Minamata Starting to Bite: Change to LED or They’ll be Changed for You
Over the last few years Australian councils would have started hearing more about the Minamata Convention on Mercury, an international treaty designed to protect human health and the environment from mercury and mercury compounds.
Australia signed the Minamata Convention in October 2013 and while we haven’t yet ratified it, this is largely irrelevant because many of our main trading partners have – including China and India, who manufacture a lot of the products we use in our daily lives.
If you don’t know the basics of Minamata check out our 2min explainer video where Paul Brown, Australia’s foremost street lighting expert, outlines what it means and why it matters.
Minamata Matters Muchly!
In a nutshell, the world is phasing out the use of mercury and mercury compounds. This means that replacements for those old inefficient mercury vapour lights that councils have installed throughout Australia are becoming increasingly difficult to source and more expensive. Distribution businesses (DNSPs) and other levels of governments already have strategies to deal with the impacts of Minamata, but many councils do not. And this is beginning to bite and about to get worse as we’ve been hearing from dozens of meetings and workshops with DNSPs who are undertaking price-review processes and discussing these issues.
For example, Ausnet Services in Victoria are considering replacing swathes of old decorative mercury vapour lights from 2020 due to the impacts of Minamata. At a workshop in late February 2019, senior Ausnet representatives explained that “replacing hazardous mercury lights” will be necessary due to Minamata. Other DNSPs have spoken to Ironbark about how there are already challenges in finding good quality and fair-priced products for their standard lamp replacements.
What does this mean for councils?
Higher tariffs. If a lamp costs more to replace then these costs are passed onto councils. If lamps are of poorer quality and failing more frequently then these costs are passed onto councils.
However, the pandora's box for councils opens if DNSPs start unilaterally replacing mercury vapour lights because councils don’t undertake the projects themselves. While this may seem OK at first glance – the DNSPs undertaking changes to LEDs off their own back – it will result in significant extra costs to councils. When DNSPs fund these projects up-front, councils have to pay them back through tariffs over the life of the lights. The overall cost ends up being a lot higher.
In every jurisdiction in Australia it is better for councils to pay for the up-front capital of an LED changeover than DNSPs. Councils can borrow money at very low rates. If a DNSP pays for the changeover then they charge councils higher rates. Over twenty years! For example, in South Australia a council can either move to LEDs via the PLC tariff or SAPN LED tariff. Via the PLC tariff the council pays for the upfront capital (the LED itself, installation and project management). Then they move onto a lower tariff. Under the SAPN LED tariff, the DNSP, SA Power Networks, will pay for the upfront capital. Then council moves onto a higher tariff as the capital is paid back over 20 years… at an interest rate of 6-7% instead of the 3-4% that councils can get from traditional lenders like banks or local government association procurement arms.
This has also played out in the Ausgrid area in NSW in the past and councils are still paying for it. In the mid-2000s, councils actually took down tens of thousands of streetlights and replaced them with inefficient mercury vapour lights. Councils are still paying for this decision today – still paying back Ausgrid through their tariff, through higher energy costs and through larger retirement fees when funding LED projects (these projects also tend to be much more expensive than in neighbouring regions).
Don't repeat these mistakes.
The Solution: Don't Keep These Assets
Your old mercury vapour lights are going to be changed to LED. This is going to happen. And unless you start planning and implementing these projects yourself, it eventually be taken out of your hands. As mercury lamps are phased out and not available then DNSPs will be more justified in unilaterally making these decisions. Get in the driver’s seat asap and make the change yourself or else you’ll essentially find yourself “borrowing money” from a DNSP to change to LEDs and paying this money back through your tariffs. At a very high interest rate.
For councils in Victoria and western Sydney who are well ahead in changing all or most of their P-category lights you are not immune to Minamata! You still have to think about your decorative and V-category lights.