Author: Sarah Morton
Contributor: Lisa Kendal
Non-profit, grassroots organisation Ballarat Renewable Energy and Zero Emissions (BREAZE) helps members of the Ballarat community show how individual and community-based actions can make a difference in our response to climate change. BREAZE has developed extensive bulk-buy knowledge and experience.
This case study outlines the organisation’s second solar photovoltaic (PV) bulk-buy project in 2007 and 2008. BREAZE administered purchasing and installation, as well as Renewable Energy Certificates (RECs) and rebates. It also promoted the offer and recruited participants.
Objectives of the bulk-buy
Through its involvement in bulk-buy programs, BREAZE aims to provide value for money, efficiency, educate people in sustainable product purchase, provide accurate and trustworthy information, and maximise access to government help.
The solar PV systems
BREAZE developed a criteria for assessing solar panels and inverters in terms of price, quality, carbon footprint and payment terms. Assessment was primarily carried out by volunteers - just one person was employed to help organise supply contracts.
As a community organisation with no purchase history, BREAZE found it hard to access supply contracts. For example, some companies required BREAZE to set up credit accounts that made its directors personally liable. Fortunately, BREAZE had access to a pro bono lawyer to advise on such issues.
Uncertainty around the number of participants in the project meant BREAZE didn't pursue a formal tender process for the supply of equipment. So while there were initial price commitments, there was no certainty of these prices on delivery. Due to the financial crisis and of exchange rate fluctuations during the project, suppliers couldn't honour all price commitments.
Three systems were offered, a 1 kilowatt (kW), 1.53 kW and 1.7 kW system.
Contracting installers
BREAZE sought quotes for installation from local BCSE (now CEC) accredited installers. It was a relatively informal process, with no formal Expression of Interest (EOI) or tender process. BREAZE now completes a formal EOI process with a clear specification document when seeking quotes from installers.
BREAZE chose installers on cost and bulk-install capability. To protect participants from missing out on the rebate, contracts included a schedule for installation and penalties for non-delivery of installations within fixed timeframes.
Promotion and recruiting participants
BREAZE was responsible for recruiting participants, primarily by email and local media. The bulk-buy promotion also received good coverage through the local paper and BREAZE ran advertisements for community information nights. BREAZE also advertised on regional TV, a billboard campaign and online.
Workshops and public meetings focused on sustainability education and encouraged locals to install systems. Even if BREAZE's bulk-buy product didn't suit them, they were encouraged to find other systems that did.
BREAZE estimated total costs and prices based on quoted supplier costs, contracted installation costs and estimates of their own administration outlay. Customers were quoted indicative prices based on certain participation volumes, with no closing date for validity of these prices. Unfortunately this was during the global recession, and the final prices available from the suppliers varied substantially from initial quotes. Final prices for participants were out of the originally anticipated price range. Participants were advised of these price changes before committing to buy, and a disclaimer about price changes was introduced. Prices were only finalised just before ordering, to minimise the risk of further price changes.
Participants were given a site checklist and an electrician visit to determine suitability.
Managing risk
BREAZE has learnt how risk assessment and due diligence are paramount to success and preserving reputations and relationships with customers, suppliers and installers. Using contracts with penalty clauses for non-delivery and disclaimers, ensuring appropriate insurance and seeking legal advice on these are just some of the activities BREAZE recommends.
Financing and RECs
Limited cash flow meant BREAZE couldn't cover rebates of $8,000 per system for its participants, so it couldn't offer point-of-sale discounts, either. Participants had to pay in full for systems upfront, and then get the rebate from the Government. However, BREAZE did negotiate a deal with a local Bendigo Bank branch to waive application fees for participants' personal loans for bulk-buy purposes.
Estimated Renewable Energy Certificates (RECs) were factored into the overall costs, but participants had the option to pay a higher price and retain rights to their RECs. BREAZE created and sold on RECs through a registered agent, but couldn't get a fixed REC price for future installations. So they costed in conservative estimates for future REC prices, so that actual REC prices at the time of installation would work to their advantage.
Group resources
Clearly this model is more resource-intensive than outsourcing all equipment supply and installation. Much of the work was done by committed volunteers, with one person employed to organise supply contracts. Costs were covered by the administration fee factored into overall system prices. The primary aim in estimating these costs was to provide value for money and cover costs, rather than to generate surplus income for the organisation.
Results
80 systems installed, totalling 99.79 kW:
- 51 x 1.02 kW
- 3 x 1.53 kW
- 26 x 1.70 kW
Lessons learned
- REC ‘buy’ prices vary between agents. It's worth shopping around to get the best deal, and wherever possible, negotiating for a better price based on bulk volumes.
- Providing professional customer service is expected and important for maintaining a good reputation, regardless of whether the organisation is a business or not-for-profit.
- Managing system prices for fluctuations in the market is very important. This is possible with disclaimers and shorter quote validity periods.
- Taking the time to build good relationships and communication with suppliers and installers helps to avoid unwanted surprises.
- Smaller, more frequent installation projects help manage tight schedules.
- Using a panel or team of installers - a preferred installer plus back-ups - is a good way to ensure flexibility of installations.
- Insuring stock can be difficult - risk can be reduced by keeping on-site storage to a minimum. Installers may be able to help with storage, or you can look into delivery schedules to better fit installation plans.
More Information
BREAZE website.
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Establishing a bulk-buy program
BREAZE organisational case study