Key points 4 state energy savings schemes are the biggest game in - - PDF document

Energy Efficiency Expo 24 October 2019, Melbourne Energy Saving Schemes Panel ‐ Topic and Participant Talking Points Introduction: Energy efficiency schemes and incentives ‐ 2019 unprecedented year of opportunity

Australia’s energy efficiency schemes have been the quiet achievers of the energy transition, saving households and businesses in Victoria, NSW, SA and ACT more than $1billion of customer bills annually and delivering an average annual reduction of total electricity consumption of almost four per cent. This session will unpack 2019 as an unprecedented year of opportunity to strengthen these schemes to 2030 and explore their flexibility to incentivise demand reduction and management to address multiple summer peaks.

Energy savings schemes are spearheading technology transformation which wouldn’t happen otherwise because of

• ngoing market barriers that prevent households and businesses from doing upgrades that improve energy

efficiency Energy savings schemes policy shapers and participants epitomise the can‐do, innovative mindset needed to push Australia forward. We encourage you to visit the ESIA at stand FF147 at EEC at stand E108. Chair: Rod Woolley President, Energy Savings Industry Association (ESIA) & Managing Director, Yellow Door Consulting

• Introduce topic and panel participants

Participants:

• 1. Ric Brazzale Board and Policy, ESIA & Managing Director, Green Energy Trading and Green Energy Markets

Energy savings schemes overview across Australia:

• State of play: states leading the fed’s on essential market interventions that work
• Energy savings versus emissions reduction targets in a renewable world
• Targets from 2021 to 2030 need to start big to meet Paris commitments
• 2. Jack E Brown Senior Policy Officer, Energy Demand & Efficiency, Department of Environment Land, Water

and Planning, Victorian Government Victorian Energy Upgrades Program

• Victorian energy and climate frameworks: suite of supporting targets and initiatives
• VEU targets for 2021‐2025: RIS late 2019
• Getting the activity mix right for program success
• 3. Merrily Hunter, Director, MAC Energy Efficiency

South Australia and ACT schemes: new directions post 2020

• SA Directions Paper for post 2020: considering peak demand and more
• ACT committed to 2030
• Priority Household Targets essential: can include renters
• 4. Stuart Edgley Managing Director, Emerald Planet

Lighting ‐ retrofits are not BAU:

• Products ‐ why scheme‐approved products can be trusted
• Technology and opportunities ‐ where to from here
• BAU ‐ why retrofits are not BAU
• 5. Craig Morgan, Managing Director, Northmore Gordon

Project based upgrades gaining traction ‐ ERF, Vic NSW

• Unique upgrades using PBA/PIAM&V, customer costs with and without incentives
• Customer experience: 7‐9‐year lead times, certificate and cashflow certainty
• Compliance bumps that need to be ironed out ASAP

For more information regarding this panel and further information, please contact comns@esia.asn.au

Key points

• 4 state energy savings schemes are the biggest game in

town (and under review)

• Schemes have supported range of activities and we are

advocating for expansion and extension and move to energy metric

• Energy savings schemes are part of policy mix to ensure

that Australia does its part to limit temperature increase to 1.5 degrees (Paris)

Policy support of > $250m pa

3

• All Schemes currently under review
• ERF/CSF can also supports EE – few projects so far

Key differences in schemes

4

Certificate based Yes ‐ $18.40/VEEC Yes ‐ $19.75/ESC No No Priority Households No No Yes ‐ 20% Yes ‐ 20% Energy Audits Co‐Payment No Yes $5/MWh for CL No No HEERs $30 Large energy users Excluded Yes ‐ included Excluded Excluded can opt in EITEs exempt GJ cap on upgrade Target setting frequency 5 yearly Set to 2025 3 yearly 3 yearly Target Metric GHG Emissions GHG Emissions GJ Energy savings Notional GHG Compliance approach ESC audits External audit and creation cap Liable parties Liable parties Project based methodologies Yes – emerging Yes ‐ established No No Commercial lighting discount Discounted Discounted Discounted Discounted Feature Vic NSW SA ACT

Yes - $22.90/VEEC Yes - $22.00/ESC

5

Activities supported by schemes

Certificates created (monthly since Jan 2018) Victoria NSW

• Massive transformation occurred in lighting sector
• CFL replacement in Vic surging – but little project based
• ACT and SA have had more residential activities

Vic YTD Share NSW YTD Share Residential/Small Bus Lighting 1,888,415 48.5% 540,215 15.0% Commercial Lighting 1,734,885 44.5% 2,096,394 58.4% Efficient Appliances 106,442 2.7% 266,435 7.4% Water Heating 165,055 4.2%

• 0.0%

Project Based 1,130 0.0% 689,381 19.2% 3,895,927 100.0% 3,592,425 100.0%

ERF and RET only effective policy

• just leaving it to the states

6

(Climate Solutions Package Feb 2019)

Use of Carryover means that we will only achieve 13% reduction by 2030 (not 26%)

Meeting Paris Commitment

• Paris commitment to keep temperature increase to well

below 2 degrees (aim for 1.5 degree)

• Climate Change Authority recommended that emissions

reductions of 45 to 63% required by 2030 (similar to Combet Report recommendation to Vic Govt)

• Electricity sector could achieve >69% reduction as other

sectors have more expensive abatement

• Historically have tended to focus on the supply side – EE

schemes have an important role to play to ensure that cost effective investment takes place on the customer side of the meter

• Becomes more important to compliment increasing amounts
• f renewable generation (peak demand reduction)

7

1

Victorian Climate Change Act 2017

• target of net zero greenhouse gas emissions by 2050
• five-yearly interim emissions reduction targets
• targets for 2025 and 2030 to be set by 31 March 2020

Market changes, policy planning and goals, VRET and Solar Homes lowering the emissions intensity of the grid What does all this mean for Victorian Energy Upgrades (VEU)?

• VEU achievements over 11 years – 1.8 million households, 100,000

businesses, $3 billion in bill savings, 52 million tonnes of emissions reduction Setting VEU targets for 2021-2025

• Working in parallel with climate change process
• Process – stakeholder input, extensive modelling, options

identification, OCBR, legal review, Ministerial approval process

• Legislated requirement to publish targets by May 2020
• Modelling complete, finalised conclusions, approvals, consultation to

be conducted

DELWP – Victorian Energy Upgrades program

2

VEU – getting the activity mix right for program success VEU is technology neutral and has three goals:

• Reduce greenhouse gas emissions
• Encourage the efficient use of electricity and gas
• Encourage investment, employment and technology development in

industries that supply goods and services which reduce the use of electricity and gas Existing activities

• Lighting – additionality changes
• market transformation, LED MEPS, halogen phase out, NCC,

Minamata New activities – what is Victoria going to need in the energy transition?

• Digitalisation, electrification, integration with distributed energy

resources, demand management, other?

• Smart home technologies?

VEU has been successful, balancing priorities the key for future success

DELWP – Victorian Energy Upgrades program

3

RE REES DIRE IRECTIO IONS PAP APER (POST 2020) Multiple retailer targets Customer Contributions Comm Lighting changes New C & I activities Energy Productivity target

4

AC ACT Ext xtends the the EEIS IS till till 2030 Move from TCo2e to Energy savings Insulation Activity introduced Renters included in Priority Group Heating activities expanded to business

5

“The issue of energy poverty is both an economic and a moral issue. It is the most critical issue in the current energy ‘trilemma’ for consumers.”

• Cassandra Hogan National Sector Leader, Power & Utilities, KPMG Australia

> Performance Testing: LM reports

rewards this!

THE FUTURE OF LIGHTING IN THE ENERGY

EFFICIENCY SCHEMES

Standard product quality vs scheme approved product requirements

> NATA Labs > Safety / EMC

incentivise high The schemes efficiency products No other market > High volumes > Driving price down

THE FUTURE OF LIGHTING IN THE ENERGY

EFFICIENCY SCHEMES

THE FUTURE OF LIGHTING IN THE ENERGY

EFFICIENCY SCHEMES

Australia-wide incentives

9

Benefits and challenges along the way

• Benefits
• 10-30+% of project costs, $10k - $1+M
• Verified results - 5% fail, 50% under-deliver
• Better cashflow from forward creation in NSW and VIC
• Examples: VSDs, heat recovery, refrigeration, boilers
• Simplest form of funding
• Challenges
• M&V Projects can last 1 - 9 years (conception to close)
• Costly (multiple audits, professional sign-off)
• Regulatory compliance very difficult (VIC / NSW/ Fed). Differences

between non-routine adjustments, priority date, statistical tests, difference of opinions

• Cashflow certainty (timing, # certificates, cert price)

10

Progressive energy efficiency policies could deliver: 120,000 job years of work

(eg 24,000 jobs a year for 5 years

43,000 (1/3) from energy savings schemes

(eg 6,000 a year for five years)