peak demand, there are three controllable loads that can be turned off or delayed; EV chargers, hot water heater and the outlets on a dedicated circuit for each unit’s space heaters. The residents are aware that these services are subject to curtailment and understand the economic benefits.The control system also seeks to utilize as much of the solar energy generated on site by heating the hot water and charging the EVs during the day.

Load control operates to reduce operational cost by maximising the use of onsite generation. If Cohaus moves to time-of-use rates in the future, load control can be used to take advantage of lower (off-peak) tariffs.

Demand control has allowed the site to reduce the grid connection capacity allocation by 30%, down from 250 A to 180 A. This eliminated the need to upgrade the distribution transformer which saved at least $40,000. In addition, since the lines charge is proportional to the capacity (Amps) allocated the 70 Amp reduction (250- 180) saves about $750 per annum in lines charges.

Photovoltaics

The 40kWp (peak) roof mounted system feeds the consumer network and therefore all loads on the property. In New Zealand, the cost of a kWh of energy from the grid is significantly higher than the price paid to the owner for a kWh of solar exported to the grid. The value of solar energy is maximized by the control system to ensure that, to the extent possible, the energy generated is used on site particularly by controllable loads such as the hot water heater and EV chargers.

Central hot water

The central heat pump hot water heating system cost about $100,000 which was about $50,000 more than having conventional individual hot water heaters. However, the additional capital cost of the heat pump system will be paid back through energy savings in less than 3 years ($15,000 of operational savings per year, increasing over time). In addition, over 20m² of floor area was saved in the apartments by avoiding the installation of individual hot water cylinders, with a built floor space value of $100,000. Thus, the payback was instant from a space savings perspective and delivers an additional $15,000 of operational savings per year, increasing over time. The hot water heating set point can be increased when there is excess on-site solar electricity available.

Space heating

Since the units are well insulated, the space heating requirements are relatively modest. Therefore, it was decided to use a dedicated, controllable circuit for the outlets (plugs) for the space heaters, but leave the decision on size and number of space heaters up to the owners. In a peak capacity event, the space heater circuit can be curtailed if needed.

EV chargers

The shared electric vehicles are charged with smart fast chargers that integrate into the demand control system. This allows EV charging to be reduced or curtailed during times of peak demand and for charging costs to be reduced by maximising charging at times of excess PV generation and in the future low electricity pricing.

Allocating costs fairly

The data acquisition, metering & billing solution ensures that the operational and capital costs of the system are recovered fairly from the residents. The system:

1. Records and stores the metered electricity, hot water and cold water use of each apartment.
2. Allocates the costs of the shared vehicles by distance travelled.
3. Optimizes energy cost by storing and managingtariffs for the service centrally, including time of use tariffs for any service.
4. Allows onsite solar PV generation to be determined on a half hourly basis and billed to each unit at a separate rate to grid electricity to incentivise residents to change their usage patterns.
5. Automatically generates monthly invoices for the services which are pushed into Xero to be managed and communicated.

To start, billing has been kept simple. Over time, as residents become more comfortable, and ways to save or shift energy use become evident, the billing system might become more intricate to create incentives for residents.

Monitoring and visualisation

The same data that has been captured for billing, plus data from additional check meters which measure central loads (e.g. heat pumps, PV & EVs) can be visualised centrally. A fully customisable dashboard allows the managers of the site to keep track of consumption, and generation of electricity, heat and cold water.

A simplified dashboard will be shared with residents to allow them to understand the best time to use electricity & hot water. The system also tracks costs and savings in real time to allow live reporting of cost and carbon savings.

Interactions with contractors

Supported by Revolve Energy, Cohaus, put together a clear set of system specifications that could be bid out in an RFP (request for proposal) process that enabled direct comparison of offers from contractors. This ensured that best quality, price and service level was achieved for each system. Revolve Energy continues to act in an advisory capacity to Cohaus.

Interactions with the lines company

Lines companies are transitioning in their attitude toward innovation in the distribution grid and this was reflected in the Cohaus experience. In general, the lines company will supply whatever capacity is needed. Vector was prepared to supply the 250 A (three phase) suggested by the electrical building services engineer. However, Vector was initially not prepared to tell Cohaus what capacity threshold was available to the site without the need for a distribution transformer upgrade. This information was vital to the economic decision to invest in a load control system to reduce the capacity needed or to simple go with a higher capacity connection. This required navigating to someone at Vector who was prepared to provide the information. Once it was established that the threshold to avoid a transform upgrade was 180 A (three phase), the decision was made to go with load control and save the cost of the transformer upgrade of at least $40,000.

However, even the 180A capacity allocation is higher than needed and Cohaus will seek to demonstrate this with data over time and seek further reductions in lines charges. The peak load to date has been 85A (one half of the capacity allocated.)

Further, while Cohaus has achieved internal cost savings, they have not been able to engage with Vector to provide ancillary or flexibility services such as load shedding, load shifting, voltage support or reactive power support. Perhaps these opportunities will arise in the future as Vector seeks to procure these services and puts in place the grid management technology to be able to provide a demand signal and API feed of current tariffs.

There is also a future opportunity to be able to operate in island mode in the event of a grid outage but this would require batteries to be installed to balance the generation and load.

Interactions with the retailer

Ecotricity is considered to be an innovative retailer supportive of community initiatives for self-generation and load management even though it means they sell less electricity. They provided two options for energy. One based on time-of-use and the other a flat rate. Because of the volume purchase, both were considerably lower than they would have been for a single household. After analysis of anticipated usage, Cohaus opted to go with the flat rate for energy at just over 11 cents per kWh locked for a two-year period. Lines charges are separate and a pass through. This, in combination with solar, makes the middle of sunny days the best time to use electricity Cohaus will analyse its usage patterns in advance of negotiating the new energy rate toward the end of the 2-year period to determine which rate it should be on. Cohaus might also adjust the internal billing to reflect time of use pricing to encourage residents to shift energy use toward low-cost times. Having control of the billing system and customer network allows flexibility in how they allocate costs and incentivize behaviour of their community.

Storage

A common question is whether energy storage was considered and why it is not included. There are three answers to this. Firstly, energy is stored in the form of super heating the hot water system and through charging EVs. This is just a valid a method of energy storage as stationary batteries and more cost effective. Second, since Cohaus is grid-tied in a relatively resilient part of the grid, the grid effectively acts as storage and Cohaus is part of a broader community of energy users. Third, the financial case for batteries which would include energy arbitrage, ancillary services and resiliency did not stack up because, at the time of construction, these where not a sufficiently important problem to solve or were not available. If this changes, then stationary onsite battery storage can be added in the future.

Final words for those who follow

Cohaus sought to balance economics, ecological stewardship and comfort with each design decision. This required careful consideration of upfront costs and future needs and lifestyle choices.

One example was the decision to only have the required storm water storage buffer rather than oversize the system to perhaps double the requirement. The council requires a certain size in order to buffer storm water runoff, but additional tanks could store water for reuse in the garden and other non-potable uses. These subterranean tanks are most economically installed at the start of construction. At the time, the economic cost did not seem justifiable, but in retrospect some residents would have liked to have additional water for the garden or other uses.

There are check meters at each unit and most of the common loads. However, the shared laundry could also benefit from having a check meter to better allocate costs. At present this is all bundled with general lighting and so usage cannot be incentivized or allocated. When you can amortize costs across a community of 20 units it is easier to make long term infrastructure decisions that require upfront capital cost for longer term payback.

Special thanks

Thanks to Josh Yeats and Thom Gill of Cohaus for their time in discussing the project. Thanks to the Cohaus community for being willing to share their journey with the readers of the guide. Thanks to Shay Brazier of Revolve Energy for making the introduction and taking the time to describe the project and review the case study.

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- Case Study: Energise Ōtaki

Summary

Energise Ōtaki (EO) has built, and operates, two solar generation projects. Both produce revenue that serves as a financial annuity to fund community grants for community driven initiatives for as long as they operate. This case study focuses mainly on the energy project at the treatment plant, but it worth understanding a little more about EO energise.otaki.net.nz. At its heart, Energise Ōtaki (EO) is about enabling bright futures for the community which they do through sustainable energy related initiatives. EO started about ten years before the energy project was started. This was important because it enabled the members to worktogether on smaller projects first, get to know one another and establish a track record and credibility.

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The people, the people, the people

Like most community projects, Energise Ōtaki started with people:

Leigh Ramsey had worked in the alternative fuels sector and through establishing projects in the Pacific Islands had developed technical, innovation and project management skills and was a business member of the Clean Technology Centre in Otaki

Gael Ferguson had been the senior manager responsible for strategic direction, climate action and sustainability on the local Kapiti Coast District Council (KCDC). She brought many existing relationships that would later prove helpful and she had the project management and negotiation skills. Motivated by a desire to contribute and learn, Gael became the project manager.

Ian Jarrett (Astarra Technology) had experience in solar and battery storage and was a business member of the Clean Technology Centre in Otaki. Ian did the initial sizing and scoping and was able to judge merits of the proposals from suppliers.

The community had several contractors, technical experts and community leaders who could provide advice along the way as needed.

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Success Factors

Energise Ōtaki describes five factors that were key to their success:

• It was important to have a core team of people who were dedicated, persistent and had the foundational skills to initiate, develop and manage the project. Importantly, they had someone with enough knowledge of power systems to hold their own in discussions with industry players and contractors.

• They had established relationships with key stakeholders such as KCDC who would ultimately purchase the energy and lease them the land. This enabled them to get the first meeting and build on the relationship.

• They had people who could think strategically. Not just about the project, but what the project could mean in the broader context of the community. This was key to securing the financing for the project and the ongoing contribution to the community.

• They were able to figure out who had the requisite skills in the community and were able to enrol them to in contributing to the extent that they could and stay engaged throughout the project.

• They were organized and efficient in the use of resources and people’s time. They started as a loose coalition but became a functional organization with clear governance and management roles. They worked as a coherent team.

In combination, these factors gave EO the credibility and gravitas to be taken seriously by outside parties and to be able to execute at a pace that maintained momentum which was most important in dealing with risk adverse stakeholders.

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Recipe for Success

They knew that they wanted to create a renewable energy project that would generate revenue for community initiatives. Previous projects had been on a smaller scale with less structure and risk and external stakeholder engagement.

The trick was to get three primary elements all lined up at the same time: the funding, the commitment of the land, the off-taker (purchaser of the energy) and the physical plant construction.

Off-taker or purchaser of the power:

EO did a broad scan of loads (under its intern program) on the local grid to understand location, size and how they were used and managed. There were consumer loads, retail store loads and industrial loads. Consumer loads where too distributed and retail loads individually were too small but industrial loads were large and managed by a single entity that could be readily negotiated with. EO was looking for a “behind the meter” circumstance to reduce complexity and maximize the value of the energy.

Kapiti Coast District Council (KCDC), is the big game in town both in terms of electricity use and land holdings so it made sense that they might have a stable load that an energy project could serve. In addition, EO had a good current and historical relationships with all levels of council (political and operational). Ultimately, the best KCDC load identified ended up being behind the meter at the Otaki Waste Water Treatment Plant (OWWTP). This was ideal for solar as it predominantly runs electrical pumps for the water treatment.

Generation Technology:

EO evaluated several generation technologies but settled relatively quickly on solar versus other technologies. Firstly, it was resource that they had and secondly it was modular so could be built at the right scale. They also decided to do a relatively large installation (over 100kW which at the time of inception was one of the largest in the country) so that they could have significant impact. A key was to model the demand, loads and financial return.

Funding:

EO were searching for a single source rather than cobbling together a coalition of funders although the cobbling option was a fallback if necessary. Ultimately, both energy projects were funded with a $407,000 grant from the Wellington Community Trust.

An absolute key to securing this funding was Energise Otaki’s development of a model which would return the revenue to the community via community change focused projects. This is what attracted the Community Trust who could see an on-going return to the community on their investment. In effect the financial model was worked out at the outset as a way to contribute to the community and attract funders. Thinking outside the box on this was key.

This focused, clear decision making and reduction in complexity, enabled EO to work relatively quickly and build credibility with third parties and stakeholders.

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Governance

Initially, for Energise Otaki overall, and well before the solar installation conception, the group functioned as an umbrella reference group for ideas. To get the ball rolling for financial activities, Leigh’s existing commercial entity served as an umbrella organization. This involved using a spare bank account and having a separate person monitoring it until EO could be established as a legal entity. EO moved to an Incorporated Society Inc. structure which evolved the people in the reference group into the legal entity. This structure lasted several years until EO outgrew this structure and took legal advice that EO move to a trustee (charitable) structure. EO is now a charitable trust governed by a committee of trustees.

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The physical project

In October 2020, Energise Ōtaki commissioned a 23kWp solar PV system at Ōtaki College and a 107 kWp system at the Ōtaki Wastewater Treatment Plant. The energy generated is used at the College and to run the Council’s wastewater treatment process. Behind the meter energy is billed to both the college and the council and excess export power is sold back to the retailer. Proceeds from these electricity sales are put into the Whakahiko Ōtaki – Energise Ōtaki Fund to support community-initiated energy projects.

The remainder of this case study focuses only on the system at the water treatment plant.

Key features or the system at the Ōtaki Wastewater Treatment Plant

• A ground-mounted solar farm facing north at a 25° angle

• 240 photovoltaic solar panels of 445W each (total of 106.8kWp) with four 3-phase Fronius Symo 80kW inverters.

• A peppercorn lease with KCDC for the land being used for the solar farm. This was a negotiation with council that had to be worked through as the land is owned by district-wide ratepayers. It was determined by council that the land was landlocked, that the OWWTP would not be needing the land for future expansion and it was part of an old landfill not fit for better use.

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Contribution to the community

Starting in 2021, the Whakahiko Ōtaki – Energise Ōtaki fund is to be dispersed annually, according to funding criteria, to community energy projects. Governance of this fund is via an Energise Ōtaki sub-committee with representatives from Nga Hapu ō Ōtaki, Wellington Community Trust, Kāpiti Coast District Council and Energise Ōtaki. There is an estimated minimum $23k annual revenue from the two installations for reinvestment in community-initiated energy projects.

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Engaging with funders

Energise Otaki knew that they needed to be able show a return on investment that was relevant to the funder. This meant a financial return, but they also needed to show how the money, that would be generated annually, would be used. Specifically, since their funder was the Wellington Community Trust (WCT) they needed to show that there would be a return to the community in ways that the WCT would ordinarily have funded anyway.

The financial model (how much value would be generated) was as important as the physical model (how the electricity would be generated).

The basic economics are that a $407,000 upfront investment generates $23,000 per year. On a straightline basis this would pay back in 18 years. Since the project has a life of 20 to 25 years, they can expect to generate about $575,000 over the life of the project for the community. Therefore, WCT can deliver 50% more value by doing this project than by investing directly in the community projects. Of course, there are variables that would make this number go up or down but there is a demonstrable payback. In addition, since the proceeds are distributed to projects decided by the community, WCT can be assured that this is the highest and best use of the funds in the eyes of the community.

In many ways the EO model is ingenious in its simplicity and directness with which it serves the community – that is to build an asset that generates revenue and then use that revenue annuity to fund community led initiatives for the commercial life of the project.

However, to fully commit the funding, WCT needed to see that they had signed contracts with the landowner. This was difficult to do as they could not sign without knowing the funding was assured. This was eventually solved by lining everything up so that it was all agreed and signed at the same time and by making each contingent on the other. This required a degree of trust of the key stakeholders.

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Engaging with off-taker (and in this case the land owner)

Since the project was to be built on local council (KCDC) land and KCDC would also be buying the power, EO needed the council to say yes to three key things:

• Yes, that they could lease the land on a peppercorn lease of $1 per year.

• Yes, that they would take the power and that they would pay the same price for the power as they were currently paying from their existing retailer.

• Yes, that they would allow EO to assess and count the export value of energy going through their ICP connection.

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First, EO got the operational team to say yes and then they got the elected officials to say yes to the project in concept. Getting the sequence right is important as elected officials rely on the operational team to understand the details and act in the commercial interest of the constituents. The conceptual yes, aligned the operational team to negotiate in good faith.

Since the land is ring fenced (land locked), adjacent to the waste water treatment plant and a former dump site it was of little alternative value so it was relatively non-controversial that EO would be able to lease it for a nominal $1 per year. In addition, the substation is close by. The land was zoned for industrial, so EO needed to change the designation to simplify the consenting process. A resource consent was not required as solar farms are considered a controlled entity in the district.

The negotiation on the power off-take and price was more difficult. The council argued that there should be a discount on the price otherwise why would they switch. EO argued that this was for the benefit of the community which the council also serves. Of course, there are differences in the definition of the community for each and the council can’t be seen to be biasing positive or negative toward one segment of the community. Ultimately, the impasse was resolved by allocating the green credits from the solar project to the KCDC as a non-financial deal sweetener. Since the EO project is less than 1 MW they do not need to pay the Electricity Authority (EA) registration fee so could pass that savings on to the KCDC.

Although the chances of electricity costs declining significantly are slim, EO carries some downside risk. If the price that council is paying for electricity from its retailer is reduced then council will pay the reduced rate to Energise Otaki. Since the project was grant funded, they are not servicing any debt so this merely impacts their ability to fund grants.

To enable the electricity to be procured by KCDC, EO and the council had to be with the same retailer (Meridian). Rather than use a formal Power Purchase Agreement (PPA), a contract for the energy sale to KCDC was drafted from scratch by EO and negotiated.

A check meter at the solar site and another at pumping station ensure that there is accurate accounting on a 30-minute basis for what is produced and used. The meters compare the energy generated by the onsite solar to the energy used at the pumping station. This amount of energy is then multiplied by the corresponding time of use rate (there are 3 tiers.) This is tallied and invoiced at the end of each month.

The excess energy is exported through the meter at the pumping plant. Since any export must have come from the solar project this is allocated to Meridian via a direct passthrough from the KCDC electric bill. KCDC has direct access to the spot market through Meridian, the retailer. For each 30-minute period they get the market price multiplied by the kWh exported.

The negotiations and complex workings of this required both parties and the retailer to work in good-faith and EO developed IP for this financial model to be put in place.

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Engaging with the lines company

Electra, the local lines company, engaged to enable the project to get connected. As part of the interconnection, EO had to install an import/export meter and run a cable to the switchboard but no upgrade was needed to the substation. Over time the relationship has strengthened and EO and Electra are looking at more creative approaches for future projects.

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Engaging with contractors

Led by Ian Jarrett, EO put together a bid package for the project and ran a contestable RFP process to solicit proposals for the solar array. One of the challenges was that they received a very wide range of bids in terms of quality, detail and price. It is still common for contractors to simply provide a total cost estimate and be opaque or non-committal about the type of equipment they will use, to break out parts and labour and to show where cost reductions might be possible.

There might also have been an incorrect assumption that, because EO was a community group, they might lack expertise or savvy and could be taken advantage of. One of the clearest and most detailed proposals came from Infratec who have done extensive work on energy projects in the Pacific Islands. It broke down the costs in several categories with labour rates, cost for civil works, panels etc., Their price was toward higher end however. After further discussion between EO and Infratec, in order to ensure fairness, they settled on doing the project open book with a reasonable margin for Infratec. Infratec did the array design and was the overall project manager and dealt with the interconnection, Electra, access to the grid for export and all the physical construction third parties including the two subcontractors. EO managed any consenting matters of which there were few. Because the land was within a designation EO simply had to provide information that the installation was consistent with the designation. No RMA consent process was required beyond that.

Infratec also set up all the guarantees from the various parties to ensure that the work was done correctly. Hoskins Energy Systems built the array and Pritchard civil did the civil works pritchardcivil.co.nz. There were some geotech surprises as the land was found to have hard rock below the river silts. This increased the cost of the civil works but did not affect the size of the array. The key issue was to ensure that the ground works did not affect the PV supplier guarantee, which ultimately was unaffected. The final plant was 106.8kW – a bit smaller than the original plan. One of the benefits of solar is that it can be scaled up or down depending on the budget and hiccups along the way.

EO decided to go for top quality components like Fronius invertors so that they could be assured that it would work over the long term. The project went operational in 2021 and is expected to deliver revenue to the community for the next 25 years.

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Operations

To deliver the revenue according to forecast, the plant needs to be operated and maintained and the running costs kept in check. This requires a manager, at least part time, to reconcile revenue and ensure the grounds are maintained and the panels kept clean. One of the surprises was the cost of insurance. Few insurers had experience with solar and assessed a premium for it being ground mounted even though it is in a difficult to access, fenced-in location that should present very little increased risk compared to roof mounted.

Understanding the ongoing maintenance costs is also import to creating an accurate assessment of the net cash flow that will be delivered from the project.

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Future plans

EO plans to expand the system to potentially megawatts size and also incorporate of end-of-life EV batteries to provide stationary power storage all of which are positively welcomed by the stakeholders.

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