City of Sydney is taking a first step towards reducing its dependence on the electricity grid and centralised energy with the official launch of a city-wide low-carbon energy network, to be built via a series of tri-generation plants installed by Origin Energy subsidiary Cogent Energy.

The launch of a program to ultimately build a trigen network of 410MW or more across the city is the first of its kind in Australia, and the first where major users are looking for solutions that do not require further investment in grid infrastructure. In fact, over time, it may not require the grid at all.

Australia currently rates somewhere behind Uganda and Indonesia in terms of efficient use of energy. As Allan Jones, one of the architects of the City of Sydney scheme, pointed out today, little more than 30 per cent of the energy used to produce electricity at coal-fired stations actually leaves the plant, more is lost in transmission, and anyone using a 100W tungsten light bulb is creating 90 per cent heat. For some users, therefore, they are actually only using 3 per cent of the energy that is created.

Trigen systems seek to address that by locating small gas plants on site – usually in basements – that use excess heat for heating and cooling (via absorption chillers) for that and nearby buildings. The cost per megawatt-hour of electricity is not significantly different from what is paid now, but consumption is reduced by two thirds or more, and greenhouse emissions are also significantly reduced.

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The City of Sydney plans to invest close to $500 million in its trigen network over the next decade or two, but estimates that it will negate the need for up to $1.5 billion in network upgrades and new power stations over the same time.

The city has signed a deal with Cogent to install 63.5MW of capacity in coming year, which will be centred around four precincts – near Town Hall in the south of the CBD, near Martin Place, at the new Green Square development, and in Pyrmont/Ultimo around the refurbished CUB site and UTS.

Cogent says it will invest $100 million in the first state of the program over a 10 year period, cementing its place as the leading tri-gen operators in the country. It is also installing a single plant for a precinct in Melbourne.

“Tri-generation is a compelling, alternative energy solution that helps lower carbon emissions and network demand, while increasing energy efficiency and power security,” said Jim Galvin, the head of retail markets for Origin Energy.

Jones suspects that the days of “supersizing grids” as Australia’s network operators are seeking to do now, may be coming to an end. While the current five year program to spend $45 billion in grid infrastructure snuck through with few people paying much attention, the next five year plan – when a similar amount may be proposed – will come under greater scrutiny.

Jones estimates that $17 billion of that $45 billion is earmarked for NSW, and a third of the total is avoidable – at least according to a study by the Institute of Sustainable Futures last year, which proposed a focus on distributed energy such as tri-gen. Network costs currently account for more than half of retail electricity bills and more than half of the recent and anticipated cost increases.

The City of Sydney says that the network will provide 70 per cent of the electricity requirements in the local government area, and reduce emissions by around the same quantum. Jones thinks it could achieve more than that – particularly with the introduction of energy efficiency measures and other technologies such as building integrated solar.

He says the system could also become entirely renewable, by substituting the natural gas to be used in the tri-generation systems with bio-fuels, and also exploiting geothermal heat that lies around 1km beneath the surface.

*This piece first appeared at RenewEconomy.