Australia is the developed world’s worst performer in energy efficiency. A National Energy Savings Scheme (NESS) will be the most significant and transformative policy driver for delivering energy savings in Australia.
A NESS will be the primary mechanism that spearheads a suite of energy efficiency measures. Itcan contribute to all three horns of the electricity trilemma including helping Australia to meet its emissions reduction target under the Paris Agreementii.
All Australian governments, businesses and consumers will benefit at no net cost with nationwide access to a comprehensive range of eligible energy upgrades that will save billions in energy bills and support energy security.
An ambitious NESS target will provide a further decade of certainty to the energy efficiency sector stimulating tens-of thousands of jobsiv and hundreds of innovative businesses across Australia.
A NESS has fallen through the Commonwealth cracks
In 2013 the Commonwealth Government was working on implementing a national scheme and found that a 5% national energy savings target would deliver up to $5.3b from 2015 to 2050.
In 2017 the Climate Change Authority (CCA) recommended a NESS by 2019 to deliver more.
In 2017 the COAG Energy Council (EC) committed to Finkel Report recommendations including governments accelerating rollout of energy efficiency measures, but that report failed to consider the CCA’s NESS recommendation published just seven days prior.
COAG EC’s 2015 National Energy Productivity Plan (NEPP) of 40% energy productivity improvement goal between 2015 and 2030 is an aspirational goal only with no substantial measures to deliver it.
COAG EC has acknowledged the success of state-based schemes operating since 2009 and their contribution to the NEPPvii, but the majority have no target from 2021. (See Chart 1)
Chart 1 Energy Savings Schemes: Targets committed to 2025 (ESIA March 2019)
Chart 1 indicates that except for the NSW Energy Savings Scheme (ESS) which has targets committed to 2025, existing schemes’ targets are uncommitted including for the Victorian Energy Upgrades (VEU) program, SA Retailer Energy Efficiency Scheme (REES) and ACT Energy Efficiency Improvement Scheme (EEIS).
Existing schemes have a combined energy savings target equivalent to 11,475GWh in 2020.viii All schemes are in the process of being reviewed.
NESS target saving 10% of electricity and gas consumption by 2030
The Energy Savings Industry Association (ESIA) proposes that a NESS commence from 1 January 2020 with a target increasing progressively in order to achieve savings of 10% of electricity and gas consumption by 2030. (Refer to Chart 2)
Chart 2 National energy consumption and proposed NESS energy savings 2019-2030 (ESIA March 2019)
Assumptions for 10% target
The recommended 10% target is based upon:
Electricity and gas consumption in the National Electricity Market (NEM) and the WA South WestInterconnected System (SWIS) which is expected to be the equivalent of 379,119GWh in 2019 and growing to 394,154GWh in 2030.
These figures incorporate business and residential energy use (including losses) and exclude gas used for power generation and LNG.
These deliver annual energy savings of 10% by 2030 needing an initial national target of 19,799GWh in 2020 and increasing to 35,980GWh in 2030. (Refer to Chart 3)
Chart 3 Proposed NESS target and annual energy savings 2019-2030 (ESIA March 2019)
Assumptions for energy savings
Chart 3 illustrates a national target ambition from 2020 to 2030, in comparison to existing currently committed scheme targets. Existing targets including Vic, NSW, SA and ACT have an equivalent target of 11,319GWh in 2019 increasing to 11,475 GWh in 2020.
In this analysis, for the national target, energy savings targets have been determined upfront in GWh and would be committed in NESS legislation on an annual basis to 2030. In this analysis, the actual energy savings delivered each year have been based on an assumed deemingxi period of eight years.
The chart shows a linear trajectory to achieve the 10% by 2030 target that would require a target increase at 2020 of 8,324GWh which could be mobilised under a NESS. Notably, existing scheme targets from 2021 will be determined through reviews during 2019 and 2020.
A significant target increase from 2020 will provide a strong signal to the market to deliver upgrades sooner.
NESS to save 4.5 times Liddell’s annual electricity output
A NESS could deliver energy savings from both electricity and gas equivalent in electricity terms to 4.5 times the annual output of the Liddell coal-fired power station scheduled to close in 2022.
This is based on a NESS target saving 10% of electricity and gas consumption by 2030 which will deliver 39,415GWh energy savings a year by 2030 and based on Liddell’s average electricity output of 8,680GWh over the past two years.
‘Low-hanging fruit’, quick payback upgrades include:
Residential – water heating, thermal comfort upgrades including heating, cooling and weather sealing, and lighting.
Commercial buildings – lighting and Heating Ventilation and Air Conditioning (HVAC) systems and controls including better fan, compressor and pump systems; and comprehensive building retrofits including better sub-metering so building managers can monitor energy use and make informed adjustments.
Industrial – process and technology improvements; variable speed drives, high efficiency boilers and heat pumps for better use of power, ambient or waste heat; fuel switching; and improved maintenance schedules to reduce losses.
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