Embedded Network Benefits
Developers and operators of large commercial buildings realise the need to master energy usage. Not only are there potential cost saving, but more companies are conscious of their obligations to be good corporate citizens with respect to carbon emissions. There is an understandable focus on energy efficiency initiatives as well as alternative power sources such as solar energy or gas fired turbines for co-generation. However, the most immediate means of delivering demonstrable cost savings is to install a private electricity network in the building. Sometimes these are referred to as embedded networks. For building owners who essentially own the switch room, electrical infrastructure and risers and are responsible for the maintenance of that infrastructure, it makes eminent sense to maximise that investment by managing the metering as well via a private embedded network. The beauty of an embedded network is that one “gate” meter is installed that measures the total electricity supply into the building from the sub-station. As far as the distributors and retailers are concerned, there is only one (large) customer. The operator of the embedded network installs industry compliant meters for all of the units or tenancies and then bills each of the tenants. In a well-managed embedded network, the energy revenue from the tenants (even when offered at a discount to market) is more than the energy bill for the gate meter. The ability to on-sell electricity in this manner has been ratified by government as long as the following principles are adhered to:
- The on-selling activity must lead to greater competition
- The consumer cannot be locked-in and may use a retailer other than the embedded network operator (although this varies in different jurisdictions)
- The on-sell price must not be more than the published price of the local default electrical retailer.
The early adopters of these embedded networks were the retirement communities. More recently, large shopping centre owners have adopted it as an industry best practise. The provision enacted in Victoria & NSW that tenants must have choice considerably complicates the operation of the embedded network. It has only been in the last 2 years that embedded network have become commonplace in suburban shopping centres. The other big winners are the multi-tenanted high rise towers. If there are more than 100 residential units it is probably financially attractive to on-sell electricity. For developers who face a raft of logistical challenges in getting a new building out of the ground, it is understandable that this niche capability is not high on the agenda. Nevertheless, developers and builders all agree that electrical connections, sub-stations, energy contracts and interaction with the power grid are painful exercises. An early decision to install a private embedded network greatly simplifies the process.