Finally the spectre of a National Energy Savings Scheme (NESS) has been removed, freeing up the states to get on with rolling out variations on current successful state schemes.
Despite the federal government spending a lot of money considering and planning for a national scheme over many years, energy minister Josh Frydenberg quashed the idea at the Energy Efficiency Council’s national forum on 28 June.
In answer to a question from the floor, he stated that while he supported the strengthening of the current schemes and their continuing harmonisation, and that he would encourage other states through COAG processes to develop their own, he saw it as a state issue, and that his hands were tied by COAG.
Mr Frydenberg also didn’t think that his department could add a great deal and it would be better to roll them out laterally rather than from above.
So that’s it! The concept of a NESS – an energy efficiency scheme available for all Australians – is finally dead!
The schemes in NSW, Victoria, SA and ACT have been remarkably successful in implementing energy efficient products throughout the broader community. Not only is this a great way for the government to help householders and businesses reduce power bills in the face of ever-increasing charges, but it has also been so widespread and in such numbers that overall energy use has reduced.
This reduces stress on our generation and transmission and allows the government to take more care in considering the transition to cleaner energy sources.
Well over a million houses have benefitted from the installation of energy efficient lights, shower heads, hot water systems and insulation. Thousands of businesses have had teams of electricians change old fluorescent tubes and big 400-watt high bay lights to LED equivalents that use a fraction of the energy. Container loads of LED high bays are being installed every week. A small company with 10 high bays in Dandenong, Cabramatta or Cavan will save 7.5 megawatt-hours of electricity a year.
The cost of the schemes has been proven to be significantly less than that expected. The price of certificates and transactional costs to the obligated parties (retailers) has consistently resulted in only a 2-3 year payback. This is good news for the entire state economy.
So why would Mr Frydenberg reject the advice of his own department as recently as a week before the Finkel report and leave it to the states to run with energy efficiency, particularly given that energy productivity within Australian businesses lags poorly against equivalent nations and we have a stated goal of improving it by at least 40 per cent by 2030 in the National Energy Productivity Plan? Surely the state energy saving schemes support the NEPP.
My view is that Mr Frydenberg genuinely believes that the schemes are better run by the states and the federal government would be on a hiding to nothing for taking over successful schemes and trying to run them all in together. He knows the states never agree about anything (especially Victoria and NSW) and the Department of the Environment and Energy would just be pushed and pulled mercilessly.
So be it! The good news is that a decision has been made and there are significant benefits!
No excuses now – lagging states need to step up
No longer can the states without schemes claim to be waiting for the Feds.
Queensland, Tasmania, WA and the NT need to step up to allow their householders and businesses to benefit from the energy saving activities within energy efficiency schemes. And it’s not even very difficult anymore. They can just copy an existing one or apply a hybrid approach like SA does.
Copy the legislation and rules for the Victorian Energy Efficiency Target (VEET), make some modifications that suit and implement it. Or, perhaps even better, the NSW scheme registers have been made available for other states/territories (ACT in particular) to use. Run the new scheme through the NSW registers – easy. SA have a smart hybrid scheme that references the other states as it suits keeping the cost of running the SA Retailer Energy Efficiency Scheme (REES) to a minimum.
It can also be argued that a federal scheme would need to force harmonisation on the states and that this may not be in the best interests of individual states.
The states and territories remain free to tailor a scheme to maximise the benefit to their various communities. State-based schemes allow the states to apply multipliers or discounts to efficiency activities that more specifically address their opportunities or issues.
That’s the beauty of a state-based approach – consider SA continuing to focus on small businesses and concession card holders while Victoria and NSW are dominated by large installations of high bays in industry and distribution.
Victoria was entirely residential until a couple of years ago and NSW has been almost entirely commercial for years.
The Victorian scheme is twice the size of NSW’s and almost 10 times that of SA – each state deciding for themselves how much energy efficiency to be supported within the schemes.
How do you negotiate all of those variables from above?
Anyway, there we have it. RIP NESS, 28 June 2017. Now let’s get on with the rest of them!
Bruce Easton is chief executive of energy consultancy Ecovantage.