Councils turn to sustainability to deal with funding cuts
Willow Aliento | 14 October 2014
For local councils, funding cutbacks and having to do “more with less“ is standard business practice. But one consultancy that’s worked with 200 local government authorities around the country says sustainability is key to stretching the dollar.
According to Alexi Lynch, Ironbark Sustainability business leader sustainability strategy, when revenue dries up local councils have the choice to cut services and forgo maintaining community assets, but in general these days they can see that greater energy efficiency and sustainability saves money.
The Melbourne based company, which started in 2004, and is now about to recruit two more staff to add to its current total of 13, has worked with more than 200 councils around Australia to help them reduce energy and carbon emissions.
Many of the projects were funded under the $200 million Community Energy Efficiency Program initiated by the previous government.
A key area of work has been in streetlighting upgrades, replacing inefficient mercury vapour street lights with LED lighting or other energy efficient alternatives such as T5s.
Some of this work uncovered a significant waste issue around old lighting and the company was commissioned by Northern Alliance for Greenhouse Action to develop a waste strategy and identify recycling options for Victorian projects. This established that most components of lights, apart from some of the hard plastics and contaminated copper wire, could be recycled. The report also contained clauses councils could use in contracts with lighting providers regarding appropriate disposal.
Mr Lynch said that these clauses have been inserted into all of the tenders for installation of street lighting that the consultancy has project managed for councils over the last few years.
Street lighting constitutes between 30 and 60 per cent of a council’s energy usage and corresponding carbon emissions. Mr Lynch said the projects carried out to date, comprising more than 232,000 lights in Victoria alone, has reduced carbon emissions by over one million tonnes.
Victorian projects comprise 90 per cent of the street lighting changeover projects carried out or underway in Australia, and Mr Lynch said Victoria’s energy efficiency program is the second largest in the world.
Brisbane City Council is also taking up the challenge, with Ironbark preparing the business case for the changeover of between 22,500 and 25,000 street lights in Australia’s largest single energy efficiency upgrade project. Some New South Wales councils are also doing changeovers from mercury vapour lights to more efficient fluorescents, or in the case of City of Sydney, to LEDs.
But the company has worked across all states, Mr Lynch said.
The general change is from a 96 watt light down to a 19 or 26 watt light, with the 19 watt LED street lights leading to a 77 per cent reduction in energy use.
“The street lighting projects of councils are good news. There are over 60 councils completing projects, making this the single greatest energy efficiency and emissions reduction project ever [in Australia],” Mr Lynch said.
“With street lighting the majority of lights are all the same, in installation terms it is pretty straightforward.
“Every day hundreds more lights are being replaced. It’s been a decade in the making, working with councils, community groups and ICLEI.”
Mr Lynch said the big story currently is the activities underway in regional and rural Victoria. The Lighting The Regions project, for which Ironbark developed the business case, will see almost 23,000 mercury vapour lights replaced with LEDs across 16 local council areas in north, west and central Victoria.
- See our story Regions shine a light on emissions reductions
The second round of CEEP projects that are currently underway have specific requirements around community engagement and communications in addition to undertaking specific capital works like lighting upgrades.
Mr Lynch said this gives the projects co-benefits in terms of the employment of community engagement staff by councils facilitating a diverse range of grassroots activities. For example, grade 5 and 6 drama students at Grahamville Primary School are making videos about the importance of changing to energy efficiency lights as part of the Watts Working Better project, which includes a number of councils from Shepparton in the north of the state up to the NSW border. Whittlesea held a “youth art celebration” about energy efficiency upgrades.
“There’s been a lot of good news from the [local government] sector,” Mr Lynch said.
“A few years ago if you had said to me that small local councils would be doing these capital projects I would have said ‘you’re dreaming’.”
Mr Lynch said the rural and regional councils are looking at a whole range of environmental sustainability issues in addition to energy use, including biodiversity, water, salinity and degradation of natural resources with support from a wide range of community groups.
“Unlike the capital cities, where councils can have multiple revenue streams, Mr Lynch said rural and regional councils rely much more heavily on grants which is why the FAGs cuts will hit them disproportionally hard. They’re also less able to tap into revenue streams such as parking fines or payments that metropolitan or growth councils can,” Mr Lynch said.
Councils lost a substantial amount of funding under the recent Federal budget, with the freezing of Financial Assistance Grants and cuts to a range of projects and agencies.
These financial pressures give councils a solid business case for some of the other services the company provides for the sector, including energy audits, retrofits, and preparing the business case and documentation for capital projects such as renewable energy installation or plant upgrades.
Lucy Carew-Reid, the company’s business leader, said a key step in the process for lighting upgrades is to ensure all proposed measures make both a financial and sustainability case. Once this happens it’s a lot easier to make projects happen, Ms Carew-Red said.
The benefits can be considerable.
“We have found councils can reduce water and energy use by 50 to 60 per cent if they aim for the highest level of [facility upgrades]. They may be investing more at the outset, but over the lifetime of the asset they more than recoup it,” Ms Carew-Reid said.
For example, a million dollar retrofit for an asset that will be retained for at least the next 30 years, in relative terms quickly becomes cashflow positive in terms of savings on energy and water costs.
The retention of assets is one of the positives for local councils in terms of developing the case for upgrades, there is a challenge however in terms of whole-of-LGA environmental performance standards, due to the wide variety of asset types, sizes and building functions.
“Some councils manage about 2000 buildings.”
There can also be issues with the standards councils set for themselves and for developments within the LGA making it a challenge for developers when they work across a number of LGAs. To counter this, some groups have worked together collaboratively to develop open-source tools that apply across a number of LGAs, so developers don’t need a different tool for each council.
On the ground, Ms Carew-Reid said the consultancy does a very simple retrofit as part of any asset energy audit. This includes “lagging” [insulating] hot water system pipework, changeovers to energy efficient light bulbs, and installing draught-stoppers. During the process, members of the community that use or staff the building are often present.
“It is part of our job to talk to them, and when they see how easy, fast and simple the [basic] retrofit is, and we explain that 12 per cent of energy use [on average] has been saved just in that one visit, people seem to be inspired by that,” Ms Carew-Reid said.
“We will brainstorm with the occupants ways they can save energy in the building, and when those people see that council is doing something, it is a great selling point for them to be doing something themselves [at home].
“A popular measure is having a competition among staff where there are multiple levels in the building, around who can switch off the most things, for example. These things are becoming more and more do-able. Councils are often running these types of competitions with their residents also.
“A lot of councils are also helping their communities, and the communities are ready to embrace initiatives.”
An example of this is councils that bulk buy solar systems and then on-sell or lease them to residents at a discounted rate.
Councils are often advised to install timers on lights and/or ambient lighting sensors, upgrade the efficiency of HVAC systems, and also see that installing solar panels and upgrading appliances are also both practical and profitable initiatives.
“Councils on an average facility can save about 50 per cent on waste, energy and water with renewable energy harvesting and installing water saving appliances,” she said.
In terms of bigger budget initiatives, Ms Carew-Reid said Environmental Upgrade Agreements are being looked at for commercial facilities and the advice in general is to embed sustainability earlier in the design process of projects, rather than as an “add-on”.
“We work with the contractors, the electricians, heating and cooling subcontractors,” Ms Carew-Reid said.
Mr Lynch said that while for many businesses, if you show something has positive net present value but high upfront capital costs, with savings coming in the operations and maintenance phase, trying to capture the savings can be a challenge.
“But the council staff we work in the sustainability area are wise to this and have been developing tight business cases for some time. It is not [just] about the greenhouse gas emissions, it is talking about the operational costs in future and saving ratepayers money,” he said.
“Energy efficiency is an easy one, as prices will continue to rise and it is topical. The councils we work with once they have the business case and the finance organised will still talk about the savings over the life of an asset, that’s the big ticket number.
“Those basic projects – the initial retrofit and insulation – they are money for jam. It’s so cheap to do it, even though they need us to audit the building first and talk to the manager, and there’s another line item there.”
Financial pressures are nothing new
In terms of the financial pressures on councils, Mr Lynch said that in many ways nothing has changed, even with the loss of over one billion dollars this financial year from council budgets due to federal measures.
“Ratepayers have always expected councils to do more with less, and the people in sustainability know how to make a dollar go far,” he said.
“As revenue dries up, councils either cut services or up rates, except in NSW IPART prevents them increasing rates. [The other choice] is they forgo maintaining community assets.”
Generally, both Mr Lynch and Ms Carew-Reid see that councils are interacting greatly with both the businesses and the residents of their communities, and are persevering with sustainability initiatives regardless of whether other levels of government are playing ball too.
“It appears to me that most councils aren’t stopping what they are doing because increasing energy efficiency and increasing sustainability saves money,” Ms Carew-Reid said.
“And they are getting a lot more sophistication about them in terms of ways to fund initiatives, such as leasing equipment. The councils that are really suffering are the ones with less resources.”
Even major policy uncertainty, such as the recent drawn-out battle over the RET has not taken the wind out of council sails.
“The councils that we’ve been talking to are going to continue with initiatives. They may tread water [for a time], or they may just get more canny about how to do things,” Ms Carew-Reid said.
“For example, with community solar, councils seem inspired to fill the gap left by the states and the federal government, and are looking at ways to make solar more affordable for people. The change in the feed-in tariff didn’t change the rate of uptake by the community.
“Where there’s a good business case, councils plough ahead. It might take them a while to get approval [to spend council funds], but they go ahead.
“They have a difficult role. They have to balance everyone’s interests – I think they do a really difficult job.”