Adelaide’s energy efficiency program for houses works well

9 December 2013 – For every dollar of energy saved in South Australian households the returns are enormous, so why threaten them? Willow Aliento asks an energy consultant, Ecovantage, AGL and the SA Conservation Council of SA for their views.

It seems success does not insure a program from a political itch to reinvent the wheel, with South Australia’s highly effective REES set to be axed should the South Australian Liberal Party win Government in the March 2014 State election. Under the current government, the scheme is set to continue until 2020, and will be extended beyond households to include small businesses.

In sustainability terms, it’s fairly obvious that improving the energy-efficiency of existing housing stock is a highly workable and cost-effective way to proceed towards reducing carbon emissions.

The key benefit of the REES scheme is it helps people do their bit with a free energy-efficiency assessment and advice house-call which also provides a range of products including energy-efficient light bulbs, standby power controllers and water-efficient shower heads.

Number-crunching by Essential Services Commission of South Australia has shown that for the roughly $14 per household the service costs annually, the return is enormous.

The total cost of Stage One of the scheme was $29.1 million, which was paid for by mandatory contributions from the large energy retailers. The benefit achieved is an estimated $135.7 million, which gives a benefit to cost ratio of 4.7:1. So for each tonne of carbon abatement, there are $162 of net benefits which means REES more than pays its way. [You can check the figures for yourself here]

In social benefit terms REES also adds up, with low-income households identified as a priority area for the REES service, which also includes free energy audits for low income customers.

So why mess with it one might ask? The Liberal policy focuses on several key aspects, firstly that REES has not yet reached everyone in the state, yet everyone is paying for it. Secondly, they believe consumers should be put in charge of their own efficiency measures through being able to purchase smart meters incorporating energy use monitors and a facility to opt for Time-Of-Use-Tariffs and monthly billing.

The Liberal policy suggests there may also come a time when the individual Smart Meter could turn off airconditioning at appropriate intervals and turn on appliances automatically at off-peak tariff times. Cue a scenario where one wakes in the night and realises the washing machine has been turned on by the Smart Meter, but everyone forgot to put their clothes in.

For those on the ground doing the actual REES assessments, the possibility of seeing the scheme chopped rather than extended in a sobering one.

Ecovantage – an energy consultant’s view

“We’re there every day inside houses and every house is full of appliances,” said John Tilden, field manager for Ecovantage (South Australia).

“Electricity is like blue sky, you don’t know what it costs until you get the bill.”

During a home efficiency visit, the advisor will suggest how to minimise the energy use of all those electrical goodies, install a standby power controller if appropriate, and also check that systems such as ducted airconditioning are set to an appropriate temperature. The result is inevitably a drop in power bills, which explains why around 90 per cent of people who have been able to access the REES scheme are happy with the service.

The key issue with making sure more South Australians can access the service is staffing for field assessors, with companies like Ecovantage contracted by the power companies to implement REES obligations on the retailers’ behalf.

It’s not an off-the street job option. All assessors need to be trained and hold appropriate certifications, which creates a Catch-22 when the program’s funding and lifespan are up in the air, exposed to the fickle winds of politics.

John Tilden believes smart meters alone, without the direct assistance to achieve energy-efficiency, will not achieve the level of benefits seen with REES. He also believes the proposal to extend it to businesses should include all small to medium enterprises.

“SME’s energy bills are killing them,” he said.

The Conservation Council of South Australia view

Conservation Council of South Australia chief executive Craig Wilkins backs the current government proposal to extend the scheme, which the CCSA regards as a sustainable success story.

“The Residential Energy Efficiency Scheme has been a great success in helping South Australians save energy and money. It is reducing costs to both household power bills and to our planet,” Craig Wilkins said.

“We support the scheme being expanded to businesses, and would encourage it also to include community organisations to really maximise the benefits.

“The REES has proven to be a simple and cost-effective mechanism to be more energy efficient. It is a smartest way of using energy wisely.

“It is appropriate that our state government should be requiring the large energy retailers to help their customers to save energy. It is surprising that with an electricity system riddled with perverse subsidies and hidden costs, the SA Liberal Party is looking to discard a relatively small, but highly effective program that actually works.”

The AGL view

In some ways it’s a concept that confounds regular business logic that a commercial enterprise would actively encourage people to buy less of their product. This is however the case, with one of the state’s major electricity retailers, AGL, suggesting that a “best of both worlds” approach could be the way forward.

“AGL supports a transition to a consumer-led energy efficiency market. It is essential that consumers make efficiency investments based on information regarding their own household energy usage. Accordingly, any energy efficiency policy should be combined with the roll out of smart meters and flexible pricing,” said an AGL spokesperson.

“AGL supports specific policies targeted at energy efficiency for low-income households as an important way of managing ongoing energy use.”

And in Victoria…

There are precedents for a double-whammy approach to energy efficiency, with Victoria combining a highly effective household energy efficiency scheme with rollout of smart meters.

The difference between the Victorian approach and the proposed SA Liberal approach is smart meters are being rolled out in Victoria as a must, not an opt-in which costs the specific customer an additional bill levy, and the Government’s Victorian Energy Efficiency Target scheme continues to operate and includes both residential and business energy users.

Putting the situation in a national context, the proposed abandonment of a successful program like REES does have a precedent – the ending of the Federal Government’s Solar Cities Programs. Perth was selected as one of the showcase cities, along with Adelaide, Alice Springs, Blacktown, Central Victoria, Moreland, Perth and Townsville.

The program commenced as a pilot in 2009, and offered solar energy discounts, energy efficiency products, smart meters and services including eco-consultations and eco-coaching. The WA Government estimated the 16,000 households that participated saved more than $1 million on their electricity bills in 2012. And then it stopped. Seems like the old wisdom, “if a thing works, don’t mess with it”, doesn’t always apply.

For a thorough look at the state-by-state picture of energy creation, distribution, use, efficiency programs and smart meter rollouts, the Bureau of Resources and Energy Economics ‘Energy in Australia Report’ produced in May 2013 is useful reading. You can find it here.