CEFC chief executive Oliver Yates

23 July 2013 — Demand management could save households up to $1900 a year in energy costs, a new report has found.

The study by the Institute for Sustainable Futures of the University of Technology Sydney found that demand management could lower energy use, reduce wholesale electricity prices and defer expensive network infrastructure upgrades, but required collaboration between governments and regulators.

Demand management involves the modification of consumer demand for grid energy through such means as financial incentives to reduce consumption at certain times, end-use efficiency improvements and education.

“It is estimated that savings of $900-$1900 per household could be delivered in instances where demand management is taken up,” said study lead author and ISF research director Chris Dunstan.

Regulatory and organisational practices in Australia have historically favoured infrastructure development over demand management, the study said, but following the Australian Energy Market Commission’s Power of Choice review, the Standing Council on Energy and Resources had agreed that changes to the National Electricity Rules should be sought, including reforming the demand management incentive scheme.

Dunstan said that changing regulations was only one hurdle, however, and that a more collaborative approach was needed, including supportive policy for demand management, targets for network businesses for demand reduction and lowered consumer costs.

The study, commissioned by the Clean Energy Finance Corporation, found that the CEFC could support demand management by making finance available to invest in energy savings for customers.

CEFC chief executive Oliver Yates welcomed the report, saying that clean energy should be about delivering economic as well as environmental benefits to Australia.

“The CEFC commissioned this study to explore ways the CEFC could help improve efficiency and provide more economically optimal alternatives such as investing in demand management, rather than ever more infrastructure to deal with growing demand,” he said.

“This scoping study provides a vision for a win-win outcome for energy customers, and for network businesses and their shareholders. The CEFC stands ready to invest in initiatives to help achieve this, but we recognise that policy makers and regulators also have a crucial role to play.

“While these regulations are now being reformed, it will take years before customers see the benefits. This reform could be complemented with policy change to provide financial incentives for networks to undertake demand management now, in order to bring forward bill relief by several years and avoid the need to build further unnecessary power grid infrastructure.”

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