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NSW plunges into past and allows electric hot water systems

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The difference between the words and actions of the NSW Government with respect to energy efficiency are just bewildering.

Today, NSW Energy Minister Chris Hartcher announced a reversal of the plan to ban electric hot water systems that has been gradually being phased in since 2010.

What makes this action bewildering? Well to start with here is what the NSW Governments Department of Environment and Heritage website says: (Page last updated: 21 September 2012)

Electric water heating is the biggest energy user in NSW homes and can account for up to a third of your home’s annual power bill. The overall running cost of your hot water depends on the type of system you have and how you use it.

Running your hot water system efficiently, reducing your hot water use and choosing an energy efficient hot water system can make a big difference to the size of your power bills and carbon pollution.

So, despite Minister Hartchers rhetoric - “Consumers will no longer be forced into buying expensive new hot water systems after the state government overturned an unpopular decision made by the previous government” - his own Government contradicts him, stating that electric systems are the most significant part of household bills. 

Having said this, I acknowledge that reticulated gas is not available everywhere (although Mr Hartcher keeps telling us it will be if only he can get Coal Seam Gas wells in everyone’s backyards) and so, we need choices. Do we have choices ?

Yep.

A quick check using using Rheem’s on-line calculator shows that the expected annual running costs in NSW, based on average consumptions are:

  • Electric HW, domestic rate- $1466 per year
  • Electric HW, Off peak rate – $519 per year
  • SHW, electric boosted domestic tariff – $636 per year
  • SHW electric boosted, off peak rate – $288 per year
  • SHW, LPG boosted – $516 per year
  • SHW, Natural gas boosted $213 per year
  • Heat Pump –  $354 per year

And of course there are other products and suppliers out there too.

So, the financial befits are variable depending on your situation but comparing off peak electric to off peak SHW would yield a payback around 10 years; if we don’t change our behaviour (which the Minsters department recommends we do).

If you halved your consumption by using energy efficient shower heads, SHW would pay for itself in around 5 years, and that is assuming electricity prices don’t go up – which they will. A general rule of thumb most people selling SHW suggest that paybacks are about 4-5 years.

And of course there are the greenhouse gas emissions; electric hot water systems are so horrendously inefficient that they are a massive GHG problem and off peak systems are even worse, despite the financial benefit, as described here in a graph from the Victoria’s Department of sustainability.

The Minister’s own Renewable Energy Action Plan, released only a  few months ago talked up the “aims and goals” of the State to reduce emissions and encourage more renewable energy.

Despite this we now see the Government effectively incentivising the sale of the most energy intensive devices, the source of the biggest energy use in NSW homes and for many, a more expensive annual option.

Short sighted, bewildering, retrograde and utterly out of synch with all the words.

Of course, it does start to make sense when you consider that the NSW Government makes $1.38 Billion dollars a year through the sale of electricity……….

Oh, and also when you consider that the Governments own Independent Pricing and Regulatory Tribunal has been calling for the scrapping the the Renewable Energy Target, which provides incentives for SHW products……

This article was originally posted on Solar Business. Re-posted with permission.

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  • Alex

    This may not be exactly corrupt, but Hartcher is certainly not working in the interests of the public.

    On my Country Energy bill I got this little message in a red window. “NSW Govt estimates that Federal Carbon tax and green energy schemes add about $316 a year to a typical 7MWh household bill.” – I wonder how much “Gold plating” and taxpayer-funded coal-fired power stations (which are then sold to a company of which China is a major shareholder) and all the associated socialised expenses add to our tax burden?

  • Chris Fraser

    How fortunate that some (and yours truly) have electric boosted SHW. For only three months of the year i rely on electric boosting. A family of four needs only 7kWh per day of hot water from the off-peak tariff, costing $70 pa. This produces all the steaming AAA-rated plumbing hot water we need. When the Minister hears this is less than $288 he’ll probably nick himself backshaving his skull cap.

  • HWS

    I assume the systems mentioned are all storage-based systems. Apart from the running costs there are other aspects to consider.

    Heat pump: Many horror stories of failing parts, leading to continuous operation and much higher power bills.

    SHW, gas boosted: Uses a fossil fuel and the pilot flame seems a waste of energy.

    SHW, whichever way boosted: Continuous boosting seems a waste of energy.

    Many people have their electric HWS or the booster on their SWHS always turned on. It is much more efficient to only operate the heating element for a short period each day, or not at all on most days for a SHWS. Combine that with PV and you have a clean and efficient hot water supply, even with an electric HWS.

    • Ben Elliston

      I’ve not seen an instantaneous gas booster on a solar hot water system that uses a pilot light. They are all electronic ingition (and a couple are hydro-start!)

      • Bertie

        Ben, I think you’ve been trolled.

  • Serenity

    So over these heat pump horror stories, our heat pump has been installed for over 5 years now – never missed a beat.- our electricity usage dropped 45%.

  • Markie Linhart

    WHAT IS WRONG WITH THESE PEOPLE?

    • http://david.boxall.id.au David Boxall

      Ideology.

  • Jaz in Brizy

    Todays AGL bill for 89 days (Aug Nov)heat pump hot water (installed in 1998)on off peak night rate T31 115Kwh cost $12.65

  • Mike

    Clearly not everyone can have solar – shading/units or natural gas – no supply and off peak hot water is the perfect answer to the cost of peak power. Off peak NEVER uses peak power hence more effectively using the electricity infrastructure and off peak circuits are the perfect answer to the peak power problem.

  • http://www.hybridhotwater.com.au Simon Baird

    The phase out of electric hot water systems was a major factor in our business investment in Heat Pump Technologies over 5 years ago (The first COAG discussions where in 2007, for this policy) The Risk Impact Statement on this policy was 200 pages long double that if you include appendix. It basically said that no matter what short term difficulties might be experienced in rolling out this legislation that the overall benefit to the Australia in reduced energy costs far out weighed these. Have a look at our response to the Queensland Governments review of their phase out (http://www.hybridhotwater.com.au/content/queensland-submission-electric-hot-water-phase-out)

    America a country in far worse economic peril then ourselves has continued to move forward with their ban on electric systems post 2015. Australia is taking some major steps backwards particularly in helping reduce longterm financial pressures on households through rising energy costs. If you had seen these policies better implemented the growth in sales would have created economies of scale that would have dramatically reduced the purchase and installed price of efficient systems. However this is unlikely to occur with current dominate suppliers returning to a niche market a much higher premiums.

    Remember that when an electric hot water system fails, a significant amount of capital has to be paid to reinstall another poor efficiency unit, that will be operational for at least 10 years. As time of use tariffs are introduced a continued pressure placed on energy prices, you will see a significant rise is energy per KWH for off peak 1 and 2 tariffs (predominately used for hot water production) Already these tariffs have risen by over 30-40% last year in Queensland. This will result in an average home soon seeing hot water bills in excess of $500-$600 per year.

    The governments reasoning on this issue is poor to say the least. We as an industry do not need hand outs/rebates or even STC to survive. However if there is no longterm vision amongst our policy makers to increase the efficiency requirements of hot water systems then no-one can compete with an electric kettle that costs no more than a couple of hundred dollars to manufacture. This is the equivalent of the government rolling back all legislation regarding minimum fuel and emission standards set for cars over the last 10 years. Which by the way have seen a dramatic increase in fuel efficiency with almost no loss of performance.

    We will see what the final impact of this decision means for the hot water industry. Ourselves we are fortunate that New South Wales has not been an attractive place to promote or sell products and already is way under represented based on population, for the installation of energy efficient water heaters. Some clarification on the press release would be helpful, as it currently reads it is hard to determine with 100% certainty wether the NSW government is rolling back their commitment to the stage two of the phase out i.e existing homes replacing systems or if they intended to allow builders to begin reinstalling electric water heaters in new home constructions. If it is the latter you will defiantly see some supply companies close their doors, that are particularly exposed to this market.

    Like anything in life, only time will tell……..

  • Zvyozdochka

    We’re so dumb.

    If anything it should be ILLEGAL to build a dwelling without Solar Hot Water, probably w/inline electric boosting.

    • steve

      You’re missing the obvious oversight that maybe some people without children don’t want hot water.

      You phrased it horribly, you should say it should be illegal for hot water systems to not be solar powered.

  • Steve

    While I agree that electric heating can be terrible for GHG emissions if powered from fossil energy, an electric-boosted (resistance or heat-pump) solar HWS run from 100% renewable energy is actually better than any. For example, I use it and get 90+% of my hot water from direct solar heating and the rest from either my solar PV system or wind energy on the grid via my 100% GreenPower tariff. Therefore, I think ruling out electric totally is not quite right for those who want to totally eliminate their emissions.