Policy and budget update February 2021 17 February 2021

Policy and Budget Update

By Rob-Murray Leach 

I hope you managed to rest over the summer break, because the tsunami of energy efficiency policy work from 2020 hasn’t abated and we’re all going to need to swim hard.

Energy markets

Let’s start with energy market reform. The Energy Security Board is forging ahead with its work on post-2025 electricity market design, and on 5 January they released a Directions Paper. While the scope has narrowed from their early considerations on whether the National Energy Market was a ‘renovation challenge’ or a knock-down-rebuild, the Energy Security Board is still considering a huge range of issues, from minimising the impact of coal-fired generators closing to unlocking the power of the demand-side.

However, there’s also a raft of work going on to facilitate immediate changes to the energy market. The Australian Energy Market Operator (AEMO) is consulting on the detailed design of the Demand Response Mechanism. The Australian Energy Market Commission (AEMC) is consulting on an Operating Reserve, the creation of a new market for Fast Frequency Response and moving from a mandatory to incentive-based regime for Primary Frequency Response. All very sensible, very important stuff, but it definitely feels like we’re drinking from the fire hose …

National policy

Beyond energy markets, a range of modest but sensible measures continue to be prosecuted by Federal Government. Work under the Trajectory for Low Energy Buildings continues, including:

  • the 2022 revision of the National Construction Code – an important and long overdue update for residential energy efficiency;
  • development of a nationally consistent home energy efficiency labelling system;
  • expansion of NABERS to new types of commercial buildings.

The EEC is also consulting with DISER and ARENA on the design of the $95 million program to support emissions reduction in Australia’s industrial sector announced in last year’s Federal budget.

Energy efficiency in government operations

One of the EEC’s highest priorities for COVID stimulus was getting governments to invest in improving the energy efficiency of their own operations. This is the perfect form of stimulus: delivering big reductions in carbon emissions while simultaneously realising huge savings in energy and maintenance that rapidly pay back the original investment.

We had huge wins in late 2020, which built on the existing commitments that governments have made over the last decade. These additional commitments were:

  • The Queensland Government announcing $30 million for energy upgrades to health facilities;
  • The South Australian Government committing a whopping $60 million over the next two years to upgrade the energy efficiency of its operations;
  • The NSW Government allocating over $150 million to LED upgrades in state schools and;
  • The Victorian Government committing to a revolving fund that will invest in an estimated $240 million of upgrades over the next decade.

Last week we were delighted to hold an online forum with Hon Danny Pearson, the Victorian Assistant Treasurer on the Victorian Greener Government Building Program, which we highly recommend for anyone interested in participating in the Victorian program. 

Energy efficiency schemes

State governments around the country continue to work on their retailer-based energy efficiency targets.

The ACT Government extended its ACTSmart scheme yoinks ago, and the rubber is now hitting the road on some really exciting elements, including comprehensive retrofits for low-income housing.

In late December the South Australian Government passed regulations that will replace their Retailer Energy Efficiency Scheme with a Retailer Energy Productivity Scheme, which will provide more incentives for energy savings during periods of peak demand. However, the SA Government still needs to work through a lot of the details to make this scheme really sing.

The NSW Government has also committed to compliment its Energy Savings Scheme with a peak reduction scheme, and is continuing to work through the details of this scheme. In Victoria, there is ongoing work to enhance the Victorian Energy Upgrades Program and we expect further consultation in coming months.

We look forward to working with our members and partners to ensure that these schemes continue to evolve to maximise benefits to the community.


If you missed the memo, in November Victoria made a huge commitment to energy efficiency, including

  • $5.4 billion to build 12,000 public homes that are 7-star efficiency;
  • $335 million to install high-efficiency heat pumps (reverse cycle air conditioners) in 250,000 low-income households;
  • $112 million to upgrade the energy efficiency of 35,000 existing social housing properties;
  • $31 million in grants to help industry improve its energy management;
  • $21 million for community groups to invest in clean energy upgrades, including energy efficiency;
  • Minimum rental standards for residential rental properties; and
  • Support for builders to develop 7 Star residential buildings, in line with a shift in the National Construction Code (basically a commitment to higher standards for new residential developments).

We’re continuing to work with the Victorian Government on the development of these measures, but the action doesn’t stop here. The Victorian Government is currently consulting on an excellent 30-year infrastructure plan which puts a high priority on energy efficiency, with submissions due on 26 February.

This article was originally published in the February edition of Efficiency Insight.