Policy update August 2021 05 August 2021

By Rob Murray-Leach

Victorian Home Heating and Cooling program

Installing a modern heating and cooling system can dramatically improve comfort and reduce energy bills. I know this on a very personal level. When I bought my house it came with terrible panel heaters – last winter the house was often below 10 degrees in the morning, never got properly warm and my electricity bill was a whopping $267 in July 2020. In May this year I replaced the panel heaters with an efficient reverse cycle unit. Now the house is a perfect 20 degrees all the time, and my electricity use and emissions have fallen an astonishing 62 per cent. Given that the rest of my retrofit hasn’t started yet, I was honestly shocked by how big the impact was on both comfort and bills.

Rob’s energy bill for July 2021

In 2020 the Victorian Government announced a $335 million ‘Home Heating and Cooling program’, which will help 250,000 lower income households install reverse-cycle air conditioners. From my own experience, it’s clear that this will deliver major benefits for heath, comfort and reduced bill stress.

The first phase of the program started in May 2021, focussing on upgrading community housing. On 1 August 2021 Minister D’Ambrosio announced that the second phase of the program was starting, allowing all lower income owner-occupiers to apply for the grant. The Victorian Government is offering $1,000 rebates to households that earn less than $90,000 per year to “…upgrade gas, electric and wood heaters with energy efficient reverse cycle split systems.” The Government is currently working on the third phase for the program, which will focus on upgrading rental properties.

For more information on the program visit

Tasmanians advocate for home energy efficiency retrofits

With growing understanding of the health, comfort and financial benefits of retrofitting homes, we’re seeing a surge in advocacy for retrofitting. The Tasmanian state budget 2021-22 is slated for release in August and the Tasmanian Council of Social Service (TasCOSS) is campaigning for the Tasmanian State Government to invest $148 million to retrofit 85,000 homes, including social housing, owner-occupied homes and rental homes.

The TasCOSS plan would build on the Tasmanian Government’s existing $15 million program to upgrade the heating and energy efficiency of public housing. TasCOSS estimates that it’s $148 million program would create 4,000 jobs, reduce energy bills by $45 million and put $475 million into the state economy.

Victorian Gas Substitution Roadmap

The Victorian Government is currently consulting on how to reduce greenhouse gas emissions from natural gas use in the state, with submissions closing on 6 August.

The EEC consulted with members and partners to develop a submission with clear recommendations. While research is required for some zero-emission substitutes for natural gas, over 60 per cent of Victoria’s natural gas use can be substantially decarbonised using existing technologies, particularly hot water and space heating. While the Victorian Government should support research and development, we can and should immediately get on with decarbonising Victoria’s emissions.

Therefore, the EEC recommended four key actions to the Victorian Government for the period 2021-2030:

  1. Fund a major strategy to upgrade the fabric of residential and commercial buildings. Retrofitting buildings can reduce heating demand by 70 per cent or more;
  2. Replace low-efficiency gas space heaters and water heaters with electric or high-efficiency gas models. Electrification should be accompanied by energy efficiency and load shaping to maximise its benefits and minimise its impacts on the grid;
  3. Require large energy users to have Energy Management Systems (EnMS) and provide grants for large energy users to substitute gas using equipment; and
  4. Support development and commercialization of zero-emission fuels and technologies. 

Community Climate Change and Energy Action Program

The Victorian Government is proving $3.1 million in funding to supporting community groups to make their facilities more energy efficient. Community groups can apply for up to $5,000 to support an energy audit and up to $50,000 in matched funding (dollar for dollar) for implementing energy efficiency upgrades. Applications close on 20 August 2021. For more information visit the Sustainability Victoria website.

Energy efficiency schemes

The Victorian and NSW governments have been consulting on a wide range of changes to their energy efficiency schemes, the NSW Energy Saving Scheme (ESS) and Victorian Energy Upgrades (VEU) Program. The EEC put in a submission on the introduction of hot water heat pumps for commercial and industrial sites into both the Victorian and NSW consultations. The Victorian government is also currently consulting on updating the rules for refrigerated display cabinets, with submissions due on 19 August.

Most significantly, the NSW Government is informally consulting with industry on a proposed Peak Demand Reduction Scheme. The first consultation paper on this scheme was released in April 2020, and since then the NSW Government has been working on the design of this scheme. While the design of the scheme has yet to be finalised, it is likely that it will additional incentives for energy management activities that create ‘capabilities’ to reduce peak demand, including energy efficiency that occurs during periods of peak demand (e.g. efficient air conditioners), demand response and load shifting (e.g. shifting demand away from peak periods).

It’s important to note that the scheme is likely to focus on ‘capabilities’ for demand reduction, rather than actual dispatch. In practice, what this means is that the scheme would support the installation of demand-response enabled air-conditioners, while the energy market or other programs would incentivise those air-conditioners reducing demand during peak periods. We’ll bring you more information on the Peak Demand Reduction Scheme when it is available.

Emissions Reduction Fund

The Australian Government is undertaking two consultations on the Emissions Reduction Fund. The first is a new methodology for Industrial and Commercial Emissions Reduction (ICER) that would replace the Industrial Electricity and Fuel Efficiency (IEFE) methodology. Consultation closes on 17 August. The second consultation seeks suggestions for new methodologies under the Emissions Reduction Fund, and this consultation closes on 26 August.

ARENA expanded?

On 22 June 2021 the Australian Senate disallowed a regulation that would have enabled the Australian Renewable Energy Agency (ARENA) to invest in a broad range of ‘lower-carbon’ technologies, including energy efficiency, carbon capture and storage and hydrogen derived from natural gas. This action was largely driven by Labor and the Greens objected to ARENA’s funding being directed to fund fossil-fuel activities, and unfortunately energy management got caught in the crossfire.

The Morrison Government on 4 August passed regulations to give ARENA permission to expand its focus to a very limited number of clearly defined projects that have already been budgeted for.

This expansion would support some pre-announced energy management projects, but ARENA will not have the discretion that it needs to fully invest in a wide range of energy management projects and technologies. The EEC will continue to pursue a proper expansion of ARENA to energy management, as it is critical to the future of clean, affordable and reliable energy.


Another bank has introduced a green home loan, showing that this idea is really taking off. On 26 July the Commonwealth Bank announced that its Green Loan trial had been a success, and would be expanded to up to 600,000 customers. The loan offers up to $20,000 in finance at 0.99% interest rate to install solar panels, battery packs, solar hot water system, heat pumps and electric vehicle charging stations.

Rob Murray-Leach is Head of Policy with the Energy Efficiency Council. Connect with Rob on LinkedIn.

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