This blog post has been updated in Dec 19 to reflect the re-branding of NCOS to ‘Climate Active’.
If your organisation has already implemented a range of energy efficiency measures like changing your lighting to LED, optimising your air conditioning, and engaging your employees to be more energy efficient you may be interested in further options to reduce your carbon footprint.
A great opportunity is to look at ways of greening your electricity supply.
It seems simple, but once you start investigating you will find that there are many options available, with more emerging all the time. So, how to make sense of the growing list and choose the right one for you?
To help you with the selection, we group ten options for greening your supply into three broad categories:
Buying carbon offsets
Buying carbon offsets ties in nicely with a carbon management strategy. You can purchase carbon offsets from overseas or domestically, or from a mix of the two. If you don’t want to deal with purchasing carbon offsets, you can switch your account to a supplier that offers carbon neutral electricity, which automatically reduces your electricity-related emissions to zero. Make sure that the carbon neutral electricity is accredited to the Climate Active to ensure credibility. Currently, Climate Active-accredited carbon neutral electricity for businesses is available from only one supplier.
If your roof space allows for it and you are not facing any barriers like overshadowing, you can install solar panels. Solar PV panels are ideally suited to many businesses because there is daytime demand for electricity. If sized correctly, most of the renewable energy generation can be used directly, without exporting anything to the grid.
In Australia, the Clean Energy Regulator distinguishes between small-scale (<100 kW) and large-scale generation (>100 kW). Solar installations smaller than 100 kW are eligible to receive STCs (Small-scale Technology Certificates). STCs lower the cost of a solar installation and act like an upfront subsidy. Installations larger than 100 kW attract LGCs (Large Scale Generation Certificates). On an annual basis, you will need to keep track of the renewable energy generation to be able to sell your LGCs and get a financial return. Please note that if you sell your LGCs, you will not be able to claim the carbon reduction nor the renewable energy generation.
The most straightforward way to buy renewables is to purchase GreenPower®. If you are large enough, you can also directly purchase LGCs in the spot market, but the minimum parcel size is 5,000 certificates, which is equivalent to the electricity use by a multi-storey office building. Another option which is gaining in popularity is joining a renewable energy buyer’s group, like WWF’s, who aggregate corporate demand to simplify the procurement process and to access cheaper rates for renewable energy.
Corporate Power Purchase Agreements (PPAs) are another alternative that is gaining traction in Australia. This is where organisations directly contract with a renewable energy developer to purchase the renewable energy. The advantages of this approach are that you can point to a particular project and claim that this is your source of renewable energy.
People and organisations also love the concept of community renewables. As an example, an organisation with a suitable roof space hosts a renewable energy project, and the community can participate by financing this project. The host agrees to buy the power at an agreed price that is lower than grid electricity, but high enough to repay the capital cost and deliver a return to investors. Your organisation can either host a project, if you have got suitable roof space, or help finance a project.
In future, there may also be an 11th option, if peer-to-peer energy trading becomes a reality. This allows producers of renewable energy to sell any surplus they have to others directly, rather than having to go through a corporate retailer, via powerful online trading platforms that handle all of the complexities of each transaction.
To compare these different options to one another, you can apply two main tests:
- Does it meet your organisational needs?
- What do the financials look like?
This may be a simple or a complex assessment depending on your situation. You may need to take into account your environmental objectives, staff and customer needs and perceptions, your supply chain, ongoing effort or input, and energy market considerations, and other factors relevant to your situation.
To help you get started we have summarised some of the main attributes and issues to consider. These are tabulated below. Remember, your choices to green your electricity supply are not “either-or” decisions, but can be mixed and matched to get you the best outcome.
|Claim carbon neutrality||Claim 100% renewable energy||Local climate change solution||Need suitable roof or land space||Internal setup and administration effort||Potential risks||Costs and cost savings|
|Purchase overseas offsets||Yes||No||No||No||Low||Reputational, suitable accreditation, offset price fluctuation||Very low cost, no savings|
|Purchase domestic offsets||Yes||No||Yes||No||Low||Supply, Climate Active-accredited, offset price fluctuation||Low cost, no savings|
|Switch to carbon neutral electricity||Yes||No||No||No||Low||Offset price fluctuation||Low cost, no savings|
|Install: STCs||Yes, under upcoming NCOS rules||No, if sold||Yes||Yes||Medium||STC prices, energy price fluctuation||Medium cost, medium savings
|Install: LGCs||Only if retired||No, if sold||Yes||Yes||High||LGC prices, energy price fluctuation||High cost, high savings|
|Purchase GreenPower®||Yes||Yes||Yes||No||Low||GreenPower / LGC price fluctuation||High cost, no savings|
|Purchase LGCs||Yes||Yes||Yes||No||Medium||LGC price fluctuation||High cost, no savings|
|Join buyer’s group||Yes||Yes||Yes||No||High||Supply, contract term, link to retail agreement, retailer willingness||Potential cost savings|
|Corporate PPA||Yes||Yes||Yes||No||High||Supply, contract term, link to retail agreement, retailer willingness||Potential cost savings|
|Community renewables||Yes, if you are hosting||Yes, if you are hosting||Yes||Yes, if you are hosting||Medium||Project cost, host tenure||Typically medium investment, medium return|
|No, if you are investing||No, if you are investing||Yes||No, if you are investing||Medium||Project cost, host tenure||Typically medium investment, medium return|
While the qualitative and financial analysis of your options can be complex, Australia’s renewable energy and carbon markets are mature and a wide range of support is available to assist. You can obtain much of the information online, from industry bodies or government organisations. Energy market experts, solar suppliers, brokers and consultants can complement your purchasing and senior management expertise to help you take decisions that are the best fit for your organisation.