Efficiency Insight - February 2016

The quarterly e-zine of the Energy Efficiency Council, bringing you in depth policy analysis, insight into key technologies and a roundup of industry news

CEO Welcome

Welcome to the first edition of Efficiency Insight, the Energy Efficiency Council's new quarterly e-zine.

The EEC and our members are united in a common cause – making sensible, cost effective energy efficiency measures standard practice across the Australian economy. To do that, we engage in a broad range of activities – advocating for stable, economically prudent policy, delivering training and certification and making sure homeowners and businesses have the information they need to make good investment decisions around energy efficiency.

But we’re also focused on moving the broader conversation forward. If you’ve been to our National Energy Efficiency Conference, you'll know that we work hard to put the latest thinking on the agenda and tackle the critical issues facing energy users, policy makers and efficiency professionals.

Efficiency Insight is designed to keep that conversation moving, with articles from the EEC team and guest contributors designed to get you thinking about the big issues. Expect comprehensive updates on the state of Australian energy efficiency policy, in depth analysis of key technologies, and opinion from Australia's leading voices on energy efficiency. In short, if you have a professional or personal interest in energy or energy efficiency, Efficiency Insight is essential reading.

One last thought. Many of the articles in Efficiency Insight are long reads, and I found it worthwhile setting aside some time to take them in. I recommend you do the same – perhaps with a cuppa one afternoon.

I hope you enjoy this first edition - let me know what you think.

Best wishes,

Luke Menzel, CEO, Energy Efficiency Council


Analysis: Efficiency policy update by Rob Murray-Leach (Energy Efficiency Council)

Technology: Heat Pumps - radical efficiency by moving energy by Alan Pears (RMIT) & Geoff Andrews (Genesis Now)

Opinion: Will our energy policy makers remain lost in a climate change fog? by Tristan Edis

Driving efficiency in mid-tier offices - getting the right detail to the right stakeholder by Shauna Coffey (Energy Efficiency Council)

Measurement and verification critical to efficiency success by Luke Menzel (Energy Efficiency Council)

Efficiency industry champion firing on all cylinders by Jessica Roberts (Energy Efficiency Council)

New energy audit standards promote action on efficiency by Karla Paeglis (Energy Efficiency Council)

National Energy Efficiency Conference 2016 - Save the date!

EEC's top industry events picks

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ANALYSIS: Efficiency policy update

In each edition of Efficiency Insight, the EEC's Head of Policy, Rob Murray-Leach, will bring you the latest policy developments affecting energy efficiency across Australia, and the social, technical and economic trends shaping the energy sector as a whole. In this, the first edition, Rob provides an introductory overview of energy policy and the role of energy management.

Energy markets and energy efficiency policy

In this first edition of Efficiency Insight, I’m going to take a step back and look at why the design of our East and West coast energy markets increase the need for energy efficiency policies. While the reasons for policies like minimum appliance standards are well established, the problems with our energy markets are less well known.

Starting with basics, people don’t directly consume electricity and gas – they use it for ‘energy services’ such as warm showers, cool homes and computing. The cheapest way for a home or business to meet its need for energy services is through a combination of supply-side and demand-side investment.

For example, the cheapest way to keep an off-grid home cool in summer is through some supply measures (a generator) and some demand-side measures (e.g. insulation and an efficient air conditioner). If you design a house poorly and have an inefficient air conditioner, you’d have to spend a huge amount on energy supply. You could also over-invest in energy efficiency – it’s all about finding the right balance.  

Trying to achieve the right balance of supply-side and demand-side investment is much more complex for the houses and generators connected to a grid. Ideally we want the most cost-effective mix of investment in supply (generation and networks) and demand-side measures (e.g. efficient fridges and peak response programs).

However, Australia’s energy markets have failed to deliver the right mix of investments because of a number of choices that were made when setting up the market. Electricity markets are not ‘natural’ markets, as they are based around monopoly networks – poles and wires.

The question is not whether governments intervene in the structure of energy markets, but the choices that they make when they do. As a result, government decisions have had a major impact on investment patterns in both energy and energy management.

Governments gave network companies monopoly powers to make decisions on behalf of consumers to invest in supply-side infrastructure. This infrastructure allows generators to sell energy cheaply to aggregated consumers. However, very little effort was made to encourage networks to invest in demand-side measures when it was cheaper than network expansion, and governments didn’t set up a competitive market to aggregate demand-side investment and deliver balanced investment.

In other words, we set up a system that meant consumers could access supply with virtually no effort and very little upfront cost, as the costs are smeared among consumers and over time. Worse still, even if consumers don’t want more supply, networks can still invest in more supply on their behalf.

However, if consumers want to access energy management measures they have to take the initiative themselves, pay the costs upfront and get them installed. In short, we've set up a system that makes it much, much easier for consumers to access additional supply than manage their energy use.

The result is billions of dollars wasted on electricity infrastructure that we don’t need, much higher greenhouse gas emissions and homes and workplaces that perform poorly by developed country standards.

These distortions exist to a greater or lesser degree around the world. Most countries have had programs in place to address them, and these programs are currently ramping up. For example, California has long required its utilities to invest in energy efficiency when it’s cheaper than investing in supply, and they’ve just introduced one of the most sophisticated markets in the world for energy efficiency (a ‘negawatt’ market - for more on this, check out this article from Renew Economy).

Australian networks actually used to do a lot more to try to balance investment in supply and demand. However, when we created the National Electricity Market, energy efficiency largely dropped off the agenda. As a result, electricity bills are much higher than they should be.

Reforming the energy market is a long, slow process. This has meant politicians have tried to address these issues outside the energy market, with programs like the NSW Energy Savings Scheme, which puts an obligation on retailers to invest in energy efficiency. In the absence of serious energy market reform, these kinds of programs are essential.

Of course there are also issues that will always be best addressed outside the energy market, because energy efficiency is about the interactions between markets for energy and markets for products that use energy. For example, minimum standards for buildings and appliances are about protecting consumers from shoddy products that use much more energy than they should.

The case for action on energy efficiency is strong and urgent. On economic grounds alone, Australia needs to get its act together fast, as developments in technology, consumer preferences and global politics drive a new wave of investment in energy supply and demand. If we get the balance of investment wrong again, it will waste hundreds of billions of dollars and reduce Australia’s productivity.

Moreover, modelling just released by the Commonwealth Department of Industry, Science and Innovation quotes research that shows that more thermally comfortable offices result in much more efficient staff. The modelling shows that the staff productivity benefits of improving the energy efficiency of our workplaces likely exceed the energy benefits!


The global focus on energy efficiency has increased substantially over the last five years, driven by countries’ desire to address competitiveness, energy security (e.g. concerns about Russia’s control of gas markets), air quality (especially in China) and greenhouse gas emissions.

However, while government policy on these issues might influence the speed and nature of the transition to renewable energy and efficient appliances, it appears that this transition is now inevitable. Over the last two years trends in technology costs and consumer preferences have hit a tipping point, and businesses and households are increasingly voting with their wallets.

Once a shift is seen as inevitable, the debate around it transforms – the economic consequences of being left behind means that the question becomes how to adapt, rather than whether to adapt. Many investors have already started to factor this change into their decisions and the price of coal has fallen dramatically over the last four years.

There is now broad consensus that there will be a huge amount of investment in new supply, storage and networks over the coming decades. The key question for many governments and investors will be how long this transition to cleaner energy will take, and how best to manage the cost of this transition. Energy management will be critical to lower the cost of transition and balance the greater variation in both demand and supply.

Recent estimates by the International Energy Agency and HSBC estimated that the global market for energy efficiency products and services is already around $350 billion per annum, but investment is growing rapidly and could more than double in the coming decade. Australia still has the opportunity to tap into this global market, but only if we ensure that our local markets encourage local providers to flourish.


Energy efficiency has recently emerged from a turbulent and challenging time. While the NSW Government remained a beacon of moderate and consistent energy efficiency policy, in 2014 the Commonwealth Government and the previous Victorian Government terminated a number of important energy efficiency programs.

However, we have well and truly turned a corner. The Commonwealth Government became significantly more pro-efficiency in 2015, even before the change in Prime Minister, as the need to improve Australia’s competitiveness and lower greenhouse gas emissions became pressing, and the new Victorian Government is a vocal supporter of energy efficiency.

The former Commonwealth energy minister, Ian Macfarlane, started the development a National Energy Productivity Plan (NEPP), and his successor, Josh Frydenberg, signed off the NEPP in December with his state and territory counterparts.

Rather than outlining a set of policies, the NEPP is more of a work-plan to develop detailed policies in 2016, which means that this year will see major national work on a number of fronts. Key initiatives will include:

  • Governments developing plans to save energy in their own operations (e.g. hospitals and schools). NSW already has an effective program in place, South Australia recently announced that it would be running a scheme, Victoria is considering reintroducing a scheme that was effectively closed in 2014 and the Commonwealth has committed to developing a scheme by the end of 2016
  • Investigation of fuel-efficiency standards for cars
  • Further work on energy market reform, including the Demand Response Mechanism
  • Consultation on the expansion of the Commercial Building Disclosure Scheme to smaller buildings and building areas
  • Policy development for residential energy efficiency disclosure at the point of sale (and possibly lease). Victoria will lead this with the release of their voluntary scorecard

At a state level, the Victorian Government will release its energy efficiency and productivity strategy in the first half of 2016, the Victorian Energy Efficiency Target (Energy Saver Incentive) is being expanded to support a wider range of projects, and the NSW, ACT, South Australian and Victorian governments are working to harmonise their energy efficiency certificate schemes.

There is still a robust debate around energy efficiency. The Western Australian Government is currently considering reducing incentives for demand-response, which would benefit its state-owned generators, push up electricity prices and draw ire from large energy users. However, this issue shows how far the debate has moved, with consumers firmly pushing for more, not less, action on energy management.

2016 will be a huge year for energy efficiency.

Rob Murray-Leach is Head of Policy at the Energy Efficiency Council. He has an extensive background in climate change, energy, transport and sustainability, as an author of the Garnaut Climate Change Review and senior policy expert in the South Australian Government. Click here to contact Rob.


TECHNOLOGY: Heat pumps – radical efficiency by moving energy

The range of applications for heat pumps is expanding rapidly. In this special article, technical experts Alan Pears and Geoff Andrews demystify the practicalities and explore the potential of heat pumps to drive down energy use in Australian homes, businesses and industry.

Every Australian home and business has at least one heat pump – a refrigerator or air conditioner. But ongoing development means heat pumps can be used for an increasing range of activities, including cooling, producing hot water and even industrial steam.

The range of applications for heat pumps is expanding rapidly as capital costs fall and materials, motor efficiencies and capacity to vary motor speeds and manage systems all improve, new refrigerants are developed, more sources of heat (or cooling) are identified, energy storage becomes more attractive, and process heat requirements change.

Indeed, heat pumps now provide viable alternatives to traditional sources of heat, such as gas, for many activities. Given recent increases in gas prices, heat pumps are becoming even more attractive. And, of course, heat pumps can provide cooling as well.

A recap on heat pumps

A heat pump (or chiller) works by using energy (e.g. electricity) to pump thermal energy from one area to another. A fridge, for example, moves heat from inside the fridge to the coils at the back. As a result, heat pumps can use a small amount of energy to create a big increase (or drop) in temperature, which makes them seem to defy the laws of thermodynamics! In theory, a heat pump can deliver up to 10-15 times as much energy as they consume driving the compressor. The efficiency of heat pumps (often called the ‘Energy Efficiency Ratio’ or ‘Coefficient of Power’) is growing rapidly, as this graph from EnergyConsult shows.

Shifting heating and cooling to high-efficient heat pumps could save enormous amounts of energy. The latest residential heat pump can deliver heat at 600% efficiency (i.e. create six units of thermal heating per unit of electricity consumed) compared with a gas heater at 50% to 95% efficiency. When the electricity is produced using renewable electricity, this delivers astounding reductions in greenhouse gas emissions.

While most heat pumps are driven by electric motors, they can also be driven by gas engines or, indeed any device that can drive the compressor. This article focuses on heat pumps driven by electric motors.

(Graphic: Baseline and Policy Trends for Energy Efficiency Ratio [EER]: Split System Air Conditioners- Reverse Cycle, from report by EnergyConsult for Department of Climate Change and Energy Efficiency, November 2010).

If you’d like for more detail on how heat pumps work, click here to read Alan and Geoff’s 'back to basics' summary of heat pump principles.

Why use heat pumps?

There are many reasons for using heat pumps in today’s rapidly changing energy context.

Financial benefits

The running cost of an efficient heat pump is much lower than electric resistance heating, LPG and, in many cases, even mains gas. The best heat pump water heaters are competitive with solar options. Where use of heat pumps and other emerging efficient electric technologies (such as induction cooking) avoids the need to connect gas to a property, the fixed charges of gas supply, as well as the need to deal with another energy supplier, can be avoided.

There are concerns about ongoing increases in gas prices as our east coast gas grid competes with LNG exports from Queensland. At the same time, the economics of on-site electricity generation and energy storage, which complement heat pumps, are improving. So heat pumps provide insurance against increasing energy prices.

Installation costs can vary widely, but heat pumps can be cheaper to install than solar, and can avoid costs and practical problems of installing flues and on-site gas and steam pipes. Heat pump prices are falling as economies of scale and technology improvements flow through.

If a need for cooling exists, heating capability can be added at little or no extra cost by adding a ‘reverse cycle’ valve.

Where waste heat, water vapour or waste ‘coolth’ is available, a heat pump can scavenge and upgrade energy to temperatures suitable for use on-site.

(Graphic: Pears, A. Presentation to APEC Energy Ministers, October 2015)

Environment and safety 

A heat pump avoids on-site combustion, reducing local pollution and health concerns. It may also offer safety benefits, for example it can replace unflued gas space heaters in homes, and LPG cylinders in bushfire-prone areas.

Heat pumps can also play a key role in dramatically reducing emissions. While gas has traditionally been seen as a lower emission fossil fuel, it still has significant emissions, including methane leakage from the gas production and transport.

Heat pumps, however, can utilise renewable electricity and thermal storage. Where on-site generation occurs, dependence on electricity suppliers for fair pricing of electricity exports can be reduced by use of heat pumps. When combined with thermal or electricity storage, peak grid electricity demand can also be managed.

Energy supply and demand management

This is a complex area: increased electricity demand at existing peak times can add to supply infrastructure costs. However, attractive integrated strategies can limit or avoid increases in peak demand. Options to offset electricity use by an additional heat pump include replacing resistive electric equipment and old, inefficient heat pumps, utilising thermal and/or electricity storage and smart demand management, and upgrading energy efficiency of buildings and industrial process equipment. 

Replacing gas with such strategies can smooth seasonal gas peaks. This can increase gas infrastructure utilisation while freeing up gas for export.

At home - new applications for heat pumps

In homes, heat pumps are playing roles beyond refrigeration and cooling. They are now used for home heating, domestic hot water, clothes drying and pool heating. Heat pump clothes dryers extract the heat from the hot exhaust air, condensing the water vapour and recovering energy. This avoids the need for venting of humid exhaust air, although they need a water drain.

There are also many interesting innovations. Variable speed inverter-controlled air conditioners are now common: they offer improved temperature control and higher part-load efficiency. In space heating and cooling, multiple indoor units can share a single outdoor compressor unit. Daikin have recently released a European-designed indoor unit (Nexura) that provides both radiant and convective heating, as well as the US7, which has a built-in desiccant wheel and can deliver filtered and humidified or dehumidified outdoor air.

In extreme climates, ‘cascaded’ compressors are emerging. By using two compressors in series, with one sourcing its heat or cold from the other, the temperature difference across which each heat pump operates is reduced, so overall efficiency is improved. ‘Geothermal’ or ground source heat pumps are also available: because ground temperature is more stable – higher in winter and cooler in summer extremes, they can deliver higher efficiency, although pumping energy and temperature differences across heat exchangers can offset savings, especially in moderate climates.

While heat pumps have been used for domestic hot water for many years, they have tended to be noisy, and maintaining efficient cold weather performance has been a challenge. A number of Japanese manufacturers have jointly developed the ‘Eco-Cute’ design approach. This uses carbon dioxide as the refrigerant, which allows high efficiency (e.g. COP around 4.5) and maintains relatively high efficiency in cold weather. They can raise the temperature of water by around 40C in a single pass, so they can also provide a continuous flow of hot water.

Commercial buildings – existing and new uses of heat pumps

In the commercial sector, heat pumps are widely used for refrigeration, space heating and cooling and water heating. They are also beginning to appear in aquatic centres to heat pools and manage indoor humidity. A heat pump can recover large amounts of latent heat in exhaust air by condensing the water vapour in humid exhaust air.

Many commercial refrigeration systems are inefficient, with the inefficiencies starting with thermally poor design of the display cabinets, cold rooms and other equipment that needs cooling. As in other areas, improvements in all aspects of system design, such as variable speed drives for compressors and fans, more effective heat exchangers, smart controls and improved refrigerants are driving big savings. Thermal storage, sometimes using phase change materials (PCMs) to store more heat per unit of volume by utilising latent heat, is far cheaper than battery storage – and it can enhance the economics of adding on-site electricity generation by storing heat or ‘coolth’ for later use to avoid chiller operation at peak times or if the grid fails.

Heating, ventilation and cooling (HVAC) of buildings is the biggest energy consuming activity involving heat pumps in the commercial sector. ClimateWorks estimates that HVAC consumes 44% of commercial sector electricity and 39% of commercial gas. A significant proportion of this electricity runs fans (which actually add heat to the air they move) and pumps: their consumption is falling rapidly with improved motor and fan design and variable speed controls. Indeed savings often reach up to 80% relative to traditional fixed speed fans or pumps with dampers or valves.

HVAC energy demand is driven by building envelope thermal performance, but also by heat released by equipment, lights and people, as well as air leakage and exhaust air. Improving equipment efficiency and building design and construction are reducing energy use and size of HVAC systems. Well-designed buildings may need little or no heating, so they can avoid even connecting to a gas supply.

As in other sectors, commercial heat pumps and chillers are improving efficiency all the time. The Australian-designed PowerPax chiller, for example, is achieving Integrated Part Load Value (IPLV) COPs of 6.5 for air cooled units and up to a remarkable 11.1 for water cooled units. The IPLV is a weighted average COP based on ASHRAE-specified hours of operation at varying levels of part load operation. As noted earlier, chiller and heat pump efficiency improves at lower loads and, in the real world, many commercial buildings only operate at full output for limited periods.  

Real time diagnostic systems such as can now alert building managers to problems, while sophisticated management tools compare actual performance to real time simulation of design performance and ‘learn from experience’, to optimise operation. CSIRO’s Building IQ system uses this approach, and is internationally successful.

Industry – an emerging opportunity for heat pumps

Heat pumps are attracting increasing interest in industry, especially now that gas prices are increasing. They can play useful roles in a number of areas:

  • Refrigeration and cooling
  • Providing process heat efficiently, mostly at under 90℃, but steam production is practical (see below)
  • Recovering latent heat from moist exhaust air
  • Scavenging heat from gaseous, liquid and even solid wastes and upgrading the temperature of that heat
  • Drying: for example, drying of timber or grain can be very efficient, as the sensible and latent heat in the moist exhaust air can be recovered by the heat pump. The air delivered by the heat pump can also be drier than heated ambient air when the weather is warm and humid, as the ambient air carries a significant amount of moisture. Indeed, some conventional drying systems struggle to deliver consistent quality and output in humid weather.  

In many cases, modular heat pumps can be located at the point of use, replacing long steam, or hot water pipes or air ducts and their associated energy losses and capital and maintenance costs. This also allows process performance to be optimised because of improved flexibility.

A key issue in the cost-effective use of heat pumps is to carefully analyse the process temperature actually required, and to actively challenge the use of gas-fired steam boilers. Often boilers provide heat at temperatures far above those actually required, leading to very high energy waste. For example, one electrolytic process investigated operated at 63℃, and generated most of the heat it required from internal electrical resistance within the cells. The back-up gas boilers operated at very low efficiency and involved significant maintenance costs. A heat pump that utilised process waste heat (with a storage tank) could be a more cost effective solution.

Research in Japan is leading to development of cascaded heat pumps (see below) that can produce steam at 120-165℃ at efficiencies of 200 to 300%. They can utilise low grade waste heat that would otherwise be dumped. Their modular design offers potential to avoid expensive and inefficient centralised steam distribution systems for many industrial applications.

(Graphics from IEA HPP Annex 35 Application of Industrial Heat Pumps, Task 3 (2013))

Heat pumps are not a ‘silver bullet’

Heat pumps are great for many, but not all, applications. The bigger the temperature difference across a heat pump, the less efficient it is, so they can’t deliver high temperatures for furnaces and other high temperature processes. On the other hand, careful analysis of process requirements may show that the actual temperatures required are much lower than traditionally supplied by steam or combustion. And a heat pump can upgrade ‘waste’ heat for other uses.

Traditional refrigerants used in heat pumps have very high global warming impacts, although most of the ozone depleting refrigerants have been or are being phased out. There is rapid development of low and zero climate impact refrigerants, including hydrocarbons, carbon dioxide, resurgence of use of ammonia, and even water. Careful management of refrigerants is very important, as many are toxic or flammable.

In some sectors, the reputation of heat pumps has been damaged by poorly performing, often noisy equipment applied to inappropriate situations. Careful analysis of the temperatures and amounts of heat available and needed is critical, and quality equipment suited to the application is essential.

Alternatives and complementary technologies

Of course, heat pumps have to compete with a variety of options. Other alternatives are also improving and heat pumps can be combined with other technologies.

As noted earlier, heat pumps can, and should, be combined with thermal and electricity storage systems, onsite energy generation, waste energy recovery and smart demand management based on careful analysis of fundamental thermal energy and temperature requirements. There is increasing potential to avoid or reduce the need for high temperature heat using advanced chemistry, improved heat exchange systems and smart control systems. 

There are exciting developments across a range of technologies. For example, thermo-electric modules (used in some small refrigerators and for micro-cooling of electronics) have traditionally been inefficient, but modern materials technology is driving big improvements.

Thermal cooling and solar heating and cooling technologies are also improving, while gas-powered cooling is also a focus of activity. Of course, these can be integrated with heat pumps for many applications!


It is easy to be frustrated by the pace of improvement in energy efficiency, given the many benefits for households, businesses and the environment. But progress in heat pumps shows that rapid change can happen. The challenges are to take advantage of the opportunities being presented and to encourage even faster innovation.

Alan Pears AM is a Senior Industry Fellow at RMIT University and Senior Advisor to the Energy Efficiency Council. Alan has worked across all aspects of sustainable energy in policy, program development, public education and specific projects and is a well-known commentator on sustainable energy issues.

Geoff Andrews is the founder of energy efficiency engineering consultancy Genesis Now, co-founder of six of sustainability focused businesses and inventor of Organic Response. Geoff was named ‘Energy Efficiency Leader 2013’ at the National Energy Efficiency Awards in recognition of his long-standing contribution to the sector.

OPINION: Will our energy policy makers remain lost in a climate change fog?

Energy market analyst and carbon policy expert Tristan Edis argues that Australia's key energy regulatory institutions have handled the carbon reduction challenge poorly, and a changed approach is needed

Our energy regulatory institutions – the Australian Energy Market Commission which decides on the rules of our energy market, the Australian Energy Regulator which enforces these rules, and the Australian Energy Market Operator which manages its operation – could be considered the ultimate climate change sceptics. 

This has left them blindsided and poorly prepared to consider how energy efficiency, embedded generation and demand management could not just reduce carbon emissions but also reduce costs for energy consumers.

To clarify my provocative remarks, they are climate change sceptics not because the staff within them believe there’s some vast conspiracy to fabricate the scientific research on the earth’s climate.

Rather it’s because since the inception of the national regulatory system for Australia’s gas and electricity markets, senior government officials have resisted any attempt to incorporate any consideration of environmental impacts into the objectives of the regime.  The AEMC and the AER are explicitly instructed by the following overriding objective within the National Electricity Law:

The National Electricity Objective is to promote efficient investment in, and efficient operation and use of, electricity services for the long-term interests of consumers of electricity with respect to price, quality, safety, reliability, and security of supply of electricity; and the reliability, safety and security of the national electricity system.

Price is important. Reliability is important. Safety and security are important. But the fact that electricity is the largest source of Australia’s greenhouse gas emissions and that Australia’s electricity is also the most emission intensive in the developed world is completely irrelevant.

This was done for extremely good reasons and is also why they have also kept out consideration of social impacts. But it risks creating a myopic and ultimately more costly approach to management of our energy system.

Firstly it should be said in defence of those that have sought to keep the National Electricity Objective simple and focussed, that energy markets shouldn’t be used as the instrument to cure all the world’s ills.  Multiple, conflicting objectives risk leaving our energy policy makers and regulators in a quagmire of complexity when often there are better, more targeted ways of addressing social and environmental problems. 

For example, if we are concerned about the welfare of the socially disadvantaged then we can best assist them not through subsidising the cost of power (which well-off people also consume), but by ensuring welfare payments keep up with the cost of living and keeping unemployment low.  As another example, the toxic by-products of coal combustion such as mercury or sulphur dioxide could be partly contained by trying to encourage energy conservation and reducing the waste of electricity. But electricity also comes from sources other than coal that don’t have these kinds of nasties, so it’s far more effective for our state environmental protection agencies to directly regulate the coal power stations that emit these toxic substances.

However when it comes to greenhouse gases we face a serious problem.

The policy mandarins have generally been characterised by a consensus that the best, most efficient way to contain greenhouse gases would be to put a price on them, either through emissions trading or a carbon tax. Put this in place and voilà, no need for energy regulators to worry about greenhouse gas emissions specifically, because they’d get wrapped up within the overall electricity price. The AEMC and AER can then go about their normal business trying to optimise for lowest overall possible price, just as set out in the National Electricity Objective.

However there’s just one little issue– Australia’s politicians and the electorate haven’t come round to the same consensus as the policy mandarins. They have debated and argued over the introduction of a carbon price going back more than two decades with considerable acrimony. Instead there is a strong preference amongst the electorate (not just in Australia) for policy measures that are directly tied to tangible technological means of reducing emissions, like for example subsidising solar panels or banning the sale of highly inefficient appliances.

In addition most people and most organisations in the world aren’t the amazing calculating machines that the policy mandarins (who have typically been trained to think like classical economists) assume them to be. For all people’s whinging and moaning about electricity prices, the reality is that most households and most businesses don’t put very much effort into thinking about cost-effective and relatively straightforward ways they might use less of it. Countless studies stretching back to the 1970s energy crisis have found time and again that households and businesses don’t implement simple technologies for saving energy that would provide extraordinary financial returns without sacrificing on other attributes.

The end result of this breakdown between energy policy mandarins’ expectations of how the world should work and how it actually works in reality, is that our energy regulatory institutions are being left behind in a wake of changes to the energy system wrought by efforts to lower carbon emissions other than a carbon price.

It is certainly true that a number of these emission reduction efforts haven’t been as well thought out as they should have been.  But the general direction of the interventions - which have been to increase the amount of renewable energy supply and to reduce demand via improved energy efficiency - are completely consistent with what’s required to meet an overarching goal of containing global warming to 2℃.  This is an international goal both sides of Australian politics have signed onto.  Furthermore Environment Ministers have spoken about the need for deep emission cuts in the realm of 50% or more since the early 2000s. 

You would have thought that if our energy institutions took the Australian Government’s commitment to such a goal seriously they’d have been war gaming and thinking through how to design an energy system that is increasingly dominated by renewable energy, demand for energy from the grid might go down rather than up, and demand might need to become more flexible.

This is starting to happen, but from an outsiders perspective it appears to be reluctant and only after the changes have become so embedded that they can no longer be ignored. 

Network costs – a financial disaster

The area where the greatest stress is evident is in how we regulate and pay for the electricity network.

In the decade leading into the commencement of the national energy regulatory regime which began in 2007, Australian state and federal governments’ environment officials, in conjunction with governments overseas, had been working on implementing a range of measures to improve energy efficiency of things as varied as refrigerators to industrial motors to new homes and commercial buildings.  For the most part these measures made very good economic sense beyond the environmental benefits.

Unfortunately the mandarins developing the regulatory rules surrounding the energy market were either blissfully unaware of this or deeply sceptical that such measures would achieve anything.

The end result has been a financial disaster. Network businesses were granted the right to invest and guaranteed a return on billions of dollars in additional network capacity, while consumers’ power demand barely grew.

On top of this solar power systems, which can bypass a large proportion of the electricity network, have now become a highly competitive source of electricity. Again this was a product of more than a decade of deliberate international government effort. Solar systems, which used to be horribly expensive, are now anticipated to be one of the lowest cost means of decarbonising power supplies in sunny locations such as Australia.

A further emerging development is the internet of things, which enhances our ability to shift power demand across time far more easily.

No one knows with certainty what will be the cheapest means of achieving the dramatic reductions in greenhouse emissions required within the next 30 years to contain global warming below 2℃. But there’s a better than even chance it will involve technological changes at the customer end of the power line.  Technologies that would have allowed us to decarbonise with little change to the existing structure of the energy market in carbon capture and storage, as well as nuclear power, have fallen well short of the outcomes their proponents envisaged over the last decade and a half. Furthermore large rises in the price of gas in Australia mean it isn’t likely to play an important transitionary role in decarbonisation either.

The views of the energy policy establishment, perhaps best personified by the recent Energy White Paper as well as the prior Labor Government’s White Paper, don’t appear to have come to terms with this.  They seem to still approach issues from the perspective that the existing supply infrastructure should be protected from change. 

This reached ridiculous proportions during the recent review of the Renewable Energy Target where the government argued the target should be reduced primarily because it was leading to an oversupply of electricity generation capacity. But an oversupply of electricity generation capacity isn’t a problem for anyone other than owners of existing power stations.

Reform of electricity pricing for small electricity consumers seems to also be proposed not so much from the perspective of the future need to enhance the flexibility of the market to respond to changes in the supply-demand balance (which becomes more valuable as you increase the amount of renewables in the system). Rather it appears to be more about ensuring the costs of investment in the existing network infrastructure are recovered without encouraging further reductions in energy consumption from the grid. Recent hikes in fixed charges unrelated to customers’ behaviour by some power companies are a worrying sign of where this might go. They are completely inconsistent with economic efficiency and will also increase the costs to society to decarbonise. They serve to illustrate that the decision by the AEMC to entrust monopoly network businesses themselves with developing the shape of new pricing structures was like putting the fox in charge of the hen house. 

Meanwhile progress on development of a wholesale market in demand response that would reward reductions in demand as an alternative to expensive peaking power plants has been painfully slow.

Advances in energy efficiency, customer-embedded generation such as solar and the internet of things provide a prized opportunity to decarbonise the economy at lower cost to consumers.  This is precisely because they allow consumers to lessen their need for quite expensive existing capacity from conventional suppliers. Energy policy and regulatory rules that are framed around the idea that past investments in capacity must be protected from such advances, or entrusting monopoly network businesses to play nice with emerging competitors, will make the task of decarbonisation far harder and more costly for consumers than it needs to be. 

Tristan Edis is an energy and climate change/carbon policy and market analyst who has worked in government, consulting, clean energy industry and the media. He is Director – Analysis & Advisory at Green Energy Markets and blogs at

National Energy Efficiency Conference 2016 - Save the date!

The National Energy Efficiency Conference, Australia’s premier energy efficiency event, is coming to Sydney in 2016.

Following the huge success of the event in Melbourne last November, this year's conference will take place at the Australian Technology Park on 15 and 16 November 2016.

Exciting plans are afoot which will bring a truly global perspective to this year’s conference. Over 300 leading energy efficiency specialists, policy makers and industry leaders will come together to debate the big changes and influence the decisions that will drive our industry forward in 2017 and beyond.

More details will be announced soon, so watch this space, follow us on Twitter or check out the conference website here.

In the meantime, be sure to add the National Energy Efficiency Conference 2016, Tuesday 15 – Wednesday 16 November, Australian Technology Park to your diary!

Driving efficiency in mid-tier offices - getting the right information to the right person

While the Australia’s premium commercial buildings sector has seized the opportunities of energy efficiency, the mid-tier still lags behind. Shauna Coffey explores some of the work underway to help complete this vital piece of the jigsaw.

In recent years, energy efficiency performance in the top tier of Australia’s office market has increased significantly. However the balance of the commercial office building sector (those B, C and D-grade buildings commonly defined as the ‘mid-tier’) operates differently, and still faces significant barriers to realising these energy savings and the associated benefits.

The scale of unrealised opportunity is enormous. In Australia, it is estimated that as much as 80% the 64 million square metres of commercial office space could be classified as mid-tier. They are there in the CBD and fringe areas of major cities, in suburban centres and in regional towns.

Mid-tier building owners are diverse in their size, business structure, investment strategy, risk appetite and understanding of energy efficiency benefits and opportunities.

Herein lies one of the biggest challenges in wholesale market transformation. There simply is no one size fits all approach. That means it is critical that, as we seek to assist mid-tier building owners unlock energy efficiency benefits, we recognise and respond to these differences.

A range of organisations are working hard on this problem. The Green Building Council of Australia (GBCA), with support from the Department of Industry, has pulled together over 50 industry stakeholders to develop a national pathway to deliver the mid-tier commercial office building sector as ‘an exemplar for energy efficiency and greenhouse gas emissions reduction’ and the planned actions and initiatives. The action plan includes a range of initiatives intended to act as targeted levers on the different owners within the market.

Without doubt, there is a small group of innovators in the mid tier forging ahead with building energy improvements, often with the support of ‘pilot’ government programs and incentives. They are receiving much deserved recognition in awards and as cases studies to demonstrate to others of what is possible.

As outlined in the widely accepted ‘Rogers Diffusion of Innovations Theory’ approach, ‘early adopter’ owners benefit from access to tools to assist in change and the ‘early majority’ will also make use of these tools, supported by solid proof of benefits.

To deliver these tools of change and solid proof of benefits, the Energy Efficiency Council and the Property Council of Australia are leading the development of the Building Retrofit Toolkit (BRT). The BRT will be a comprehensive package of tools, information and facilitation to support mid-tier office building owners to achieve best practice energy performance and plan to promote it through trusted sources.

A scoping study undertaken in collaboration with the NSW Office of Environment and Heritage is almost complete, which will establish best practice in retrofits and tune-ups in mid-tier buildings as well as identify information needs and information gaps.  Following the completion of this study the BRT will move into development.

We know from our research and engagement that different stakeholders in the mid-tier building upgrade process have different information needs. Even within building owners, different types of owners will have different information needs based on their motivations.

While there is no shortage of information intended to facilitate building energy upgrades (we identified over 100 in the scoping study) few reflect the unique information needs of the stakeholders or reflect the different retrofit opportunities and challenges presented by mid-tier buildings.

As we now move into delivery of the BRT, our priority is to address these two key gaps in the delivery of meaningful and accessible support.

Shauna Coffey is the EEC's Manager of Policy. Shauna leads the Council’s policy work in NSW and works with partners on a range of collaborative projects. Click here to contact Shauna.

Measurement and verification critical to efficiency success

M&V may not be a barbeque stopper, but EEC CEO Luke Menzel reminds us that it’s a fundamental issue for the energy efficiency sector.

Let’s face it. Measurement and verification (M&V) of energy savings is not a barbeque stopper. In an industry with more than its fair share of abbreviations, the International Performance Measurement and Verification Protocol (IPMVP) is a gold medal candidate for most unwieldy acronym. And it’s easy for non-experts to be intimidated by M&V, to feel that it is too technical for them to get a handle on.

But experts in energy efficiency are working hard to turn that perception around. I was immersed in the global conversation around M&V late last year when I spoke at the APEC Workshop on Harmonising Standards for M&V of Energy Savings in Beijing.

The stories being told by APEC delegates echoed what I've heard from EEC members. To a person, delegates reported that measurement and verification is often regarded as an optional extra in their countries, and that clients are happy to shave that cost off the project budget.

Unfortunately it’s not well understood by the private sector, in Australia or globally, that robust M&V is how a client ensures that they get what they pay for. Clients that embark on an energy efficiency project without a credible M&V plan in place are effectively crossing their fingers and hoping that the promised savings materialise.

If you engage a credible provider things can work out okay, but low rates of M&V make it harder to demonstrate the quality and value of energy efficiency projects.

That has big implications for the reputation of our industry over time, which is why we need to keep working to get the message across on M&V. It’s a fundamental issue for the energy efficiency sector, in Australia and around the world. Building confidence in energy efficiency investments requires a high level of certainty that the product, energy savings, will materialise. And ubiquitous, robust M&V is the mechanism that can deliver that certainty.

Building professional capacity around measurement and verification has been a core focus for the EEC for a number of years now. In partnership with the Efficiency Valuation Organisation, we've run the Certified Measurement and Verification Professional (CMVP) training and exam every year for the past four years, which certifies the professionals that can develop M&V plans and verify an energy efficiency project's success.

That work has had a significant impact; last year we saw Australia's 150th CMVP certified, up from just eight in 2012. As a result, we have more capacity and expertise in the Australian market. And we are building on that work – in April, we’ll welcome US expert Steve Kromer delivering an advanced Applied M&V Workshop for Australian CMVPs in Melbourne.

But it’s clear there is still much to be done. In 2015, we surveyed Australian CMVPs and 85% of them said their clients need a better understanding of the basics of M&V. This is exactly the type of work the EEC is focussing on, and we'll be ramping up our efforts to help educate the market on the benefits of robust M&V.

It’s true that M&V may never be a barbeque stopper. But getting the message out is incredibly important for increasing the uptake of sensible, cost effective energy efficiency projects in Australia.

Registration is now open for the CMVP training and exam program:

  • Melbourne: 9, 10 & 11 March 2016 – click here for info and to register
  • Perth: 11, 12 & 13 April 2016 – click here for info and to register

An expert on energy efficiency capacity building and financing, Luke Menzel is CEO of the Energy Efficiency Council. Click here to contact Luke.

Industry champion firing on all cylinders

Jessica Roberts reflects on a productive 18 months for the Energy Efficiency Council, a period which has seen a step change in the organisation’s activities and a surge in its membership.

As Australia’s peak body for the energy efficiency, demand management and cogeneration industry, the Energy Efficiency Council's focus is to grow the market for our members’ products and services and to drive the development of a collaborative, mature and forward-looking sector.

Over the last 18 months, our team has invested time in reviewing and refreshing the ways in which we work collaboratively with our Members to do just that.

As part of this process we’ve launched a new website, undertaken our first Annual Member Survey, redeveloped our digital communications, revamped our database, rebranded the National Energy Efficiency Conference (and held our most successful conference ever in November), created a range of new professional training and education opportunities, welcomed a new Board and spent more time than ever before talking directly with our Members about their priorities and aspirations for their businesses, for the EEC and for the sector more broadly.


(Image: delegate feedback following the National Energy Efficiency Conference 2015)

Most importantly though, while this has all be going on behind the scenes, our well-respected policy experts have continued to fly the flag for mature energy efficiency policy in Australia, working with governments across the nation to implement and develop programs, projects and policies that will drive long-term uptake of energy efficiency products and services.

In recent months, more and more organisations have recognised that industry collaboration is critical to maintain momentum and to move Australia’s energy efficiency sector forward. We've seen a host of new members have joined the EEC to add their voices to the discussion.

Siemens has joined AGL, Honeywell, Philips, Schneider Electric and Veolia at the top tier of membership. Australia’s most influential and well respected energy businesses operating at the top tier of the industry, Sponsor members share the EEC's ambitious aspirations for the sector and are integral to the development of innovative practice and an informed policy debate.

Stefan Schwab, Siemens’ Executive General Manager said "We are deeply committed to working with the Energy Efficiency Council to grow the market for energy efficiency services in Australia. There are huge opportunities in commercial, industrial and government efficiency, and our collaboration with the EEC is a core part of our strategy to unlock that potential."

A diverse mix of organisations large and small have also come on board including AE Smith, Kingspan Insulated Panels, ACTewAGL, OPRA Turbines, OASETech, the ACT Government and more. Leading organisations including EnerNOC, City of Melbourne and the City of Sydney have upgraded their membership to take advantage of new opportunities such as the new ‘Energy Efficiency Leaders’ Lunch’ series, which brings industry executives together with political leaders to discuss tackle the big issues and opportunities facing the sector.

(Image: Luke Menzel and The Hon. Mark Speakman MP, Minister for the Environment at the EEC's NSW Energy Efficiency Leaders' Lunch, Dec 2015).

There are more exciting projects on the horizon for the EEC - from the launch of our new policy platform articulating our vision for energy efficiency in Australia, an exciting new collaboration for National Energy Efficiency Conference, and a host of new collaborative projects with other leading organisations which will provide members with more opportunities to get involved.

2016 is already shaping up to be a big year. We’re looking forward to working with our Members, established and new, to drive Australia’s efficiency conversation forward.

Click here to read more or to apply for EEC membership or click here to see a full list of EEC members.

Jessica Roberts is the Energy Efficiency Council’s Executive, Membership & Communications. Click here to contact Jessica.

New energy audit standards promote action on efficiency

Often used as the basis for business case justification, project design and as a baseline to measure post-upgrade savings, accurate and consistent energy auditing is critical to the uptake and quality of energy efficiency projects. Following the introduction of the new Australian Standards for energy auditing, the EEC's Karla Paeglis explains the benefits of ensuring your energy audits are Standard-compliant.

In 2014, Standards Australia released the new standard for energy auditing: AS/NZS 3598:2014, which sets out minimum requirements for commissioning and conducting audits that identify opportunities for cost effective investments to improve energy performance.

Unlike the previous standard, the new Standard is actually a series of standards focused on particular economic sectors: commercial buildings; industrial and related activities and transport related activities.  

The new series of Standards are a significant revision to the previous Standard. They are more rigorous, are outcomes-based and are focused on providing audit customers with actionable energy conservation measures. Read more here.

Whether you’re an external consultant or an in-house energy manager, by delivering Standard-compliant energy audits, you’ll give decision makers the confidence they need to increase both the quantity and quality of their energy efficiency projects. You’ll be better positioned to identify opportunities, develop powerful business cases, design innovative projects and to effectively measure post-upgrade savings.

To help practitioners implement the Standards in real life projects and to drive the update of more high quality energy efficiency projects, in partnership with the NSW Office of Environment & Heritage, the Energy Efficiency Council has developed a new one day training program.

The program is practical and hands-on, using workshops and group exercises to lead participants through the process of delivering a Standard compliant energy audit. The training will be delivered by Dr Paul Bannister, one of the world's leading authorities in energy efficiency. Registration is now open for the one day program as follows:

  • Sydney - Tuesday 23 February 2016 - click here for info and to register
  • Melbourne - Thursday 25 February 2016 - click here for info and to register

Karla Paeglis is Manager, Sector Development at the Energy Efficiency Council. She leads the EEC's training and education programs and the delivering of the Energy Efficiency Certification Scheme. Click here to contact Karla.

Industry Events

From specialist training opportunities in M&V and energy auditing to industry networking opportunities, there are some outstanding events coming up to help kick-start your professional development in 2016.

Here are some of the EEC team's top picks for the coming months:

  • Energy Audit Standard Training - learn how to apply the new Australian Standards for energy auditing with efficiency expert Dr Paul Bannister  - 23 February (Sydney) & 25 February (Melbourne). Read more here
  • Network with some of Australia's leading efficiency experts at the A2SE Summer Study on Energy Productivity - 24-26 February, Sydney. Read more here
  • Join the Clean Energy Regulator, the Department of Environment and AusIndustry to hear about how the Emissions Reduction Fund (ERF) can provide a positive incentive for businesses to undertake energy and fuel efficiency projects - 29 February (Townsville), 1 March (Brisbane), 3 March (Adelaide) & 4 March (Perth). Read more here
  • Want to improve the success-rate of your business case proposals for energy efficiency projects? Join this new seminar - 1 & 8 March, Sydney. Read more here
  • Get a detailed insight into the Building Blocks of Energy Efficiency with a join EEC & Australian Institute of Energy lunchtime seminar - 2 March, Perth. Read more here.
  • Update your measurement and verification knowledge with the internationally recognised Certified Measurement & Verification Professional (CMVP) training program - 9-11 March (Melbourne), 11-13 April (Perth). Read more here 


The Energy Efficiency Council offers warm thanks all our external contributors – Alan Pears, Geoff Andrews and Tristan Edis – for their work on this inaugural edition of Efficiency Insight.


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