According to an independently written lighting audit report to be tabled at tonight’s Unley Council meeting, ratepayers could see cost and carbon savings of $350,000 and 1,056 tonnes respectively per annum by moving to modern lighting technologies.
Summary of Savings:
LED Energy Efficiency Saving $153,450
LED Optics Saving $ 11,000
Energy Control Saving $ 7,000
Energy Cost Saving $ 28,500
Carbon Saving 1,056 tonnes
Infrastructure Financing $72,900
Private Industry Contribution significant but unqualified
Depreciation Value $ 12,200
LED Maintenance Reduction $ 72,340
Total Potential Annual Savings $357,390
The audit report shows outdated technologies that light the city streets is prevalent across the council area but points to the inflexibility of SA Power Networks (SAPN) in moving to new technologies as the major barrier to realising the cost and environmental savings that should flow to the community. This comes in the wake of the June 6th Advertiser report which demonstrated that SAPN was making 4 times the profit from South Australians ($420 per person) than it does from its UK arm UK Power Networks ($92 per person).
As the lighting audit reports states;
“The current hurdle is the near monopoly on street lighting infrastructure held by SAPN. This
monopoly has been achieved through incumbency rather than regulation or competitiveness,
and there are clear precedents for alternative infrastructure providers (eg. Council currently
owns street lighting infrastructure.)”
I believe passionately that Council must take steps to realise the financial and environmental benefits of utilising new lighting technologies and that if SAPN don’t come to the table then we must look at investing in our own lighting infrastructure.
To realise opportunities identified in the lighting audit Council should initiate a Street Lighting Infrastructure Project (SLIP). This project will act as the catalyst to achieve financial, environmental and social benefits to the community brought about by improved lighting infrastructure and/ or reduced tariffs. Technology opportunities available through new lighting related infrastructure would also be explored through this project.
The scope of the SLIP would include:
• Determine Council financial capability / appetite for capital expenditure.
• Identify and negotiate with possible capital contributors (i.e. Grants, related Council projects etc).
• Identify and determine different SLIP delivery models and technologies.
• Negotiate with key stakeholders (e.g. private industry, SAPN) with relation to key factors of each delivery model.
• Resolve an effective scope and delivery model for the SLIP which obtains the best return on investment for the community.
• In Section 4 – Cost Efficiencies, it was identified that new LED technology could be deployed to reduce electrical power consumption. If all luminaires in Unley were replaced with current LED technology there would be an electrical consumption reduction of approximately 860,000 968,000 kWh per annum. At the current electrical cost 15.85c/kWhr this equates to savings of approximately $153,450 per annum.
• LED optic technology can allow increased spacing of lighting, especially in P Category roads where a 17% reduction can be achieved. This equates to a further annual saving of approximately $11,000.
• Current technology allows for the possibility of “controlled” lighting. While this, in effect, reduces the Service Level provided by reducing lighting levels at times of low use. Results from other cities have identified a potential 10-15% reduction of power use in areas where controlled lighting is utilised. If a 15% reduction was achieved during Off-Peak periods an additional saving of approximately $7,000 per annum may be achieved.
• Through additional benchmarking analysis performed by COMPLETE it was identified that Council may be paying a higher cost for electricity than other Government entities. Further investigation and negotiation may allow a 40% reduction in power costs for the remaining 450,000 kWh of electricity usage. This equates to a further saving of approximately $28,500 per annum.
• If Council deployed the series of infrastructure and technology improvements above and achieved a 1,100,000 kWh annual reduction in electricity use, this would equate to 1056 tonne of CO2 reduction. No addition cash saving has been attributed to this reduction as currently there is currently no additional financial cost, outside the carbon charge include in the retail electricity charge.
• Council is currently paying SAPN approximately $140,000 in infrastructure charges for the provision of assets. These charges are calculated from a SAPN WACC of 8.7% and an additional depreciation charge of approximately 3.6%, totalling approximately 12.7% per annum. SAPN therefore asserts that there is Regulated Asset Base of approximately $1,100,000 within Unley Council. Council have access to borrowing from the SA Local Government Finance Department at rates between 4.9% and 6.1%. Utilising the 20 year rate of 6.1% (conservative), Council could finance the equivalent value of infrastructure for $67,100. As depreciation of a Council asset would not attract a cash transaction, and replacement assets could be financed as above this component has been excluded from the comparison. A net cash saving of $72,900 could be achieved through Council financing assets.
• There are multiple examples of private industry contributing capital for the provision of infrastructure in return for the rights over the provision of associated related services from that infrastructure (eg. Adshel bus shelter provision). As the digital age further embeds itself in our community the once humble street light has become a potential hub for supporting digital technologies. While the scope of this project does not allow for the quantification of such a capital contribution, it must be identified that a significant but yet unquantified capital contribution could be made by private industry for the rights over street lighting infrastructure.
• Depreciation of an asset can create value for Council if that depreciation is assigned to a private company who can benefit from this as a tax shield, unlike Government. This value could be up to 30% (ie. corporate tax rate) of the depreciation value. As SAPN is associating $40,700 per annum in tariffs to depreciation, a value of $12,210 could be created through the private ownership of an equivalent value of street lighting assets.
• Council is currently paying SAPN approximately $73,000 for the management and maintenance of the street lighting network. The current level of service provided is in effect limited to a “replace when fail” policy. There is very limited, if any, proactive maintenance provided. A significant benefit of deploying new LED street lighting technology is the significant reduction in maintenance. Case studies of long term (>5 year) deployment of LED street lighting in equivalent environments as Adelaide have indicated a 0.3% replacement after 5 years. If this was applied to the Current Asset Value adopted above this would equate to a cost of approximately $660 per annum, or a saving of $72,340 per annum.
The front page of today’s Advertiser shines a light on SA Power Network (SAPN) but it’s their monopoly over street lighting that is having a negative impact on the community, the environment and your rates bill.
Unley Council spends half $1 million dollars on street lighting and our street lighting accounts for one third of our carbon footprint. Unley is the 14th largest of 68 Councils in SA so you can imagine how many millions Councils spend and how large the total carbon footprint of street lighting is across the entire state.
Perhaps it is because SAPN has a monopoly over street lighting that SA is encumbered with outdated cumbersome street lighting technology that is highly inefficient and expensive to run. How much money are all of SA’s Council’s spending on street lighting which is ultimately passed on to you the rate payers?
SAPN needs to “get with the program” and choose to modernize or the SA Government must be compelled to step in and introduce legislation that enables other providers to enter the market.
The monopoly that SAPN has arises from its historical origins emanating from its State owned forebear ETSA. Times have changed. The rest of the world has started introducing solar lighting. Why are we so far behind and so seemingly reluctant to change?
Our ratepayers, our environment and our state needs SAPN to bring the state into the modern era.
rel=author Lachlan Clyne
0427 132 494
Categories: Lachlan Clyne - Personal Life