Origin Energy sees Australia on-site power boom

SYDNEY Tue Oct 12, 2010 12:33am EDT

SYDNEY (Reuters) - Origin Energy (ORG.AX) aims for a bigger share in the Australia's on-site energy generation market, which could grow to 20 percent of supply from less than 1 percent now in the next two decades, a company executive said.

On-site generation systems produce power near the end user, often through renewable energy sources such as solar, wind and geothermal as well as conventional thermal systems.

The Commonwealth Scientific and Industrial Research Organisation (CSIRO), Australia's national science agency, said in a report last year that the present value cost savings associated with wide-scale on-site energy use could be as great as A$130 billion by 2050.

For its part, Origin sees greater opportunities for a more efficient on-site gas turbine generation system in Australia as a drive for green buildings intensifies with mandatory energy efficiency disclose rules due to come in next month.

"We know who's using how much energy. We can identify who's using more than average," Greg Murphy, manager of new business markets at Origin, said in an interview for the Reuters Global Climate and Alternative Summit.

"Origin is well placed to give strong solutions to the market place in cogeneration and trigeneration."

Australia is one of the developed world's highest per-capita emitters of greenhouse gases, blamed for global warming, due to a reliance on burning coal for about 80 percent of the nation's electricity.

Origin installs so called trigeneration plants, which promise greater efficiency by producing heat, cooling and electricity from a gas-fired unit, for free but asks for a 12-year agreement to supply energy, establishing a long and stable customer relationship.

"In the Australian market there is a lot of churn. People are moving between suppliers quite a lot," Murphy said.

Murphy said the penetration rate for on-site generation is less than 1 percent in the Australia's commercial sector, compared with a global average of 10 percent and could reach 20 percent, although growth may rest on government policies and other factors.

The building sector accounts for about 19 percent of total energy consumption and around 23 percent of total greenhouse emissions in Australia.

Murphy said on-site generation was in demand as the system enabled landlords to upgrade energy efficiency star ratings.

"Right now, people are taking up trigeneration because it gives them 1.5 star and 2 star more on their buildings," he said. "A higher star building can get premium tenants."

Under a new regulation in Australia, office building owners need an energy rating from the National Australian built Environment Rating System, which measures performance on a scale of 1 to 5 stars. Government entities have pledged to occupy buildings with 4.5 star or better.

An Australian government report on Friday proposed a new 30 percent energy efficiency target, to be underpinned by a price on carbon, to help the country curb greenhouse gas emissions and fight global warming.

The city of Sydney has unveiled plans to eventually supply all of its electricity needs from local trigeneration schemes.

(Editing by Ed Davies and Ed Lane)

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