NSW moves to top of class on energy efficiency

Last Thursday was a landmark day in Australia’s energy debate – but not for the reason you might think.

Most attention was focused on the long-expected announcement of the closure of Victoria’s Hazelwood power station. The attention was justified – it was a milestone in the transition of Australia’s energy supply to cleaner forms of generation, and has big implications for the community in the Latrobe Valley. However, there was a development at least as significant unfolding north of the border in NSW, where the Baird government released three major new climate and energy plans for consultation.

The draft plans see NSW join South Australia and Victoria with a target of net zero emissions by 2050. They also flag significant new investments in renewables and climate change adaptation. But critically, the energy efficiency plan – A Draft Plan to Save NSW Energy and Money – also proposes a massive ramp up of effort on energy efficiency.

Why is that so important? There are two major reasons.

Firstly, NSW has recognised something important about managing the transformation underway in our energy system. It requires more than a focus on the way we generate and distribute energy – the supply side. It also calls for a smarter approach to the way we use energy – the demand side.

Energy systems are changing rapidly all over the world. Jurisdictions like California that are effectively managing this transformation have one thing in common: they are taking a balanced and integrated approach to ramping up investment in renewables on the one hand, and energy efficiency and demand management on the other.

Why? Because they understand that the transition to lower carbon forms of generation will be quicker – and much cheaper – if they drive cost effective energy efficiency at the same time.

The NSW government is proposing up to $200 million of investment in renewables and advanced energy over five years. It is also proposing up to $200 million of investment in energy efficiency over the same period. These are major investments that support the transition taking place on the supply side and the demand side. This balanced approach could see NSW join places like California as a global leader in this area.

Secondly, the Baird government has recognised the importance of government policy in unlocking the energy efficiency opportunity.

A significant ramp up of energy efficiency is challenging, because there are different drivers and barriers in every part of the economy. As such, it takes careful, considered action from government – tailored to the unique circumstances of each sector – to realise the big opportunities we have to use energy more efficiently and productively. This is a point the International Energy Agency made strongly in its 2016 Energy Efficiency Market Report, released just last month.

Reading the Draft Plan to Save NSW Energy and Money, it’s clear the NSW government has carefully considered its role in supporting businesses and households to become more energy efficient.

This includes increasing energy standards for new commercial buildings to ensure these long-lived assets aren’t hogging energy for the next 40 years. Supporting large energy users to investigate energy savings opportunities that drive business productivity. Accelerating energy efficient appliance standards so mums and dads aren’t stuck with poorly-performing appliances that send their energy bills skyrocketing.

These are just some of the sensible measures the government is proposing, with big benefits for the entire community. If implemented, these actions are projected to save NSW households and businesses around $17 billion in avoided energy costs by 2050.

The NSW government’s draft strategy takes an ambitious, integrated approach to both renewables and energy efficiency. The measures it is proposing are carefully calibrated to respond to the drivers and barriers in each part of the state’s economy.

In short, this Draft Plan is best in class, and a template for action that other governments around Australia should study closely.

Luke Menzel is CEO of the Energy Efficiency Council. The Council is hosting the National Energy Efficiency Conference in Sydney on 15-16 November 2016.