Originally from the Australian Financial Review
Providing solar power to apartments is an expensive and onerous problem which a Melbourne startup claims to have cracked.
Allume, a 2016 graduate of the Melbourne Accelerator Program, is patenting a 50 centimetre by 25 centimetre box its founders say will allow solar power to be distributed and billed to individual apartments, without the expense of changing the building’s existing metering infrastructure.
Apartment residents wanting solar power have to date had two options, according to Allume co-founder Cameron Knox.
They could band together to install an ’embedded network’, where one meter channels electricity to the whole apartment block. However this requires everybody in the block to agree to sign up, and involves a “regulatory overhead” that renders most installations unviable.
“As soon as you put a master meter in front of all the current meters, you’re messing with the network provider’s property and that gets expensive, we’re talking five or six figures upfront,” said Mr Knox.
“Your average 12-unit apartment block just won’t have the energy throughput for the body corporate or an external financier to justify the investment.”
Individual apartment owners could also connect to their own panels, but even if their neighbours agreed to grant them the roof space, Mr Knox said the upfront cost of wiring a single flat would exceed $3000 and likely lead to inefficient use of the panel, with a much longer ‘payback period’ than that enjoyed by owners of standalone houses.
Under Allume’s system, not every apartment owner has to sign up and an installation is usually viable with as little as six customers, Mr Knox said.
Allume’s box costs $490 upfront for every apartment whose connection is housed within, so $4900 if 10 units in a block sign up to get solar power. The startup then charges $4.99 per apartment per month for access to its billing application programming interface, which includes a direct debit service.
In return residents get access to solar power for an average 16 cents per kilowatt hour, compared with the average retail power cost of 24 cents/kWh. The purchaser – whether it be the body corporate, or an external financier – is charged only the wholesale cost of the power and makes enough margin for the ‘payback period’ on Allume’s deal to range between six to eight years.
“Solar power purchase agreements typically last for 25 years, so that’s a lot of years of free revenue stream,” said Mr Knox.
Allume worked with the Australian Energy Regulator to get a ‘retail exemption licence’ allowing it to sell energy to landlords, who can then on-sell to tenants.
“We almost co-authored it ourselves, it’s pretty novel, but it still took several months to get approved,” Mr Knox said.
The startup received a $50,000 grant from the NSW Government to fund a pilot program in the community housing market. The Narromine Aboriginal Land Council and Fitzroy’s Nicholson Gardens have also signed up for trials.
There are 20 more apartment blocks on the waiting list, Mr Knox claimed, although the startup cannot begin selling its technology until its patent is lodged, which he expected to happen “in the next few weeks”.
Allume’s long-term strategy is to become the financier of its own solar power installations at apartments, which Mr Knox said would reduce the payback period below five years.
The startup is now seeking $300,000, in part to cover IP protection costs as well as to advance manufacturing partnerships which Mr Knox claimed would halve the upfront cost of an Allume box.
Mr Knox’s co-founder, Andrew Justo, is also a full-time investment analyst at John Wylie’s investment manager, Tanarra Capital, although it has not been finalised whether Tanarra will back Allume.