Can Embedded Networks Deliver Good Outcomes for Strata Communities?

Large scale investment in the embedded network market has meant the net has been cast wider capturing more and more new developments.

They are an attractive proposition as they can deliver significant material benefits by reducing development and ongoing system maintenance costs, enable bulk utility purchasing power and deliver efficient and sustainable systems for end users.

The advantages, however, need to outweigh negative perceptions and in some cases experiences of these networks by end users. These include a lack of understanding about embedded networks and inclusions, long term fixed contracts, reduced control of utility assets and services, reduced negotiating power and reduced freedom of choice for utility supply.

Here we bring a strata managers perspective on terms to be considered when working through contract arrangements that maximise benefits for the building owners and end users.

Lower energy costs

One of the most compelling reasons for adopting embedded networks is cost efficiency. By pooling usage, owners within a network should be able to negotiate better rates with utility providers and benefit from bulk purchasing. This, in turn should lead to lower utility costs for the building owners and occupants compared to standard retail contracts.

Almost without fail, the first question asked by building and lot owners within a network is about their retail rates. It is easy to compare prices on competitive market rates, so operators need to be able to provide clear information on their rates including discounts from standing offers and comparisons with rates offered by competitors.

Ensure your selected embedded network provider guarantees competitive market pricing from the outset and negotiate for this to be regularly reviewed for the ongoing supply through the contract term. Price matching the best in market offers is an easy salve to negative sentiment and leads to positive communication on the network arrangement.

Lower hot water supply costs

Hot water supply costs for embedded networks are much more opaque as standing tariffs are not fixed by regulators with arrangements generally outside the National Energy Customer Framework (NECF).

Legislative changes are in the pipeline, but get ahead of this by negotiating with the embedded operator to charge users by energy units rather than $’s per litre. This enables improved consumer protections under the NECF.  Additionally, to ensure operational efficiency and competitive pricing, set benchmarks for the operation of the heating systems installed that achieve best practice standards which are available through the Independent Pricing and Regulatory Tribunal (IPART).

If both low electricity and hot water costs are assured, the network can be a great selling point to purchasers. It’s also an easy sell for the operator when presenting agreements that need to be resolved at new owners meetings following development completion.

Smart and flexible metering

To enhance efficiency and user experience, embedded networks should incorporate best in market smart technologies. This includes smart meters and building management systems for the optimisation of energy distribution by building owners and occupants giving greater control over consumption.

Modern embedded networks can utilise both advanced infrastructure and smart technologies. Smart metering technologies provide real-time data on energy consumption, allowing for better resource management and conservation.  This real-time data will help identify inefficiencies and enables owners and occupants to monitor their utility use more closely, leading to better consumption decisions and improved overall efficiency.

Smart usage can also generate savings so that high usage plant and equipment is operated during off peak times optimising overall energy use within the network and the grid.

Sustainability features

Sustainability should be a key feature of embedded networks with a balance found between delivering costs savings for the end user and installing market leading sustainable plant and equipment that feeds into the network. The embedded operators will often subsidise these systems on the basis they retain ownership or control of the infrastructure on completion. Hence, embedded systems are best placed to integrate renewable energy sources such as solar with the installation of other sustainable infrastructure such as battery storage, EV facilities, heat pumps, etc. significantly reducing the carbon footprint within a development.

Sustainability is a great objective, but the reality is that unless they deliver cost savings, they are unlikely to resonate with building owners and occupants. Make sure the investment in sustainable infrastructure is tempered with hip pocket relief for the end user.

Reliable high-quality service

Having a captured market should allow an embedded operator to provide consistent, high-quality utility services across the network. As the operator is in total control, they have a greater ability to provide reliable uninterrupted service with a much higher end user experience. There needs to be provision in agreements for regular system maintenance, limited downtime and system upgrades as necessary to ensure excellent service reliability.

Additionally, as operators have greater knowledge of the individual sites and the equipment within the network, customer service should far exceed that provided by retailers with limited or zero site knowledge.

Consumer protections

Energy supply and services are heavily regulated with freedom of choice mandated for electricity supply. The fact is, however, if electricity is supplied through an embedded network, it is very difficult to move outside the network. For hot water supply, it is impossible.

Assurance needs to be provided that the standard contract terms are easily understood, fair, reasonable and deliver promised benefits for the duration of the contract. Where required mechanisms for dispute resolution should be clear and efficient providing additional confidence and protection against any unfair practice.

Future proofing and flexibility

Embedded networks should be designed with futureproofing in mind. They need to be adaptable to new technologies, regulatory changes, and evolving best practice. Developers when working through agreements and design requirements with an operator and their construction team should plan for scalability and flexibility that can accommodate future advancements. Provisioning for solar, EV installations, gas to electric systems and energy capture are measures that should be incorporated into embedded network design and agreements.

Community engagement

Trust is built through communication and delivering on commitments. There should be a lot to promote within an embedded network that can then be conveyed through regular user communications. Broadcast the network benefits such as $’s saved, discounts provided, PV generation, diminishing usage and the like.

It is important that communication be provided to the building management team giving usage analysis, detailing service reliability and highlighting areas where efficiencies and savings can be generated or may be available through system upgrades. This allows active management for better utility outcomes.