25 Nov Alice Plaza – gaining confidence in the savings
One of four directors of the Alice Plaza Property Syndicate, Sam Scaffidi, was introduced to Westpac Energy Efficient Financing through Scaffidi Group, which owns and manages a network of pharmacies across Australia, banked by Westpac.
Independent energy expertise
Westpac’s Energy Efficient Financing Program provides customers with the opportunity to work with independent energy expert firm, Verdia, to identify, design and deliver quality energy projects. Having worked with Verdia and Westpac to implement energy saving projects across several Scaffidi Group pharmacies, Sam Scaffidi and CFO Damian Donato introduced the team to the Alice Property Syndicate.
Damian Donato commented, “A number of energy services companies have approached us in the past, but we didn’t have confidence that the projected energy savings were realistic, or that their product would be the best one for our circumstances. We’re not experts in solar panels or energy efficiency, so it’s hard for us to verify what any given provider is telling us.
“Verdia is independent from equipment providers, and they have strong knowledge and experience in the energy sector. That, together with support and finance from Westpac, makes it a different experience from the outset, because you have confidence in the solution and the finance.”
Energy challenges for Alice Plaza
Alice Plaza’s Northern Territory location presented several challenges to reducing energy costs. In Eastern and Southern Australia the National Energy Market (NEM) connects the states, creating one of the largest geographically interconnected power systems in the world. Not so in the NT, where the energy supply operates independently and there is a shortage of energy generation capacity.
This means that energy prices in the NT can be higher than elsewhere in Australia. Additionally, prices in the NT are similar regardless of how much energy you use; whereas elsewhere there are discounts for higher usage. As a result, Alice Plaza was paying more than 30 cents per kWh for energy – where businesses of its size elsewhere in Australia might pay 11 -15 cents.
Identifying the best approach
Verdia began by examining Alice Plaza’s energy bills and operations, learning which tenants were the largest consumers of energy during daylight hours – this would indicate where the best savings could be had by installing solar. This evidence then had to be compared with where it would be feasible to install solar panels on the building, to design the optimum solution.
Making the business case
Verdia presented a number of project options to the Alice Plaza Property Syndicate, who settled on a 300kW solar system, combined with power factor correction and LED lighting upgrades.
The solar system would offset the cost of buying electricity, allowing Alice Plaza to generate its own energy on site. Meanwhile, power factor correction and lighting upgrades would improve energy efficiency across common areas, generating cost savings for Alice Plaza and its tenants.
With Westpac Energy Efficient Finance, the business case was compelling. With no capital outlay, the significant energy savings from the project would make it cash flow positive in the first year. The finance would be fully paid off after six years – with savings of more than $1.6 million projected over the 10 year life of the equipment.
Damian Donato commented, “The process was quite simple from our perspective. We got a detailed proposal, case study, costings, timeframes and details of the funding; so we had everything we needed to make a decision. The solution was cash flow neutral or positive from day one, and would improve our environmental impact. It was really a no-brainer. We were on board very quickly.”
Quality equipment from accredited providers
Verdia operates a national network of accredited energy equipment providers, to provide clients with confidence that projects are being delivered by reputable suppliers, for a fair price. The main equipment provider and installer on the Alice Plaza project was Darwin-based firm, Country Solar – a more cost competitive solution than engaging a local installer.
David Muir, Verdia’s General Manager, Project Advisory, said, “As part of managing procurement for our clients, we spend at least three to four weeks evaluating tenders. This includes working out who has the best price, but also other things like which supplier has the best warranties, and who can deliver the project soonest. There can be an opportunity cost if installation is delayed by lack of availability from a particular provider. There’s a lot to consider in order to get the best outcome for the customer.”
Donato added, “Verdia’s management team is very experienced in the energy industry, and the fact that they’re not pushing one product or supplier gave us a lot of confidence. Essentially, their goal is to get the best outcome for the customer. They designed and managed a tender process for us – they knew the outcome we wanted to achieve and it was up to them to get there in the most cost effective way while ensuring a quality outcome.”
Business as usual
With the project underway, the Verdia team worked carefully to ensure there was no disruption to tenants or shoppers during the installation phase. For example, in order to connect the 300kW solar system, the power to the shopping centre would have to be turned off.
David Muir said, “One of the retail tenants at Alice Plaza is a baker, and his ovens need to go on at a quarter to six. The financial impact of power outages can be signicant for smaller retailers so we had to take that into account. We made sure the system was turned on at 5am, so any issues could be fixed in time for the baker to go about his normal business.”
Damian Donato commented, “From my perspective, Verdia went to great lengths to plan the project, providing all the relevant information to us, the property managers and other stakeholders, to ensure the project was delivered smoothly, with minimal interruption and impact on operations.”
Ensuring long term performance
Verdia works with customers to ensure that any equipment installed continues to deliver the expected performance over its lifetime. Verdia’s General Manager of Project Development and Asset Management, Andrew Pearce explains, “Once a solar system is installed, we take a baseline measurement to check whether it’s performing to factory specification. This helps us identify any manufacturing or installation issues straight away. It also gives us a baseline to measure future system performance. We’re one of very few companies that do this.
“Once we’re happy that the solar system is correctly installed and performing as it should, we monitor it remotely to make sure that everything is on track, 24 hours a day, 365 days a year. We retain the serial numbers and details of all the equipment installed, so if there are any issues with a particular piece of equipment, we’ll know about it and be able to get warranty repairs organised.”
The outlook is bright
According to Donato, “Ultimately, Verdia and Westpac delivered what they said they would. We’ve already seen the benefits across our pharmacies and Alice Plaza, and we’re looking for more opportunities to work together across our property and business portfolio.
“Of course, businesses want to be more energy efficient and improve environmental impact, but the dollars and cents proposition has to be right. Once the business case is compelling, why would you wait?”