Welcome to our CVGA Newsletter

A Renewable Energy Boom, directly comparable with the Mining Boom we've heard so much about, has commenced in Victoria (and around Australia). The resources at stake are different (sunshine, wind and waste instead of iron and coal) but the dynamics are virtually the same.

The responsibility to ensure we don't get caught up in focusing on short-term investment benefits at the expense of a 30+ year operational phase lies with us, (for my short article on the three phases of the Boom Cycle and how they might impact us, see here). We need access to good information, good models for structuring these deals and some common principals to ensure the long-term economic development potential of these projects is maximised and not lost in the rush for the investment dollar.

As many of you are already aware, as with the Mining Boom we're talking very substantial investment. Councils have an opportunity to transform the economic profile of some regions in our municipalities if we are careful, well-informed and consistent in our approach.

The Victorian Greenhouse Alliances (representing 74 of Victoria's 79 local governments) has been effectively preparing for the beginning of this cycle for over ten years. There is a deep understanding of the dynamics of the renewable energy industry from a local government perspective spread across the ten Alliances.

The Renewable Energy Boom is going to develop EXTREMELY QUICKLY now that the pricing disparities between fossil and renewable energies have become clear in the market (whatever the federal government is saying). The increase in the scale of current and putative investment in this sector represents a financial wave we'd better be ready to ride!

So, what are some things local governments can do now to start preparing for this Boom Cycle? 

This question was the driver for the recent CVGA Energy Procurement Members Forum held in Bendigo in March. Most CVGA Councils had representatives attending and the discussion was exciting and not a little mind-expanding!
 

1. Get your house in order!

Your current contracts do not maximise your current energy spend, and they certainly don't into the future. Current contracts through Procurement Australia (PA) or the MAV do not provide you with real options for holding your retailers accountable, maximising the non-grid energy options or providing feedback on your energy consumption that could collectively cut your energy costs in the next few years by between 20 and 30 percent.

Given all but one of the CVGA's Councils will be renegotiating energy procurement contracts in the next 18 months (and some of you in the nest 12 weeks), now is a good time to think about the criteria you would like your procurement agents to consider (Procurement Australia or the MAV) to start considering. 

Competition in the energy sector is hot and the range of options available to Councils is very broad. Properly calibrated, these options could help Council fulfill on some of the following policy objectives:

• cost-cutting
• renewable energy investment (both private sector and Council-owned)
• environmental targets (including but not limited to Green House Gas Emissions targets)
• contract accountability

There are huge price and, perhaps more importantly, delivery structure changes underway in the energy market. Ensuring the PA or MAV include the appropriate Tender Evaluation Criteria is critical if Councils are going to maximise the current and future value of their energy procurement contracts. 

The Victorian Greenhouse Alliances have been working on developing appropriate Tender Evaluation Criteria for the past twelve months and will be in a position to make some proposals to your contract negotiation teams in the very near future. 

2. Make sure your Economic Development Units and Planning Departments are conscious of these developments and the impact they could have on your municipality.

Councils should really be considering how to ensure that the community and the municipality capture the benefits of the boom, and that they do not all get distributed to non-regional, and in most cases, non-Australian private businesses.

3. Look beyond wind and solar.

There are now options with extremely good economic returns available to Councils in the waste space.

For example, the CVGA Energy from Waste Micro-Power Station Network project (developed in partnership with Hepburn Shire Council and funded by DEWLP, the City of Ballarat and the Shire of Macedon Ranges) has a putative four year pay-back for Councils and an ROI of over 20%.

This project leverages the ground-breaking work done by Hepburn Shire which is at the EOI stage of implementation while the CVGA just recently submitted an EOI for $900,000 funding from Sustainability Victoria to help build a gasification plant at the Hepburn Transfer station and the second stage of implementation for five CVGA member Councils. 

The point I want you to take away is that we are in the first stage of a Renewable Energy Boom and we need to get ready quickly or we will simply sell-away the benefits and regret it for the next 30 years. This will happen very fast. My guess, the majority of investment deals will be locked-in within 3-5 years. After that, if Councils have not negotiated good deals, it will be essentially too late to change them (like we're seeing federally in the Natural gas sector right now).  

We need good information and we need to be prepared to negotiate good deals.

Your Alliance is a great source of information and support in this process. We've spent fifteen years, funded by you, essentially preparing for this time. 

Please use us!

If you want more direct information relevant to these topics, call me directly and attend the Victorian Greenhouse Alliances Conference on May 12th (see article below).

Yours,
Sonny Neale
Executive officer CVGA
0467-692-827 eo@cvga.org.au

Heatwave Health

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